Apple Manufacturer Foxconn Is Under Fire Again

×

FoxconnApple (AAPL) is backpedaling -- an unusual move for the world's most valuable tech company.

Foxconn, the Chinese contract manufacturer that probably pieced together your new iPhone or iPad, has come under fire on ABC this week. In a segment that originally aired on ABC News on Monday, and expanded into a special edition of Nightline a day later, Apple allowed a journalist into Foxconn's factory.

Maybe Apple figured that ABC would present a glowing perspective of the facility. ABC parent Disney (DIS) and Apple have been tight since Steve Jobs sold his majority-owned Pixar to Disney. Jobs' estate is Disney's largest single shareholder. Disney CEO Bob Iger sits on Apple's board.

The ABC report seemed balanced enough, but Apple, Foxconn, and even the Fair Labor Association have now chimed in with corrections.

More importantly, people are now talking about why Apple isn't making its cutting edge gadgetry closer to home.

Fox Hunt

Foxconn has come under fire before. An unusual number of suicides at the factory's adjacent dorm -- where many of the employees live -- drew unwelcome attention to the high-tech assembler.

However, that didn't stop thousands of job seekers from lining up for hours in the Chinese city of Zhengzhou in hopes of landing a job at a new factory there.

Foxconn

The Fair Labor Association has been investigating the contract manufacturer's practices, and unconfirmed reports are claiming that Foxconn hid underage employees during the auditing process.

The combination of jingoistic fervor in the United States and bad press for Foxconn is making things difficult for Apple. However, there's more to this story than simply Apple looking to save some money.

The Real Reason Your iPhone Is Made in China

When you call a telephone support line and someone from Bangalore answers, there's no question about why: Outsourcing customer service to an Indian call center saves a company a nice chunk of change.

However, moving manufacturing to Asia isn't just about the access to cheap labor. An eye-opening New York Times article last month details why Apple leans on Foxconn.

Foxconn

Barack Obama approached Steve Jobs at a dinner last February, asking him what it would take to move production back into this country.

"Those jobs aren't coming back," Jobs reportedly told the president, pointing out how Asia offers shorter lead times and a greater pool of skilled factory workers. You won't find too many companies with U.S. workforces so dedicated that many employees actually live in a factory's dormitory, allowing for quick and cheap assembly line alterations to make sure that hot products go out on time.

Yes, money is an issue, but if folks incensed about Apple moving jobs overseas believe that ripping into Foxconn will bring those jobs back, then they're missing the bigger picture.



Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Disney. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple and Walt Disney. Motley Fool newsletter services have recommended creating a bull call spread position in Apple.



Increase your money and finance knowledge from home

Introduction to Value Investing

Are you the next Warren Buffett?

View Course »

Introduction to ETFs

The basics of Exchange Traded Funds and why ETFs are hot.

View Course »

Add a Comment

*0 / 3000 Character Maximum

137 Comments

Filter by:
billlesd

I read the Times article. Those "dedicated" chinese employees are virtual slaves, working 12 hour plus shifts for $17 a DAY, 6 days a week, and forced to live on factory grounds so they can be summoned at a moments notice. The factory is lined with suicide nets to catch those who decide this sort of life is not worth living and attempt to jump to their deaths.Whatever any American company is saving by using these factories, it is not worth the human cost, for them or US!!. I vote for the US to bring back VERY HIGH TARIFFS for stuff made at foreign govt subsidized factories like this one in China. We cannot compete with slave labor and it is destroying us here. The global economy chatter is bull, and it only serves the third world countries at our expense.

February 27 2012 at 10:58 PM Report abuse rate up rate down Reply
ss1591

China has about a billion extra people that will live in a cardboard box if it means a job. These jobs are mindless and repetitive reducing the worker to a human robot. It is very sad that these people will do it but most American would rather have no job then anything like this and who could blame them. When your employer has to install nets to keep you from splattering the pavement with your brains the job is just not worth it.

February 27 2012 at 10:33 PM Report abuse rate up rate down Reply
ss1591

China has about a billion extra people that will live in a cardboard box if it means a job. These jobs are mindless and repetitive reducing the worker to a human robot. It is very sad that these people will do it but most American would rather have no job then anything like this and who could blame them. When your employer has to install nets to keep you from splattering the pavement with your brains the job is just not worth it.

February 27 2012 at 10:32 PM Report abuse rate up rate down Reply
Michael & Linda

The only way you will see these jobs return to America is when corporations can bring in guest wokers and house them in company dormitory type housing where they will not be subject to minimum wage laws, etc. Obviously this would not play well to American citizens, so doubt it will happen anytime soon. I am all for the success of small business in America, but be honest...28 jobs here, 12 jobs there is simply not going to greatly reduce the staggering unemployment across the nation. We need large employers of 300, 500, 1000 people in one location and many , many of those to re-employe America. I just do not see this happening. If all minimum wage laws were removed and corporations/factories could pay $2.00 hr...and all business taxes were eliminated and all environmetal/employee safety standards were eliminated...they might possibly consider moving these manufacturing plants here again. In other words, if labor and business laws returned to the standards of the early 1900 era these mega corporations might decide they could continue to make the gigantic profits they are now making and still be based on the United States mainland. How would an average American worker then be able to afford rent (forget buying a home), food, transportation, basic utilities, food, etc.? Only with some type of government assistance. Welcome to Orwell's "1984" American version....or Dicken's England. We are in a terrible economic loop here people. No good steady decent paying jobs because all our manufacturing jobs that employed millions of regular Americans are now off-shore...and now even "cube" jobs like customer service call centers are moving to India or Asia.

February 27 2012 at 9:00 PM Report abuse rate up rate down Reply
Michael & Linda

The only way you will see these jobs return to America is when corporations can bring in guest wokers and house them in company dormitory type housing where they will not be subject to minimum wage laws, etc. Obviously this would not play well to American citizens, so doubt it will happen anytime soon. I am all for the success of small business in America, but be honest...28 jobs here, 12 jobs there is simply not going to greatly reduce the staggering unemployment across the nation. We need large employers of 300, 500, 1000 people in one location and many , many of those to re-employe America. I just do not see this happening. If all minimum wage laws were removed and corporations/factories could pay $2.00 hr...and all business taxes were eliminated and all environmetal/employee safety standards were eliminated...they might possibly consider moving these manufacturing plants here again. In other words, if labor and business laws returned to the standards of the early 1900 era these mega corporations might decide they could continue to make the gigantic profits they are now making and still be based on the United States mainland. How would an average American worker then be able to afford rent (forget buying a home), food, transportation, basic utilities, food, etc.? Only with some type of government assistance. Welcome to Orwell's "1984" American version....or Dicken's England. We are in a terrible economic loop here people. No good steady decent paying jobs because all our manufacturing jobs that employed millions of regular Americans are now off-shore...and now even "cube" jobs like customer service call centers are moving to India or Asia. Yet without these jobs thousands and thousands of Americans are either taking early social security or are relying on public assistance to live. We are going to see a HUGE division by economic status level in this nation in the next decade. I fear for our people.

February 27 2012 at 8:59 PM Report abuse rate up rate down Reply
1 reply to Michael & Linda's comment
ss1591

China has about a billion extra people that will live in a cardboard box if it means a job. These jobs are mindless and repetitive reducing the worker to a human robot. It is very sad that these people will do it but most American would rather have no job then anything like this and who could blame them. When your employer has to install nets to keep you from splattering the pavement with your brains the job is just not worth it.

February 27 2012 at 10:33 PM Report abuse rate up rate down Reply
laparkuh411

Seems like they're saying when the American worker agrees to "live in factories" to show dedication to the job, then they'll bring them back.

February 27 2012 at 8:46 PM Report abuse rate up rate down Reply
John Murphy

Oboma ask Steve jobs? Lets see Steve jobs capitolizes on slave labor . He should of told Oboma that Lincoln was wtrong and the dorms where like the slave houses and oboma should be a slave. Because thats what I got out of it .

February 27 2012 at 7:00 PM Report abuse rate up rate down Reply
john

Slavery !!!!!!!!!!!!!!!!! PURE and Simple

February 27 2012 at 6:59 PM Report abuse rate up rate down Reply
Charles

If the American people are really serious about supporting America and bring jobs back to our country, boycott buying and using things made in places other than the United States. Seems that people are greedy enough to ignore the problem because all that is important to them is they must have the latest product or device regardless of where it is made. Sad days for America but happy days for foreign manufacturers. America has come a long way in sixty years and not all for the better.

February 27 2012 at 3:36 PM Report abuse rate up rate down Reply
Robert

Any company with off shore manufacturing should have to pay the difference in labor cost as a tax and have to comply with all on site US labor laws if they want to sell the product here. We do not have the trained labor force for no other reason than because the jobs have moved away (no factories, no trained labor)
Apple has proven that marketing is SO much more important than real quality and ethics...I pod had terrible audio quality (see wiki article for some background)and was a DRM nightmare while. They stole the tech from Creative (later paid them big bucks in a back-room deal), made it more expensive but made it look sleek.. all marketing and no substance, the Apple and American way

February 27 2012 at 12:39 PM Report abuse rate up rate down Reply