Apple, Foxconn and outsourcing

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Apple, Foxconn and outsourcing

Postby Dark567 » Sun Jan 22, 2012 7:39 pm UTC

This was an excellent article from the NYT describing the reasons for outsourcing to China, many of which aren't related to the wages in China but the economies of scale and swaths of mid-skilled labor the country has.

http://www.nytimes.com/2012/01/22/busin ... ted=1&_r=1
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When Barack Obama joined Silicon Valley’s top luminaries for dinner in California last February, each guest was asked to come with a question for the president.
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A production line in Foxconn City in Shenzhen, China. The iPhone is assembled in this vast facility, which has 230,000 employees, many at the plant up to 12 hours a day, six days a week.
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But as Steven P. Jobs of Apple spoke, President Obama interrupted with an inquiry of his own: what would it take to make iPhones in the United States?

Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.

Why can’t that work come home? Mr. Obama asked.

Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.

The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.

Apple has become one of the best-known, most admired and most imitated companies on earth, in part through an unrelenting mastery of global operations. Last year, it earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.

However, what has vexed Mr. Obama as well as economists and policy makers is that Apple — and many of its high-technology peers — are not nearly as avid in creating American jobs as other famous companies were in their heydays.

Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the over 400,000 American workers at General Motors in the 1950s, or the hundreds of thousands at General Electric in the 1980s. Many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products. But almost none of them work in the United States. Instead, they work for foreign companies in Asia, Europe and elsewhere, at factories that almost all electronics designers rely upon to build their wares.

“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” said Jared Bernstein, who until last year was an economic adviser to the White House.

“If it’s the pinnacle of capitalism, we should be worried.”

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals.

But while Apple is far from alone, it offers a window into why the success of some prominent companies has not translated into large numbers of domestic jobs. What’s more, the company’s decisions pose broader questions about what corporate America owes Americans as the global and national economies are increasingly intertwined.

“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.”
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Re: Apple, Foxconn and outsourcing

Postby Ceron » Sun Jan 22, 2012 7:49 pm UTC

Dark567 wrote:Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.


Can you imagine them doing something like that in the US? "We decided to change the design of our product. Rather than waiting eight hours (or whatever it is in China) for normal operating hours, we're going to rouse you from your sleep so you can get a leg up on assembling the new design." That doesn't sit right with me, among all the other issues of outsourcing.

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Re: Apple, Foxconn and outsourcing

Postby Gellert1984 » Sun Jan 22, 2012 9:06 pm UTC

Ceron wrote:
Dark567 wrote:Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.


Can you imagine them doing something like that in the US? "We decided to change the design of our product. Rather than waiting eight hours (or whatever it is in China) for normal operating hours, we're going to rouse you from your sleep so you can get a leg up on assembling the new design." That doesn't sit right with me, among all the other issues of outsourcing.


I work in a factory that runs 24/7 and shuts down only for maintenance. I'm also on call and expected to be able to be in work within an hour (I don't have the 'benefit' of living in company dormitories). The only reason this wouldnt happen in the UK is because the office staff wouldnt haul their asses out of bed to pass the work orders down to the shop floor.
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Re: Apple, Foxconn and outsourcing

Postby Panonadin » Sun Jan 22, 2012 10:47 pm UTC

I guess it depends on what you are willing to do for work?

I mean, I would be perfectly ok with being woken up to work even on no sleep as long as I get paid for the work I'm doing. Some people choose jobs like that. Unless they are not paying you for the work you're doing I don't see any problem at all with it.
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Re: Apple, Foxconn and outsourcing

Postby Ghostbear » Sun Jan 22, 2012 11:23 pm UTC

Panonadin wrote:I guess it depends on what you are willing to do for work?

I mean, I would be perfectly ok with being woken up to work even on no sleep as long as I get paid for the work I'm doing. Some people choose jobs like that. Unless they are not paying you for the work you're doing I don't see any problem at all with it.

The problem with that is once it becomes acceptable to do to your employees, it becomes required on behalf of the employee to be willing to do that- or they'll be fired and replaced with someone who is willing to do that. So it's not just "let the people willing to accept it do so"- because it influences more than just them.

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Re: Apple, Foxconn and outsourcing

Postby Ceron » Sun Jan 22, 2012 11:34 pm UTC

I just find a big difference between "If this physician/plumber/X isn't on call around the clock, someone could die/have serious property damage/Y." and "If this guy that assembled widgets probably for twelve hours and in poor conditions isn't woken up for a second twelve hour shift, his corporate overlord might not be able to afford that jewel-encrusted yacht." A redesign is going to set your product back as it is; squeezing out a few hours extra production at the expense of the health and happiness of the workers is deplorable.

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Re: Apple, Foxconn and outsourcing

Postby Panonadin » Mon Jan 23, 2012 12:27 am UTC

My stance remains. I don't know first hand the working oppertunities in China. If you are willing to work a job that requests you work random hours at the drop of a pin then that's your choice. I mean come on they have on site dorms for workers. It's obvious that this is probably common.
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Re: Apple, Foxconn and outsourcing

Postby Ghostbear » Mon Jan 23, 2012 12:36 am UTC

If you think the workers are choosing to work those conditions because they find them acceptable, and not because it's the only option they're stuck with, then I would strongly encourage you to read about the history of labor rights during the industrial revolution. These workers are "choosing" to accept those work conditions because it's their only choice besides starvation and homelessness- which isn't much of a choice at all. The onsite dorms are a wonderful analogue for the "company towns" of yore.

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Re: Apple, Foxconn and outsourcing

Postby sardia » Mon Jan 23, 2012 1:06 am UTC

Don't let the labor violations/standards of China blind you to the inherent strengths that the article illuminates in China. "Apple’s executives had estimated that about 8,700 industrial engineers were needed...The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.
In China, it took 15 days. "
This is one of many reasons why the Chinese are kicking are asses. The fact that they were able to start working in the middle of the night instead of waiting for the next shift is almost inconsequential. What they were really identifying was the flexibility that China now has. They have the advantage in economies of scale, supply chains that are literally down the street. This leads to the other point in the article, which is that an advantage of industry, leads to other industries moving in to reduce costs. For example, the glass manufacturer moved to China to reduce the time it takes for the glass to ship to the iphone factory. Now the company that makes screws moves there as well, and then the engineering jobs that go with all these companies. They repeatedly state that it isn't the lower wages that makes them a better choice. It's the subsidies,
"The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day. "
We don't even do half these things in the US. You could say the Chinese out competing us because they are cheating, but it's also because we aren't trying hard enough. It's not just the Chinese either, the Japanese and Koreans are doing it too. They all have government backing and subsidies that give them an advantage over US manufacturers.
The way I see it, we can rebuild our manufacturing base by utilizing the same tricks they use, or we can move on to new technologies, and hope innovation grants us a new economy. Either way, more education + R&D money will be needed to maintain US superiority.

Edit: I may not have been clear when I said this. Having a large industrial sector draws in more industrial jobs because everyone wants to save costs and simplify the supply chain.
Last edited by sardia on Mon Jan 23, 2012 2:05 am UTC, edited 1 time in total.

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Re: Apple, Foxconn and outsourcing

Postby folkhero » Mon Jan 23, 2012 1:58 am UTC

I'm fine with the Chinese government subsidizing my consumer electronics. I don't think the answer to that is to spend my tax dollars (as few as they are) to try to bring low to mid-range manufacturing back to the states.
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Re: Apple, Foxconn and outsourcing

Postby Hawknc » Mon Jan 23, 2012 8:20 am UTC

That really was an excellent article. I think it helps separate some of the issues around Asian manufacturing. There is a lot companies like Foxconn can do to improve working conditions without greatly impacting cost; that much I think can be agreed upon, particularly since the article stated there was only about $60 difference in labour cost between China and the US for an iPhone worth several hundred dollars.

Ghostbear wrote:If you think the workers are choosing to work those conditions because they find them acceptable, and not because it's the only option they're stuck with, then I would strongly encourage you to read about the history of labor rights during the industrial revolution. These workers are "choosing" to accept those work conditions because it's their only choice besides starvation and homelessness- which isn't much of a choice at all. The onsite dorms are a wonderful analogue for the "company towns" of yore.

I think you're being slightly unfair to the Chinese here. A lot of the people applying for these jobs tend to come from rural areas - not wealthy by any standards, but not necessarily homeless or starving. Line work offers them a chance to make more money than they would have tending to farmland. There are some comparisons to be made to the Industrial Revolution, but as with most things, the Chinese are advancing along that path much faster than Europe did. As China's growth stabilises and there isn't such a near-infinite pool of labour to choose from, better working rights won't be far behind, particularly with the "West" as a template.

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Re: Apple, Foxconn and outsourcing

Postby Ghostbear » Mon Jan 23, 2012 8:37 am UTC

Hawknc wrote:I think you're being slightly unfair to the Chinese here. A lot of the people applying for these jobs tend to come from rural areas - not wealthy by any standards, but not necessarily homeless or starving. Line work offers them a chance to make more money than they would have tending to farmland. There are some comparisons to be made to the Industrial Revolution, but as with most things, the Chinese are advancing along that path much faster than Europe did. As China's growth stabilises and there isn't such a near-infinite pool of labour to choose from, better working rights won't be far behind, particularly with the "West" as a template.

I didn't mean to be particularly unfair to the Chinese- they're going through what was, for most other developed nations, a process that took up to two centuries to complete in just a few decades. They're going to have gaps in their worker rights, and they will hopefully fill those gaps in as they advance further. I don't think they can be particularly "blamed" for that- I can't think of anyone else who has been through the same industrialization process that has a particularly better record, possibly excepting a few smaller nations that received quite a bit of foreign assistance in the process. That of course doesn't make their worker issues forgivable either, but it does make it easier to understand.

What I was disagreeing with was the notion that because the workers find the conditions acceptable, then it should be taken as being OK. In areas with weaker worker protection laws and institutions- such as China at the present- workers are going to go where they can get employment. I suppose I erred in my statement of "starvation and homelessness"- but workers are going to have very little they can do to to exert their rights. So long as their conditions are better or as good as the alternatives- and I suspect that after abandoning their rural lifestyle, moving back to it would be both financially and socially difficult, not to mention the shame of failure (in a culture that, I believe, places some strong emphasis on shame), that's a very low bar to clear on behalf of the factory.

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Re: Apple, Foxconn and outsourcing

Postby elasto » Mon Jan 23, 2012 11:23 am UTC

Here's an article from a couple of years back showing both that Chinese workers aren't just blindly accepting of the working conditions given to them - and that legal protections are, sometimes at least, slowly moving in the right direction.

Even though workers don’t have the right to strike, work stoppages are fairly common in the manufacturing centres. In the Pearl River Delta, considered the “factory floor of the world”, some form of labour dispute plays out virtually everyday, involving thousands of workers, notes Han Dongfang of China Labour bulletin, a Hong Kong-based labour advocacy group.

It is in this context that the Draft Regulations on the Growth and Development of Harmonious Labour Relations in the Shenzhen Special Economic Zone, unveiled in June, acquire significance.

The draft regulations too don’t mention the word “strike”. But significantly, they no longer insist that trade unions have to help enterprises resume production as quickly as possible when stoppages occur. Going further, they stipulate that in the event of a work-stoppage, the government may issue an order prohibiting management and workers from taking any action that is liable to exacerbate the dispute, for up to 30 days.

“By stipulating the rights and obligations of employers and workers, the Draft Regulations have, in fact, brought industrial strike action within the scope of legal regulation,” reasons Chen.

The proposed changes in Shenzhen are finding resonance in other parts of China as well. “Local and regional governments across China are responding to rapidly changing economic and social conditions and workers’ demands by introducing new labour regulations and provisions designed both to protect workers’ rights and to improve relations between labour and management,” notes Han.

Indicatively, a new Employment Promotion Law and a Labour Contract Law came into effect in January 2008; a Labour Dispute Mediation and Arbitration Law, too, was enacted in May.

The promulgation of three major labour laws in one year indicates just how effective workers’ action has been in forcing the government’s hand, says Han. “These laws have not been introduced because the government is particularly enlightened, but because workers’ strikes and protests against widespread and continued rights violations have left the government with no option but to change the law, as a means of forestalling increased labour conflict.”

The proposed measures have prompted concerns that China’s competitiveness, derived from labour-cost advantages in low-end manufacturing, could be undermined, and trigger a flight of manufacturing to other low-wage economies that don’t have labour law rigidities of the sort that China is now contemplating.

Han points out that even if the revolutionary draft proposals are adopted, their effective implementation is critical. Several questions remain, he adds. “How will China establish the nuts-and-bolts of a genuine collective bargaining system? Will such a system allow workers to negotiate wage agreements that reflect the true value of their labour and not just the legally mandated minimum wage? Will the ACFTU embrace the system or sit on the fence?”

Even so, as Chen says, Chinese workers may well be within striking distance of winning the right to strike.


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Re: Apple, Foxconn and outsourcing

Postby Zamfir » Mon Jan 23, 2012 11:34 am UTC

sardia wrote:Don't let the labor violations/standards of China blind you to the inherent strengths that the article illuminates in China. "Apple’s executives had estimated that about 8,700 industrial engineers were needed...The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.
In China, it took 15 days. "

You can't separate this from the wages. I know enough engineering companies that do exactly that: supply qualified engineers on short notice. Within months, weeks, days or no more than travel time. I don't do the daily or hourly stuff, but I regularly start working on an unexpected project within 1 or 2 weeks, if a customer asks for that.

This will cost the customer through the nose, and the faster they want it, the more they have to pay. Because the only way to get that flexibility is by having people on stand-by (which doesn't generate money), or by shifting lower-priority projects which means you have to compensate other customers.

So if someone says "it would take us 9 months", they mean "it would take us 9 months because we're unwilling to pay the price premium of a flexible supply". And they are willing to pay that premium in China, because it still ends up fairly cheap.

Of course, there's also a lack of infrastructure. If there's no regular demand for thousands of industrial engineers within 2 weeks, then there won't be firms that have that many people on stand-by, or that many engineers who choose to stay unemployed waiting for a demand spike.

But this is a good thing, not a bad thing. As a general rule, it's nothing boast of to have thousands of qualified people hanging around doing nothing important. It's good for bosses, sure. No one doubts that China is a good place for bosses. For the people of China and for ourselves, we should hope that China gradually becomes a less attractive place for bosses, and more attractive for employees. Not that we become just as attractive and flexible as China.

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Re: Apple, Foxconn and outsourcing

Postby Dark567 » Mon Jan 23, 2012 2:29 pm UTC

Zamfir wrote:You can't separate this from the wages. I know enough engineering companies that do exactly that: supply qualified engineers on short notice. Within months, weeks, days or no more than travel time. I don't do the daily or hourly stuff, but I regularly start working on an unexpected project within 1 or 2 weeks, if a customer asks for that.
...
Of course, there's also a lack of infrastructure. If there's no regular demand for thousands of industrial engineers within 2 weeks, then there won't be firms that have that many people on stand-by, or that many engineers who choose to stay unemployed waiting for a demand spike.
How aren't these two things separate? It's completely possible that Apple would be willing to pay a very large wage to engineers, but there still aren't enough available? I (like you) work for a company that provides engineering on very short notice, often within a day or two of notice. My company also only has about 5,000 engineers and generally all but 100-200 are at any one time spoken for and unavailable. It seems plausible that there simply weren't that many engineers in the US lying around, even if you consider the wages.
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Re: Apple, Foxconn and outsourcing

Postby sardia » Mon Jan 23, 2012 3:49 pm UTC

Nooooo, stupid forum ate my post.
Summary: There needs to be a push towards higher education due to an emerging two tiered economy in the US. Those with bachelor degrees and higher get ahead while the high schoolers get left behind in minimum wage jobs. The fact that we can't find 9000 engineers (with 9% unemployment + 15% underemployment )in a timely manner means, to me, that our current work force either isn't skilled enough or trained in the wrong bachelor's degree.

We can also spend money bringing together a supply chain, but I could see that opposition to that under favoritism and stuff like that.
folkhero wrote:I'm fine with the Chinese government subsidizing my consumer electronics. I don't think the answer to that is to spend my tax dollars (as few as they are) to try to bring low to mid-range manufacturing back to the states.

Are you also ok with monopolies and dumping that occurs by other countries? Because that's the purpose of the subsidizing of by the Chinese, it's to jump-start their industries, get a lead, and then let economies of scale do the rest. A similar example is the solar panel industry. The US paid billions to develop the technology, and now the Chinese, through subsidies, own the market. Americans gain due to cheaper solar panels, and we get solar installation jobs. We lose our initial investment in R&D, any manufacturing jobs of solar panels. I understand your point that these jobs are only mid to low end, but manufacturing draws in more manufacturing. Giving up mid ranged manufacturing today leads to giving up high end manufacturing tomorrow. Really it leads back to my point that we should emphasize education in this country, especially since I don't want to lower our labor standards just to compete.
Last edited by sardia on Mon Jan 23, 2012 4:01 pm UTC, edited 1 time in total.

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Re: Apple, Foxconn and outsourcing

Postby Arrian » Mon Jan 23, 2012 3:57 pm UTC

Dark567 wrote:
Zamfir wrote:You can't separate this from the wages. I know enough engineering companies that do exactly that: supply qualified engineers on short notice. Within months, weeks, days or no more than travel time. I don't do the daily or hourly stuff, but I regularly start working on an unexpected project within 1 or 2 weeks, if a customer asks for that.
...
Of course, there's also a lack of infrastructure. If there's no regular demand for thousands of industrial engineers within 2 weeks, then there won't be firms that have that many people on stand-by, or that many engineers who choose to stay unemployed waiting for a demand spike.
How aren't these two things separate? It's completely possible that Apple would be willing to pay a very large wage to engineers, but there still aren't enough available? I (like you) work for a company that provides engineering on very short notice, often within a day or two of notice. My company also only has about 5,000 engineers and generally all but 100-200 are at any one time spoken for and unavailable. It seems plausible that there simply weren't that many engineers in the US lying around, even if you consider the wages.


You do realize that's a GOOD thing for the US, don't you. Those engineers who aren't available are doing productive work. The first thing I think of when I hear that the Chinese can pull 8,500 engineers for a project within 15 days is that there must be some pretty high unemployment rates for engineers in China. It's far better to have engineers gainfully employed and occasionally miss out on a big project for lack of resources than to have a huge bench just twiddling their thumbs waiting for that huge project to maybe come along.

sardia wrote:"The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day. "
We don't even do half these things in the US. You could say the Chinese out competing us because they are cheating, but it's also because we aren't trying hard enough. It's not just the Chinese either, the Japanese and Koreans are doing it too. They all have government backing and subsidies that give them an advantage over US manufacturers.
The way I see it, we can rebuild our manufacturing base by utilizing the same tricks they use, or we can move on to new technologies, and hope innovation grants us a new economy. Either way, more education + R&D money will be needed to maintain US superiority.


China is perched on the precipice, most of the economists I've seen talking about China expect it to have a massive recession erasing a lot of their gains, in large part because of their subsidies. Furthermore, they're generating a lot of inflation in order to keep subsidizing their local firms as well as by pegging the yuan to the dollar. Things are not all goodness and light for China's future.

The US manufacturing sector, however, is most certainly doing just fine. (The recession hurt our manufacturing industry, but that's what recessions do.)

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Re: Apple, Foxconn and outsourcing

Postby Dark567 » Mon Jan 23, 2012 4:02 pm UTC

Arrian wrote:You do realize that's a GOOD thing for the US, don't you.
I think it goes both ways. It's good that the engineers we have are employed. It's not good when we have unemployment and can't hire the unemployed because they don't have the skills we need to meet demand.
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Re: Apple, Foxconn and outsourcing

Postby Zamfir » Mon Jan 23, 2012 4:24 pm UTC

How aren't these two things separate? It's completely possible that Apple would be willing to pay a very large wage to engineers, but there still aren't enough available? I (like you) work for a company that provides engineering on very short notice, often within a day or two of notice. My company also only has about 5,000 engineers and generally all but 100-200 are at any one time spoken for and unavailable. It seems plausible that there simply weren't that many engineers in the US lying around, even if you consider the wages.

As a one-off issue, sure. But in the longer run, the causation runs in the other direction: there's no infrastructure to provide those engineers, because there's no regular demand from companies to hire thousands of engineers at short-notice prices.

In the end, it's a trade-off between the costs of planning for an unpredictable future, and the costs of a flexible (and as a result inefficiently used) labour supply. In China, the trade-off is more often to save on planning and just hire when you need, because even trained engineers are fairly cheap.

That's not sign of Chinese strength, it' s a sign of Chinese weakness, at least for now. It means that China has trouble finding gainful employment for qualified enigineers. So foreign companies can afford to say "screw HR planning, we'll just open a can of unused Chinese engineers".

I think it goes both ways. It's good that the engineers we have are employed. It's not good when we have unemployment and can't hire the unemployed because they don't have the skills we need to meet demand.

Yeah, that's true. But right now, China is really not a shining example for that. Most places are covered in work that would be unthinkable in richer countries. People who guard locked doors, street sweepers on the high way, restaurants (not very fancy ones) with more waiters than customers. I once slept in a $2 dollar/night hotel where every floor had a person whose job was to open your room door. A shop where one freezer was broken, so two people were continuously waving cold air from another freezer with fans. Coal mines where trucks are loaded by 20 people with shovels.

The pearl delta (and from what I have heard Shanghai as well) has less of this than the rest, but the world still changes the moment you cross the border from Hong Kong. Poor countries are poor because they are not very good at finding useful work for most people, and at the moment that is still very true for China.

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Re: Apple, Foxconn and outsourcing

Postby sardia » Mon Jan 23, 2012 6:03 pm UTC

Are you saying that the advantages that China currently has is temporary and not worth changing our priorities over? I read it as another sign of a two tier system of the educated vs the merely competent high school grads. I can see how your previous argument that getting 9000 American engineers wasn't worth the cost compared to hiring all these under utilized engineers in China. I wonder what the logistics would be to move 9000 more engineers to apple's manufacturing plants.

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Re: Apple, Foxconn and outsourcing

Postby Zamfir » Mon Jan 23, 2012 8:30 pm UTC

No, not really. More that a good response will not be to do things the Chinese way. At the moment, most of China is too poor, too socially different to draw economic lessons from for advanced economies. Chinese growth rates are impressive, but not yet the absolute levels of productivity in all but exceptional cases .

The enormous industrial hubs are amazing, there's nothing like them anywhere else. But they are still deeply tied to the presence of deep poverty and low wages, and it is far from clear how well they would work otherwise. That's even true for the parts that function best, and where wages are not that low.

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Re: Apple, Foxconn and outsourcing

Postby Dark567 » Mon Jan 23, 2012 8:43 pm UTC

Zamfir wrote:No, not really. More that a good response will not be to do things the Chinese way. At the moment, most of China is too poor, too socially different to draw economic lessons from for advanced economies. Chinese growth rates are impressive, but not yet the absolute levels of productivity in all but exceptional cases .
Although not mentioned in the article, when Jobs meet with Obama he apparently told him another major reason why Apple went to China was due to building regulations, zoning, and generally dealing with bureaucracy. Those are thing the US could implement from China, and aren't necessarily tied directly to poor wages. (Indirectly related he also slammed the US education for not having longer days and year round schooling)

EDIT: To put it more straight forwardly, Jobs praised the business practices of the Chinese government, while decrying those of the US government.
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Re: Apple, Foxconn and outsourcing

Postby wideyes » Mon Jan 23, 2012 9:25 pm UTC

Ceron wrote:I just find a big difference between "If this physician/plumber/X isn't on call around the clock, someone could die/have serious property damage/Y." and "If this guy that assembled widgets probably for twelve hours and in poor conditions isn't woken up for a second twelve hour shift, his corporate overlord might not be able to afford that jewel-encrusted yacht." A redesign is going to set your product back as it is; squeezing out a few hours extra production at the expense of the health and happiness of the workers is deplorable.


IMO this is the heart of the argument. I don't want to hear about how zillionare Apple executives "can't afford" to do business any other way, or that they're "forced" to do anything. I'll cry BS on that score. The cost of manufacturing is much higher in the US, due to many factors that ultimately come down to quality of life, i.e. not just pay, but benefits, holiday time, NOT being able to command your workers to do another 12 hours on a moment's notice, NOT being able to dump gnarly amounts of chemicals into your natural environment, etc. etc. The fact that neither the American producer nor the American consumer is willing to pony up is what leads to the current model with which we're stuck - outsourcing, which engenders lower standards of living in some other junior industrialist state and job loss (and economic net losses for the middle and lower classes) back at home.

Globalist free-market ideologues love to spout on about how things have to be or should be to remain "competitive", "profitable" and "innovative", but there are some inescapable hard truths that result from approaching business this way. It pains me to see folks in this thread dismissing worker conditions as incidental to growth or par for the course of developing industry in a nation. These are human beings like anyone you love or care about, asked to do deplorable things for dubious gains that don't necessarily trickle down to you or me, just to deliver the new shiny year after year. I doubt anyone who has posted in this thread so far has been presented with the hard economic decisions and living conditions these Chinese workers have. Consider that before all the market rhetoric dehumanizes the whole affair.

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Re: Apple, Foxconn and outsourcing

Postby Zamfir » Tue Jan 24, 2012 9:58 am UTC

Dark567 wrote:
Zamfir wrote:No, not really. More that a good response will not be to do things the Chinese way. At the moment, most of China is too poor, too socially different to draw economic lessons from for advanced economies. Chinese growth rates are impressive, but not yet the absolute levels of productivity in all but exceptional cases .
Although not mentioned in the article, when Jobs meet with Obama he apparently told him another major reason why Apple went to China was due to building regulations, zoning, and generally dealing with bureaucracy. Those are thing the US could implement from China, and aren't necessarily tied directly to poor wages. (Indirectly related he also slammed the US education for not having longer days and year round schooling)

EDIT: To put it more straight forwardly, Jobs praised the business practices of the Chinese government, while decrying those of the US government.

I dunno, the flip side of that pro-business, don't whine about the downsides attitude are yellow skies, poisoned rivers, neighbourhoods that get razed with little warning, unions that are crushed, corrupt officials, and a police state that jails and beats you if you complain about those things.

If there's a defense for those things, it is only that China is highly successful in bringing the advantages of the developed world to dirt-poor people. If the US would implement such policies, there would be no such excuse. It would be oppression for the sake of business, and nothing else.

That's sort of my point: the differences between China and the countries you and I live in go deep. The myriads of poor people, the police state, the history of the last century, including living memories of deeper poverty and oppression within living memory, and of yet deeper poverty and utter chaos before 1949. Such things affect most aspects of society, including the economy.

You simply can't look at the Chinese approach to building regulations or labour market flexibility in isolation, ignoring that context. They explain large parts of why powerful people in China can act the way they do, sometimes why they have to act that way, and why ordinary people are OK with it, or have to accept it anyway.

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Re: Apple, Foxconn and outsourcing

Postby Ghostbear » Tue Jan 24, 2012 10:30 am UTC

Zamfir wrote:I dunno, the flip side of that pro-business, don't whine about the downsides attitude are yellow skies, poisoned rivers, neighbourhoods that get razed with little warning, unions that are crushed, corrupt officials, and a police state that jails and beats you if you complain about those things.

I think this is the important point here- you can't just say that blindly pro-business is the best policy because it leads to growth. Economic growth isn't particularly useful to a society if the benefits of such are limited to a handful of people at the top. Maybe the US and Europe could be growing even faster than China has been if only we lowered our regulations to that same level. Even if so, the end result would be the vast majority of the citizenry being worse off, which seems to me to be the exact type of end result we should be glad to be avoiding. Increased economic prosperity is only really useful for two things- to use to fund measures to protect your nation (e.g. a military) and to improve the standard of living of your people. If the economy grows 100% in a year and only a handful of people see any of that, is it truly better than an economy growing 2% where nearly everyone sees some upside from it? China isn't that bad (nor growing that fast), of course, but right now a big part of why their regulations work for them is that they're transitioning large swathes of their population from being effectively third world citizens to a first world system- if you take that away, and their lax regulations will cause very little of that growth to be shared.

Even if you ignore worker rights and focus solely on environmental regulations, China's current policies are creating large problems for them that will require quite a bit of effort on their behalf to fix in the future. They're getting growth now, sure, but the future cost to them (even ignoring the present costs) could very easily exceed the benefit they're getting at the present. Regulations along these lines are made for a reason, and part of that is even economic- just it's the economy of the long term, instead of the short term.

In short, as Zamfir said, lowered regulations come at a cost, even if it isn't one you can directly attach a dollar value to.

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Re: Apple, Foxconn and outsourcing

Postby Chen » Tue Jan 24, 2012 1:40 pm UTC

wideyes wrote:These are human beings like anyone you love or care about, asked to do deplorable things for dubious gains that don't necessarily trickle down to you or me, just to deliver the new shiny year after year. I doubt anyone who has posted in this thread so far has been presented with the hard economic decisions and living conditions these Chinese workers have. Consider that before all the market rhetoric dehumanizes the whole affair.


But it does trickle down to you and me, in the fact that our goods cost significantly less than if we made them here. You think the company is going to take the hit instead of passing it on to the consumer? I'm also not sure how raising the standards in China to match the US (for example) would help. This would just drive the companies OUT of China. Clearly there needs to be a large cost incentive to produce goods there if a lot of the market for said goods is outside of China. If you can do the work in the US, and the US is a major market for the goods, why would you pay to have your goods shipped from China if you had to pay the same amount for labour?

What level of labour standards do you think China SHOULD have?

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Re: Apple, Foxconn and outsourcing

Postby wideyes » Tue Jan 24, 2012 6:25 pm UTC

Chen wrote:I'm also not sure how raising the standards in China to match the US (for example) would help... What level of labour standards do you think China SHOULD have?


It would help because it would mean better treatment for human beings. Human beings. Mankind, AKA our own race, AKA people we should be invested in treating properly. If new shinys can't be produced without gnarly pollution and human suffering, then we should be asking ourselves A). do we need new shinys, or B). is there a way we could change our current business practices to lessen pollution and human suffering? The answer to question A would be a soul-searching undertaking, but the answer to B is a definite yes: there are ways to minimize both the humanitarian and ecological impacts of modern industry. Unfortunately for the captains of said industry, the answer is most often greater responsibility and smaller profits, which is an unmentionable no-no in today's modern business climate. I'm suggesting that today's modern business climate (that has demonstrated a marked lack of concern for humans and healthy planetary ecology) is dysfunctional and destructive.

I lament the apparent apathy I'm seeing regarding these issues. Outsourcing has an established history of lameness for the average working person around the globe that I don't feel IS being refuted here by TFA or by the discussion. You assert that the savings do trickle down to the first-world consumer in the form of lowered prices. This is the fallacy of global free market capitalism and is a skin-deep assessment of an approach to doing business that has actually economically disempowered the average American, for example, over the last fifty years. Do we need to go back to the basic domestic-vs-foreign manufacturing argument here? I'm hoping we can spare ourselves the grind.

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Re: Apple, Foxconn and outsourcing

Postby Dark567 » Tue Jan 24, 2012 7:18 pm UTC

wideyes wrote:
Chen wrote:I'm also not sure how raising the standards in China to match the US (for example) would help... What level of labour standards do you think China SHOULD have?


It would help because it would mean better treatment for human beings.
Not necessarily, it could simply mean the jobs move back here to the US, and the Chinese starve. At least if the jobs move from the US, people in the US aren't likely to starve to death, just see a sizable drop in standard of living.

wideyes wrote:I lament the apparent apathy I'm seeing regarding these issues. Outsourcing has an established history of lameness for the average working person around the globe that I don't feel IS being refuted here by TFA or by the discussion.
No, it doesn't. Outsourcing has been a driving force force for relieving much of the third worlds economy. Every 20th and 21st century country that has relieved major amounts of poverty, has done so with export driven economies.
wideyes wrote:You assert that the savings do trickle down to the first-world consumer in the form of lowered prices.
It has. This isn't really debatable. Yes at the same time, it cause some American's to be disempowered, while raising standards of living in China.


Zamfir wrote:I dunno, the flip side of that pro-business, don't whine about the downsides attitude are yellow skies, poisoned rivers, neighbourhoods that get razed with little warning, unions that are crushed, corrupt officials, and a police state that jails and beats you if you complain about those things.
I think that's a little extreme. I don't think Jobs' want's to completely get rid of regulation, particularly environmental(he was a fairly strong environmentalist), I think he just wants to eliminate the masses of red tape involved with opening factories and hiring workers. Granted, Jobs' didn't like unions, and probably wouldn't have minded if they were crushed.
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Re: Apple, Foxconn and outsourcing

Postby Zamfir » Tue Jan 24, 2012 8:17 pm UTC

How is that extreme? it might not be what Jobs wants the US to be, but it is not an extreme description of what happens in China. And the official reason for nearly all red tape and bureaucracy in democracies is to minimize such excesses.

It's one thing to point at a country that manages to avoid problems, while still minimizing the amount of bureaucracy. That would be a good example to emulate. But in China, the lack of cumbersome processes leads quite often straight to the problems that those processes are supposed to avoid.

My favourite example: Chinese high-speed trains are faster than the very same train designs elsewhere, with margins of about 20 to 40 km/hr. How do they accomplish this feat of engineering? They put bigger engines in the trains. Who cares about red tape about brakes and vibrations and wheel wear and track quality and maintenance intervals? The Chinese engineers assumed that foreign enigneers put ample safety margin in the designs, so they removed part of the safety margin. Last year there was a major crash so they cut speeds again, officially to make room for more trains on the net.

It 's symbolic for a lot of the Chinese can-do approach. I can even respect it, in a strange way. It's a decision to set different priorities. But at the same time, I don't mind being born in a place that doesn't have to do that, that can afford to do things more careful with a wider set of interests taken into account.

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Re: Apple, Foxconn and outsourcing

Postby sardia » Wed Jan 25, 2012 7:17 am UTC

Zamfir, I think your argument that we perceive China's strength is actually a weakness ignores a few things. First, the accumulation of an unmatched supply chain in China means other businesses will follow, if merely to save costs getting parts from one factory to another. Second, the muscle that the central government uses to lure foreign investment, and business means that those "inefficient" practices that the local businesses in China use is mitigated. They can take more risks because they have the backing and subsidies to compensate for any waste. Lastly, the US eeks out a few elite engineers, while leaving the rest of the country as unskilled masses. On the other hand, the Chinese churn out three times as many lower quality engineers (roughly educated to associate's degree).
These advantages have almost nothing to do with sacrifices in labor laws, polluted skies, and only somewhat related to corruption. These are things we can emulate. These policies don't sacrifice our pollution standards or labor rights yet they allow us to keep up.

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Re: Apple, Foxconn and outsourcing

Postby Zamfir » Wed Jan 25, 2012 10:13 am UTC

Sardia, good points. I'll try to formulate more carefully: I don't want to claim that most Chinese economic strengths are illusory, that they are weaknesses in disguise. Far from it.

My point is that they are in many cases tied in with social and economic weaknesses (since it's still a poor country, and a police state to boot). So a direct emulation of Chinese practices will usually mean that you either have to accept the problems as part of the deal, or you will find that the same practices will not deliver a similar 'strength' when transplanted to the social and and economic circumstances of a richer and more democratic country.

Perhaps my perspective is different as citizen of a small country. I grew up in a world where suppliers and customers are obviously to be found abroad, often in larger countries (like the US) with larger and more integrated markets and supply chains, a government that promotes local business, more educated workers than there could ever be here. Yeah, that can be a challenge. It means you loose out on contracts because the locals know and trust each other better. You might find yourself at the mercy of a powerful customer, supplier or foreign government. That's business, and to me China is just another version of it, with its own peculiarities.

It's just a perspective, one that leads to a different kind of response. More deals, less head-on competition. Accept a dependence on foreigners, just try to keep some options open so they can't pressure you too much. That response might not scale as easily to the US, though I think it does. Americans can be good dealmakers, even when they are a bit used to being biggest party on the table.

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Re: Apple, Foxconn and outsourcing

Postby Chen » Wed Jan 25, 2012 1:06 pm UTC

wideyes wrote: You assert that the savings do trickle down to the first-world consumer in the form of lowered prices. This is the fallacy of global free market capitalism and is a skin-deep assessment of an approach to doing business that has actually economically disempowered the average American, for example, over the last fifty years. Do we need to go back to the basic domestic-vs-foreign manufacturing argument here? I'm hoping we can spare ourselves the grind.


What fallacy is this exactly? If wages suddenly tripled in China, do you think Apple would just eat that cost and still sell their products for the same price? If instead they made a factory here and had to pay North American wages do you think the price would remain the same? Now I will grant that making a factory here might be better for those people who would be unemployed otherwise and get a job in said factory, but its not a benefit everyone else will likely see.

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Re: Apple, Foxconn and outsourcing

Postby sardia » Wed Jan 25, 2012 10:27 pm UTC

Chen wrote:
What fallacy is this exactly? If wages suddenly tripled in China, do you think Apple would just eat that cost and still sell their products for the same price? If instead they made a factory here and had to pay North American wages do you think the price would remain the same? Now I will grant that making a factory here might be better for those people who would be unemployed otherwise and get a job in said factory, but its not a benefit everyone else will likely see.

Considering that labor is only 10% of the price of the iphone, yes they would stay. Or rather, the Foxcon manufacturing base has so many advantages that losing one advantage wouldn't tilt the balance against manufacturing iphones there. Now if you had said, what if they had demanded unions, pollution controls, higher interest rates on savings, political freedoms, less corruption. Then we be talking...about how Apple would move to a brand new complex in Vietnam.

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Apple Soaks Ipad in Blood of Humans, Denies Wrongdoing

Postby sardia » Thu Jan 26, 2012 4:31 am UTC

http://www.nytimes.com/2012/01/26/busin ... f=business
I dunno why Apple is being so dumb, but the New York Times has been cranking out great articles.
Summary: Apple says they have a code of conduct for their suppliers which is suppose to prevent labor, and safety violations. At the same time, Apple's desire for cost cutting, and on time scheduling means that suppliers often cut corners on safety and labor. This leads to Apple ignoring violations to save money and suppliers being increasingly corrupt to make money. An example of the conundrum Chinese suppliers and Apple faces is: Apple demands exact prices for parts, and labor down to the individual screw and wages, leaving the thinnest of profit margins. Then in a year, Apple demands a 10% cut in prices. This leads to suppliers demanding more hours from their workers and ignoring safety regulations to save money and maintain profit margins. Apple audits these companies, but quickly realizes that it costs a lot of money and time to fire the suppliers that are in violation. Eager to avoid becoming behind schedule, Apple routinely accepts "will promise to improve" as an excuse, and moves on.
Add lax safety standards with rushed production, throw in some corporate greed, and you get an explosion which kills four and injures dozens.
Spoiler:
Human Costs Are Built Into an iPad
By CHARLES DUHIGG and DAVID BARBOZA

The explosion ripped through Building A5 on a Friday evening last May, an eruption of fire and noise that twisted metal pipes as if they were discarded straws.

When workers in the cafeteria ran outside, they saw black smoke pouring from shattered windows. It came from the area where employees polished thousands of iPad cases a day.

Two people were killed immediately, and over a dozen others hurt. As the injured were rushed into ambulances, one in particular stood out. His features had been smeared by the blast, scrubbed by heat and violence until a mat of red and black had replaced his mouth and nose.

“Are you Lai Xiaodong’s father?” a caller asked when the phone rang at Mr. Lai’s childhood home. Six months earlier, the 22-year-old had moved to Chengdu, in southwest China, to become one of the millions of human cogs powering the largest, fastest and most sophisticated manufacturing system on earth. That system has made it possible for Apple and hundreds of other companies to build devices almost as quickly as they can be dreamed up.

“He’s in trouble,” the caller told Mr. Lai’s father. “Get to the hospital as soon as possible.”

In the last decade, Apple has become one of the mightiest, richest and most successful companies in the world, in part by mastering global manufacturing. Apple and its high-technology peers — as well as dozens of other American industries — have achieved a pace of innovation nearly unmatched in modern history.

However, the workers assembling iPhones, iPads and other devices often labor in harsh conditions, according to employees inside those plants, worker advocates and documents published by companies themselves. Problems are as varied as onerous work environments and serious — sometimes deadly — safety problems.

Employees work excessive overtime, in some cases seven days a week, and live in crowded dorms. Some say they stand so long that their legs swell until they can hardly walk. Under-age workers have helped build Apple’s products, and the company’s suppliers have improperly disposed of hazardous waste and falsified records, according to company reports and advocacy groups that, within China, are often considered reliable, independent monitors.

More troubling, the groups say, is some suppliers’ disregard for workers’ health. Two years ago, 137 workers at an Apple supplier in eastern China were injured after they were ordered to use a poisonous chemical to clean iPhone screens. Within seven months last year, two explosions at iPad factories, including in Chengdu, killed four people and injured 77. Before those blasts, Apple had been alerted to hazardous conditions inside the Chengdu plant, according to a Chinese group that published that warning.

“If Apple was warned, and didn’t act, that’s reprehensible,” said Nicholas Ashford, a former chairman of the National Advisory Committee on Occupational Safety and Health, a group that advises the United States Labor Department. “But what’s morally repugnant in one country is accepted business practices in another, and companies take advantage of that.”
First page spoilers only.
Edit: Maybe this should be merged with the Apple Foxconn thread from earlier.

Merged with the existing Apple/Foxconn/supply chain discussion -Hawk

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Re: Apple, Foxconn and outsourcing

Postby Hawknc » Thu Jan 26, 2012 5:24 am UTC

sardia wrote: An example of the conundrum Chinese suppliers and Apple faces is: Apple demands exact prices for parts, and labor down to the individual screw and wages, leaving the thinnest of profit margins. Then in a year, Apple demands a 10% cut in prices. This leads to suppliers demanding more hours from their workers and ignoring safety regulations to save money and maintain profit margins. Apple audits these companies, but quickly realizes that it costs a lot of money and time to fire the suppliers that are in violation. Eager to avoid becoming behind schedule, Apple routinely accepts "will promise to improve" as an excuse, and moves on.

This is common. Different businesses use different terminology, but a lot of companies will estimate the optimal cost of producing a part (including raw material, bought in components, labour, overheads, storage, etc.) and compare them to the price being charged by the supplier so they can reduce that cost gap. Typically buyers won't push past that optimal cost for obvious reasons, though, and most understand that suppliers need to make some sort of profit. The responsibility falls to both Apple to ensure that their parts are responsibly sourced and to the suppliers to ensure that don't abuse their workers for the sake of profitability.

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Re: Apple, Foxconn and outsourcing

Postby Zamfir » Thu Jan 26, 2012 9:53 am UTC

sardia wrote:Considering that labor is only 10% of the price of the iphone, yes they would stay. Or rather, the Foxcon manufacturing base has so many advantages that losing one advantage wouldn't tilt the balance against manufacturing iphones there. Now if you had said, what if they had demanded unions, pollution controls, higher interest rates on savings, political freedoms, less corruption. Then we be talking...about how Apple would move to a brand new complex in Vietnam.

I think you're underestimating how cost-obsessed consumer electronics get. Iphones are amazingly profitable, so there would be room for all kinds of niceties, if people choose to. But they are the once-in-a-decade exception.

The whole infrastructure is built for companies that have to fuss over ever single dollar on the BOM. Apple (for the iphone at least) is currently in the luxury position that don't need that level of cost-cutting. They get it anyway, and it adds to their profits. But it's highly misleading to look at iphones, and conclude that labour cost is not the driver behind the location of the assembly lines. If Hon Hai and their suppliers can offer unmatched economies of scale, it's because all those other consumer electronics producers with lower gross margins have their stuff assembled in the same places. Those deep and wide supply chains are not a separate advantage apart from low wages, they are the direct result of the low wages.

Also, note that the "what if wages in China triple" is not entire speculation. Hon Hai has its oldest and largest factory in Shenzen, where both wages and living costs have grown to be significantly higher than the Chinese average. Still not much by western norms, but enough for this:

http://www.taipeitimes.com/News/biz/archives/2011/09/29/2003514421 wrote:Gou unveiled the five-year plan in June, saying the company would expand its production automation system and upgrade existing factories to reduce manual labor.

“Chinese labor is no longer cheap and young people born in the 1990s no longer want to take tedious jobs at production lines. This [rising labor cost in China] will greatly impact on exporters only taking advantage of cheap labor there,” he said at the time.

Factory upgrades along with improved production yields would help boost the company’s falling gross margin, Gou said, adding that he expected margins to recover in the second half from the first half.

Hon Hai’s relocations plans in China are scheduled to be completed by the end of the year, which should help lift margins as costs drop, he said.

So yes, when Chinese wages rise, the assembly lines go away. Shenzen is (to say the least) not a bastion of worker's rights, red tape or environmentalists, and the assembly lines are still moving away. Foxconn used to have all of its workers there, now most are already in other parts of China. In fact, i think iphones and ipads are already made in the cheaper factories inland.

EDIT: Hon Hai is Foxconn, if that perhaps wasn't clear

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Re: Apple, Foxconn and outsourcing

Postby Ghostbear » Thu Jan 26, 2012 10:54 am UTC

Discussions like this remind me of something that always amazes me- that in today's modern world of automation and factory robotics, human labor can still be more cost effective. It isn't that confusing if you think about it- those machines aren't going to be cheap, and even if they have a lower operating cost, the up front cost could easily shift the equation in favor of human labor for many markets. It still surprises me all the same.

Reading the article Sardia linked to, this quote stood out to me:
Apple typically asks suppliers to specify how much every part costs, how many workers are needed and the size of their salaries. Executives want to know every financial detail. Afterward, Apple calculates how much it will pay for a part. Most suppliers are allowed only the slimmest of profits.

So suppliers often try to cut corners, replace expensive chemicals with less costly alternatives, or push their employees to work faster and longer, according to people at those companies.

“The only way you make money working for Apple is figuring out how to do things more efficiently or cheaper,” said an executive at one company that helped bring the iPad to market. “And then they’ll come back the next year, and force a 10 percent price cut.”

[...]

Many major technology companies have worked with factories where conditions are troubling. However, independent monitors and suppliers say some act differently. Executives at multiple suppliers, in interviews, said that Hewlett-Packard and others allowed them slightly more profits and other allowances if they were used to improve worker conditions.

Many times stories like this appear, many people will say that you can't really blame Apple- the other companies all make use of the same conditions. The article, however, paints a different picture; Apple's size allows it to push for deals more profitable for it while letting the manufacturer keep less and less. When the results lead to unsafe worker conditions, accidents, and abuse, Apple vocally condemns the practice and requests safer conditions. What they don't do is alter the their price conditions that cause it in the first place. I'd even be willing to believe that the executive are sincere when they try to push for better conditions initially, until they encounter the harsh reality: doing so will cut into their profits. Their forced to choose between keeping that last bit of profits they squeezed out or the safer conditions they want, and they choose the profits. From a purely market position, their decision is entirely rational. Despite that, it's sad that humanity doesn't win out for them in the end- especially since it seems to have done so for most of Apple's competitors, or at the very least, HP.

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ExplodingHat
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Re: Apple, Foxconn and outsourcing

Postby ExplodingHat » Thu Jan 26, 2012 11:32 am UTC

Article wrote:She and her husband put a quarter of their salaries in the bank every month. They live in a 1,080-square-foot apartment, which they share with their in-laws and son.
“There are lots of jobs...”
This is an existence I would be quite satisfied with.
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Zamfir
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Re: Apple, Foxconn and outsourcing

Postby Zamfir » Thu Jan 26, 2012 12:31 pm UTC

Ghostbear wrote:Discussions like this remind me of something that always amazes me- that in today's modern world of automation and factory robotics, human labor can still be more cost effective. It isn't that confusing if you think about it- those machines aren't going to be cheap, and even if they have a lower operating cost, the up front cost could easily shift the equation in favor of human labor for many markets. It still surprises me all the same.

Part (though far from all) of the story is this: if a production process has 4 steps and 3 are highly automated, then the remaining step can still employ loads of people. While the automated steps hum along in the background. Often there's not even a process of "automation", of the same step becoming more and more automated. A product just gets replaced by a somewhat similar prodcut, that requries different steps that were never unautomated in the first place.

Look for example at this:
Image
Many of those components are from nearly human-free production lines, often even in high-wage countries.

Also, there's the IKEA effect: the final assembly stage is usually hard to automate, because at that stage the shape of the product is for the benefit of the end-user, no longer for the production line. That's also why shops in high-wage countries are often self-service, instead of automated vending machines. It's that same final step where the products have to take a more human-oreinted form. Even self-service retail is a huge employer.

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Dauric
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Re: Apple, Foxconn and outsourcing

Postby Dauric » Thu Jan 26, 2012 3:00 pm UTC

ExplodingHat wrote:
Article wrote:She and her husband put a quarter of their salaries in the bank every month. They live in a 1,080-square-foot apartment, which they share with their in-laws and son.
“There are lots of jobs...”
This is an existence I would be quite satisfied with.


1,080 sq-feet is a decently sized 2-bd 2-bath apartment (mine was ~980), which is fine for the woman, her husband and their son, but maybe you missed the last bit:

...which they share with their in-laws...


You're looking at a minimum of 2 couples, possibly 3, plus the renter's son, so 5-7 people in a 2-bd 2-bath aparment.

Not so satisfactory.
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