Riots, suicides and more in Foxconn factories
(CNET) ZHENGZHOU, China - If you want to understand why iPhones are made in this corner of the world, look no further than Li Yue.
When I met the effervescent 21-year-old, she was lined up at a kiosk outside the gates of the massive assembly plant owned by Foxconn. Li, wearing a white T-shirt and blue jean shorts and carrying a pink parasol to beat the heat on a scorcher of a June day, was among a group of a dozen or so candidates applying for a job with the Taiwanese firm. Not a specific job, mind you. Any job.
It's not as if Li, who just finished her first year as a student at Henan Police College, didn't have much going for her. She was bright and engaging. She spoke more than passing English. And she conveyed an eagerness to get started.
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Foxconn granted her wish. But instead of landing a job at the plant here, which employs more than 190,000 workers, Li boarded a bus that afternoon for Taiyuan, in the Shanxi Province, a 10-hour ride away. It may have been more than she bargained for.
Late Sunday night, the Taiyuan factory, with more than 79,000 workers, was roiled by violence. Foxconn said "a personal dispute between several employees escalated into an incident involving some 2,000 workers," leading Foxconn to suspend operations at the plant for a day. While Chinese authorities are investigating the cause of the riot, Foxconn said that it "appears not to have been work-related." Apple (AAPL) declined to comment on the riot.
The weekend violence is the latest in a growing list of incidents that have heightened concerns over conditions in factories that make iPhones and other high-volume tech products. There have been employee suicides, explosions at two plants that make Apple gadgets, and reports of harsh working conditions. A New York Times investigation of the manufacturing of Apple products in China in January painted a picture of a company that wants to improve the workplace at its partners such as Foxconn but "falters when it conflicts with crucial supplier relationships or the fast delivery of new products."
There are other, less obvious issues adding to tensions in these teeming facilities. Wages may be high compared with other jobs in China, but they are sometimes barely enough to cover rent in the huge dormitories in which employees typically live, and still leave workers with money to send to family members in villages who live on even less. Managers can subject employees to harsh public ridicule that would be unthinkable in Western workplaces. And employees are often reluctant to make waves simply because there are so many other people who would happily trade places with them.
"The employees always say the people outside want a job," one employee told me in an interview, "and the people inside want to quit."
When a major new product such as the iPhone 5 is heading to stores, even more stress is put on that fast-growing manufacturing chain. Apple sold 5 million iPhones over the weekend (up from 4 million for the first weekend of sales for the iPhone 4S), and could sell 10 times that amount by the end of the quarter that closes December 31. Meeting that demand has required an epic buildup of materials, infrastructure, and labor, all while satisfying Wall Street's need for bigger, more historic profits.
Li, who is from Huaiyang, about 120 miles southeast of Zhengzhou, knew all about the suicides at Foxconn. And she had read articles online about the working conditions at the company's plants. But she still lined up for the interview, during which recruiters asked the most basic questions and look for scars and tattoos, according to Li. And she had no qualms about paying the 150 renmimbi, or $24, for a bus ticket to Taiyuan, even for a job that pays 1,550 renminbi a month, about $244. (Foxconn raised wages in Zhengzhou on August 1 to 1,800 renminbi, about $283.)
"It's very hard to get a job at Foxconn," Li said, with her pink purse and a grocery bag full of food in her hand. "They pay more than other companies."
Workers like Li are in such abundance that they've become a resource in much the same manner as aluminum or plastic. They move among cities such as Taiyuan, Zhengzhou, Shenzhen, and others where iPhones are made as needs arise. And as soon as they leave their jobs, they're replaced by other workers, just as eager as Li to get started. That's particularly true as Foxconn opens new factories in inland cities, where opportunities are scarce.
Putting size in perspective
Scale matters when you're trying to satisfy global consumer demand. Foxconn, which makes products for Apple and plenty of other tech giants, including Dell and Hewlett-Packard, is huge, employing 1.1 million people in China. But then, China is massive, with more than 1.3 billion residents.
Consider Zhengzhou. Everywhere you look in the part of the city where Foxconn has set up shop, construction cranes loom. Excavators move dusty, dry earth, while skeletons of long factory buildings and 12-story dormitories form a changing skyline. Chinese media report Foxconn plans to employ 300,000 workers here within a few years, but it's still all Foxconn and Apple can do to keep up with demand.
As absolutely gargantuan as Foxconn's facility is here, Zhengzhou can handle it. The city has 8.6 million residents. Henan province, of which Zhengzhou is the capital, has a population of 94 million. That's the same number of residents as California. And Texas. And New York. And Pennsylvania. Combined. If it were a country, Henan would have the 12th largest population in the world, in an area roughly the size of Wisconsin.
I came to this city because I wanted to explain how an iPhone comes to life and the consequences of meeting prodigious global demand. Beyond the exposes about conditions in the factories that make iPhones, we've also seen troubling reports of pollution caused by the mining for its raw materials and its ultimate disposal.
I contacted Apple during my reporting for this project. The company provided a statement last night.
"Apple is committed to the highest standards of social responsibility across our worldwide supply chain," the company said. "We insist that all of our suppliers provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes wherever our products are made."
True, virtually any major consumer electronics product carries similar labor and environmental issues. The life cycle of an iPhone isn't all that different than that of a Samsung or an HTC phone, and nearly every modern mobile phone is made by Asian contract firms, where worker rights aren't protected by federal and state laws as they are in the United States. Still, the iPhone is iconic. Its introduction in 2007 upended an entire industry and led the shift from desktop to mobile computing. But there's a downside, as the riot in Taiyuan reminds us.
Apple is not ignoring the issue. The company has hired a group to audit workplace conditions, the Fair Labor Association or FLA, as a result of the issues raised in recent months. Last month, the group reported that Foxconn addressed several workplace concerns, such as enforcing ergonomic breaks, changing the design of workers' equipment to guard against repetitive stress injuries, and updating maintenance policies to ensure equipment is working properly.
"In addition to this ambitious project with the FLA, we've been making steady progress in reducing excessive work hours throughout our supply chain," the company said in its statement. "We track working hours weekly for over 700,000 workers and currently have 97 percent compliance with the 60-hour maximum workweek specified in our code of conduct."
And in response to the wave of press coverage about and activist condemnation of the conditions at those plants, Apple Chief Executive Tim Cook took offense at any suggestion that the company is indifferent to the workers in its supply chain.
"Any accident is deeply troubling, and any issue with working conditions is cause for concern," Cook wrote to employees in January, according to an internal e-mail obtained by 9to5mac. "Any suggestion that we don't care is patently false and offensive to us."
Both Foxconn and Pegatron, another contract manufacturer that assembles iPhones in China, declined my request to visit their facilities. But Foxconn, in a statement to CNET made prior to the riot that occurred over the weekend, acknowledged problems and said it is working to improve conditions.
"Foxconn is not perfect, but we have made tremendous progress," the company said, pointing to the hiring of mental health professionals and an expansion of extracurricular activities for employees. "It is also clear that our efforts to enhance employee welfare and support are meeting with success and they are saving lives and they are serving as a model for other companies with large employee populations who face similar challenges."
Critics dispute that Foxconn has done much of anything to improve working conditions. A report released the day before the iPhone 5 debuted, from Students and Scholars Against Corporate Misbehavior or SACOM, a Hong Kong watchdog group, painted an entirely different picture. SACOM interviewed 60 workers in Zhengzhou, detailing continuing problems at the Foxconn plant.
"When the peak season comes, they are tied to the production lines with just one day off in 13 working days, or no rest day at all in a month, all to cope with the public demand for the new Apple products," the report says. "It is sad to say that to some extent, workers also yearn for the peak season because their base pay is insufficient to meet their basic needs, especially for those who have to support their dependents."
SACOM found that employees worked excessive overtime, beyond Chinese legal limits. The report said that some workers weren't compensated for their overtime. It cited "inadequate training and protection" for employees using chemicals in the production process. And the group even found that some workers need to acquire an "off-duty permit" for a toilet break.
Exploring Zhengzhou
To find my own answers, I poked around Foxconn's Zhengzhou operation. There, I hired a three-wheeled, engine-powered cart, something that might be called a "tuk-tuk" in other parts of Asia, though here it seemed to be known as motorized tricycle. The driver suggested we simply walk through the Foxconn gates, past the security guards. No one stopped us.
I didn't try to walk into buildings, where I'm certain I would have been stopped. But the grounds themselves are clean, if a bit dusty. Orange trash bins with Foxconn's logo dot the campus. From the outside, the buildings are modern, if a bit ordinary. Rows of motorcycles are lined up outside in what must be employee parking, and the sidewalks on this side of the gates are almost entirely empty as workers assemble gadgets inside.
There's plenty more action on the other side of the factory. That's where most of the dormitories are. From the outside, the dorms look like apartment buildings you'd find in an American city. They are nondescript brick structures, often 12 stories high, row after row of them. Laundry occasionally hangs from balconies. Guards prevent visitors from entering.
There, it's a lively street scene outside, as residents socialize, while occasionally picking up a snack or shoes from the kiosks that line the roads. It's a bit dingy. Litter is strewn on the streets and plastic bags tumble with the breeze.
A 26-year-old woman sits down with me at a food court on the ground floor of one of the dormitories. She only gives her family name, Ma, for fear of retribution from her employer, Foxconn, for talking with a journalist without permission. It's a concern of nearly every Foxconn employee with whom I chat. Her glasses frame a round, cherubic face. She's wearing a light shirt with a floral pattern, having changed from the Foxconn polo shirt workers wear on the job.
Ma works in the service department, logging the defects of iPhones pulled from the assembly line into a computer. She's been on the job three months, moving from Shangqiu, a city of 7.4 million that's 140 miles east of here. Like plenty of Foxconn employees, she took the job because the money was better than any work she could find at home.
But the job comes at a price. She left her 1-year-old daughter back in Shangqiu with her mother and hasn't seen her since she left home.
As for her husband, he's working somewhere in southern China, though she's not really sure where. The two of them haven't talked since she left home.
The work itself, Ma said, isn't really all that bad. Mundane, yes. But not overwhelming. She puts in eight-hour days, five days a week, and tries to get as much overtime as possible. That's because the pay barely covers her needs.
She earns the 1,550 renminbi, or $244, a month that was common for Foxconn entry-level workers here before the August 1 raise. But after she pays rent for a bunk bed in a dormitory room that she shares with seven other Foxconn workers and purchasing food that she often buys at Foxconn's canteen, there's generally no money left to send back to her home. And she's terribly worried about rumors that property management company that runs the dorms in which she and 85 percent of the Zhengzhou workforce live is going to increase its rent.
For her, the answer is overtime. Ma tries to add as much overtime as she can to supplement her salary. After media reports surfaced about Foxconn allowing overtime in excess of Chinese law, which limits overtime to 36 hours a month, her boss has limited her opportunities to work longer shifts.
"Most of the employees would rather have overtime," Ma said. "They complain that they can't work more hours."
The idea of receiving higher pay hasn't dawned on her. When I point out that Apple, which had $117 billion in cash on June 30, more than the gross domestic product of Bangladesh, might be able to afford paying Foxconn more so its workers could earn a larger paycheck, Ma just shrugged.
"Of course, everyone would like to make more money, but there is no way to ask for that," Ma said. "Foxconn can always get more people to work for them."
She's referring to people like Li Yue, the new Foxconn recruit I met who hopped on the bus to Taiyuan.
After listening to workers here, as well as at Foxconn's Shenzhen plant and Pegatron's Shanghai facility, a complex picture of working conditions emerged. That's not all that surprising given the hundreds of thousands of people who assemble iPhones. Nearly every worker with whom I chatted had a complaint. Many of the beefs were mundane, such as the tedium of doing repetitive tasks on Shenzhen production line or having a roommate in the Pegatron dormitory who evidently has particularly malodorous feet.
Others have more serious concerns.
"I am required by the factory to do overtime," says a 26-year-old man whose family name is Zhang outside the gates at Pegatron's Shanghai factory. He said his manager will fine him if he doesn't report for his assigned overtime. Pegatron declined to comment on Zhang's statement.
A 21-year-old worker at one of the two Foxconn plants in Shenzhen, whose family name is Liang, said managers there are often abusive. Liang, who puts parts on iPhone motherboards, got in hot water with his boss for a mistake a few months earlier. As a result, his boss told him to write up a note about the mistake that was then posted on a bulletin board.
Foxconn noted that there is a formal grievance procedure for workers to raise concerns. But most workers with whom I spoke were unaware of the procedure or felt it yielded no results. The company also noted that workers could complain through its union. But the union is a toothless organization, whose leaders are appointed largely by management.
Liang noted an even greater indignity.
"Managers will yell at you if you make the tiniest mistake and they will not assign overtime to you," Liang said.
While impressions of working for Foxconn vary, one feeling is constant. Every worker I chatted with frets over their paltry paychecks.
You might think the complaint sounds familiar. After all, many of us in the West aren't happy with our pay either. But for Ma and her colleagues, the pay, while better than that for most other non-skilled jobs in China, rarely covers their most basic needs. This isn't about disposable income to see a movie or pick up a cute pair of shoes.
These workers want enough cash to pay for food and rent and send a bit home for relatives who have even less money. It's fair to say that for most of them, the only time they'll hold a iPhone 5 is when they're putting one together.
This post by Jay Greene originally appeared on CNET.
