How Things Are Improving at Foxconn, and Why That's Not Great for Some

Illustration for article titled How Things Are Improving at Foxconn, and Why That's Not Great for Some

Working conditions at Foxconn plants are well known to just about everyone at this point. And while executives have been paying lip service to improvements for years, it seems that things are finally looking up. But the improved conditions come at a cost.


The New York Times has a huge report out of China, detailing how things are changing at the plants:

CHENGDU, China - One day last summer, Pu Xiaolan was halfway through a shift inspecting iPad cases when she received a beige wooden chair with white stripes and a high, sturdy back.

At first, Ms. Pu wondered if someone had made a mistake. But when her bosses walked by, they just nodded curtly. So Ms. Pu gently sat down and leaned back. Her body relaxed.

The rumors were true.

Which is Foxconn in a nutshell, basically. Company-wide, hours are being regulated more closely, and pay has increased overall. Safety is also being taken more seriously, with padding and automatic shut-offs added to much of the industrial equipment. Other plants are using dedicated intermediaries to talk to employees about professional gripes, or just personal problems:

For eight hours a day, Ms. Zhang collects complaints about the factory's free meals and dorms. She listens to workers who are divorcing, homesick or arguing with managers. When she finds someone suffering, she refers them to the company's full-time doctor or professional counselors.

All of which sounds like good, solid progress. The piece is filled with examples of better conditions re-humanizing workers. Still, there's a trade-off:

There are costs for workers, too. Quanta's employees earn slightly less than their peers at Foxconn. What's more, Quanta's emphasis on hours that are easier on employees means they are prohibited from overtime shifts that advocates say are abusive, but which some workers insist they want.

That makes sense when you think about it. While many employees are certainly forced into extreme overtime, others have very good reasons for needing the money that comes from those shifts. And while it would be ideal if wages rose to the point that those shifts aren't necessary, that still isn't happening, and in the interim, some employees are being caught in the middle. For the rest of the personal stories out of Foxconn, you should definitely check out the rest of the Times' report. Or check this chart of verified improvements, and improvements that are scheduled for the future. [NY Times]



That's not actually the issue at all, and it's a pretty common / understandable misconception about the reasons behind using China to manufacture tech products and the like.

The reason China is such an attractive place to manufacture consumer electronics is only tangentially related to the cost of labor. Sure, a low cost of labor helps keep overhead down. But the real cost of doing business in China isn't labor - it's the the resulting import / export taxes (or tariffs) and cargo shipping. Overseas shipping is hugely expensive, and you can't really avoid taxes on shipped goods - there's no Cayman Islands to launder iPods through.

China has a major advantage in terms of high-tech / high-precision manufacturing for two reasons. First, economies of scale have developed in China the likes of which exist nowhere else in the world. Entire cities - literally hundreds of thousands of people - devoted to a single trade (like textile manufacture). And that city houses the factories that process the raw material, distribute it, turn it into clothing, package it, and ship it out to the coast. That's integration. Same thing goes for tech goodies.

If you don't have that tightly interwoven manufacturing infrastructure, not only do costs go up (a lot), quality goes down, and capacity dramatically decreases. Apple makes iPhones in China because it literally could not make them anywhere else in the world. Even if Apple spent tens of billions building an iPhone production 'city,' you'd still probably see quality and production capacity go down.

The quality has to do with the second reason - only Chinese manufacturing companies have really made the investment in the absurdly costly, cutting-edge manufacturing equipment (again, at the scale needed), and only those companies have tens of thousands of people trained in the use of that highly specialized gear. Apple is trying to change that, since they're apparently moving some Mac production to the US (iMacs, right?).

It's not a problem of money (not in any great sense, anyway), it's a problem of the manufacturing industry in the US having lagged behind China's.