Apple Is `All Over' Foxconn After Suicides, Steve Jobs Says
“It’s very troubling,” Jobs said yesterday during an on- stage interview at a technology conference in Rancho Palos Verdes, California. Foxconn, also known as Hon Hai Group, is “not a sweatshop,” Jobs said in his first public remarks on the deaths.
Foxconn announced today it will raise wages by at least 30 percent, more than it indicated last week, as the 10 deaths this year threaten to tarnish the image of computers and other products made by its workers. Apple, Hewlett-Packard Co. and Dell Inc. are probing the Taiwanese company’s working conditions, while Hon Hai Chairman Terry Gou has recruited counselors and installed nets on dormitory buildings to prevent more suicides.
“The situation at Hon Hai is negative for Apple, so they need to work together to try to resolve this,” said Jenny Lai, a technology analyst at CLSA Ltd. in Taipei. About 70 percent of Apple’s products may be manufactured at Hon Hai’s facilities, she said.
Hon Hai Precision Industry Co., the flagship of the group, fell 4 percent to NT$119.50, its lowest in nine months, in Taipei trading after the company said today it will raise wages of Chinese production workers by at least 30 percent. The increase in salaries isn’t related to the suicides, said Hon Hai spokesman Edmund Ding.
“It’s been a while since we increased wages, hence the decision,’’ Ding said. “Raising pay and the suicide issues are two separate matters,” he said when asked if the move will reduce suicides at Hon Hai.
The pay increases, which Daiwa Securities Group Ltd. analyst Calvin Huang estimates may slash Hon Hai’s profit by more than 20 percent, come days after Japan’s Honda Motor Co. agreed to raise salaries by 24 percent in China to end a walkout.
“We have been seeing wage inflation over the past several months,’’ said Chris Ruffle, who helps manage $19 billion as China co-chairman of Martin Currie Ltd., in a telephone interview from Shanghai. Rising salaries may prompt businesses that operate plants in China to move to lower-cost countries such as Vietnam and Cambodia, Ruffle said.
Foxconn is a sweatshop that “tramples” the rights of workers partly because it pays about 900 yuan ($131) a month, forcing factory employees to do overtime to support themselves and their families, according to Li Qiang, founder and executive director of New York-based China China Labor Watch. The minimum monthly wage in Shenzhen is between 900 yuan and 1,000 yuan, according to the city government.
The deaths, half of them in May, have forced billionaire founder Gou to open his factories to outside scrutiny and apologize for not being able to stop the suicides. Gou has said Foxconn isn’t a “sweatshop.”
Apple said last week that it’s in contact with Foxconn senior management and that a team from Apple is evaluating the steps that the Taiwanese company is taking following the suicides and suicide attempts. Steve Dowling, a company spokesman, yesterday declined to provide any specifics about the talks with Foxconn and the status of its investigation.
Dell also began an investigation last week at Foxconn, which manufactures some of its computers. The Round Rock, Texas- based company has no intention of disclosing the content of its discussions with Foxconn, said Jess Blackburn, a Dell spokesman.
Hewlett-Packard, the world’s largest personal-computer maker, said last week that it’s “investigating the Foxconn practices that may be associated with these tragic events.” It had no updates on the status of that investigation, said Shelby Watts, a spokeswoman for the Palo Alto, California, company.
“Apple does one of the best jobs of any company understanding the working conditions of our supply chain,” Jobs said yesterday. “We’re pretty rigorous about it.”
To contact the reporters on this story: Joseph Galante in San Francisco at firstname.lastname@example.org; Connie Guglielmo in San Francisco at email@example.com; Mark Lee in Hong Kong at firstname.lastname@example.org