Foxconn to Hire 400,000 China Workers Within a Year

Foxconn Technology Group plans to hire as many as 400,000 workers in China in the coming year and will build factories closer to employees’ homes after a spate of suicides at the maker of Apple Inc. iPhones and Dell Inc. computers.

The Taiwanese company aims to boost its China workforce to 1.2 million to 1.3 million people after revenue jumped 50 percent in the first half, Louis Woo, special assistant to the chief executive officer, said in an interview today. Foxconn will expand to inland provinces Henan and Sichuan because that’s “what the new generation of workers wants,” he said.

Foxconn’s hiring plan, equivalent to more than three times the combined workforces of Microsoft Corp. and Apple, signals an improving outlook for electronics demand as the global economy recovers. The company is shifting away from Shenzhen, the southern coastal city that’s a magnet for migrant workers, after the suicides of at least 12 workers this year prompted it to install safety nets to prevent employees jumping to their deaths.

“They will need more workers for their notebook business, while Apple also has very aggressive targets for their iPhones,” said Vincent Chen, who rates Foxconn’s Taipei-based flagship Hon Hai Precision Industry Co. “hold” at Yuanta Securities Co. in Hong Kong. The plan “may create management problems as they have workers more spread out. It’s easier to manage workers when they’re all in the same area.”

Monks, Wage Increases

Chairman Terry Gou in June denied Foxconn was running a sweatshop and blamed personal problems and compensation packages offered to bereaved families for most of the suicides. The deaths prompted the company to hire monks and counselors to help employees, while it doubled the base wage for workers in Shenzhen. Clients also hired suicide experts to visit the company and talk with workers, Woo said today.

Foxconn and its employees’ union held rallies across China today with more than 100,000 workers signing a pledge entitled “Treasure your life, care for your family,” it said in a statement.

“We hope employees will express their concerns through established and proper channels,” Chen Peng, president of the workers’ union, said in the statement. “We also want to ensure that employees understand that suicide is a cowardly act.”

Fewer in Shenzhen

Around half the company’s 900,000 workers are in Shenzhen, and that ratio will drop to one-third, Woo said. The headcount in Shenzhen will decline by about 170,000 over five years as production moves inland, he said in a later briefing.

“If the circle of friends and family are closer, then it will be a lot easier to talk things over,” Woo said. Improving meals and providing more entertainment areas is also helping to improve morale, he said, although “we cannot drive suicides to zero.”

The Shenzhen facilities will focus more on research and development, product testing and new-energy technologies, Woo said. Around 20 percent of its China workforce is from Henan in eastern China, he said.

Global revenue for contract manufacturers of electronics will climb 8 percent this year to $281 billion, driven by orders for mobile computers and flat-screen televisions, according to El Segundo, California-based researcher iSuppli Corp.

Hewlett-Packard Co., the world’s largest computer maker, on June 1 said it will eliminate about 9,000 jobs as it seeks to cut costs. Foxconn in August last year signed an investment agreement with China’s southwestern Chongqing City to build a factory for making HP notebooks.

Cupertino, California-based Apple, which contracts Foxconn to make its iPhones and iPads, employed 34,000 at the end of September, while Microsoft, the second-largest U.S. technology by market value had 89,000 workers as of June 30, according to Bloomberg data.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.

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