More to do on improving Foxconn conditions -audit

Aug 21, 2012, 5:34 PM EDT
REUTERS/Bobby Yip/Files

* Hours must be cut, some workers worry about overtime

* Report comes day after Apple sets new market value record

* FLA says Apple-Foxconn pledges on track, 2013 toughest

By Poornima Gupta

SAN FRANCISCO, Aug 21 (Reuters) - Apple Inc andFoxconn have improved work and safety conditions at the Chinesefactories that make most of the world's iPads and iPhones, butthe auditors they enlisted to monitor the process warned thatthe toughest tasks lay ahead.

The Fair Labor Association said on Tuesday that thecompanies must reduce hours by almost a third for the hundredsof thousands working in Foxconn plants across Southern China tocomply with local labor laws by 2013.

Earlier this year, the association -- of which Apple is amember -- found multiple violations of labor law includingextreme hours after launching one of the largest investigationsever conducted of a U.S. company's operations outside America.

Apple, the world's most valuable company, and Foxconn --whose clients also include Dell Inc, Sony Corp, and Hewlett-Packard Co -- agreed to slashovertime, improve safety, hire new workers and upgradedormitories.

In a report tracking the progress of those commitments, theFLA said it had verified that agreed-upon changes had beeninstituted and that Apple was trying to hold its partner, theworld's largest contract manufacturer, accountable.

"One of the sheer engineering challenges is being able toshorten the production cycle, so that they can get it all donein 49 hours instead of 60 hours. And the other part of thechallenge then is workers' expectations," Auret van Heerden,president and CEO of the FLA, said in an interview.

Global protests against Apple swelled after reports spreadin 2010 of a string of suicides at Foxconn plants, blamed onharsh working conditions and alienation felt by migrantlaborers, often from impoverished provinces, in a bustlingmetropolis like Shenzhen, home to two of the three factories theFLA inspected.

Apple has tried to counter criticism that its products andprofits are built on the backs of mistreated Chinese workers.The FLA's progress report comes a day after Apple's market valueclimbed past $623 billion, surpassing the record set byMicrosoft Corp during the heyday of technology stocksin 1999.

Protesters in the past year have kept up a small but regularpresence at Apple events from iPad launches to shareholdermeetings, holding up placards urging the $620 billioncorporation to make "ethical" devices.





The latest report card on Apple-Foxconn comes after firstfindings and a timeline for improvements were announced inMarch, though some industry observers said it was not entirelyindependent because of close ties with corporate members. Sincethat March audit, rights groups including China Labor Watch haveconducted their own studies.

Some factory workers at Foxconn - an affiliate of Taiwan'sHon Hai Precision Industry - have also protestedpotential lost wages as hours get cut. Both the FLA and Foxconnhave tried to help employees through the transition.

"A lot of workers have clearly come to Shenzhen to make asmuch money as they can in as short a period as they can, andovertime hours are very important in that calculation," VanHeerden said.

"We are picking up concerns now on the microblogs aboutwhat's likely to happen as hours gets changed, and whether theirincomes will be shaved as well," he added.

Given a severe shortage of labor in China, it is likely thatFoxconn would ensure that workers are happy with theircompensation and avoid the risk of them leaving, he said.

Apart from healthy and safety enhancements, Foxconn isoffering up little enhancements to employee morale. Forinstance, Van Heerden said it is increasingly giving workers achoice of accommodation, such as by providing an allowance forhousing and food if the workers choose to live off-campus.

"If you reduce overtime significantly, you work that ideathrough with workers," he said.

Foreign companies have long grappled with working conditionsin China, dubbed the world's factory because of its low wagesand efficient coastal transport and shipping infrastructure. Inthe 1990s, investigations targeted shoe and apparel maker NikeInc, which eventually agreed to institute changes.

The FLA's audit could have wider implications for foreignmultinationals that enlist Chinese manufacturers. Foxconn aloneis estimated to make half the world's consumer electronics.

Apple CEO Tim Cook, who took over from the late co-founderSteve Jobs last year, has shown a willingness to tackle thecriticism head-on.

"We've been making steady progress in reducing excessivework hours throughout our supply chain. We track working hoursweekly for over 700,000 workers and currently have 97 percentcompliance with the 60-hour maximum workweek specified in ourcode of conduct," spokesman Steve Dowling said in a statement.

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