The New York Times’ revealing series on why Apple produces most of its iPhones and iPads in China beautifully illustrates one of the defining dynamics of contemporary capitalism: abusive labor conditions in the overseas factories of US corporations are not, contrary to industry rhetoric, a problem to be solved; they are a highly prized driver of profitability.
The Fantasy World of “Corporate Responsibility” vs. the Real World of Global Supply Chains
While Apple and its competitors know they must pay lip service to concern for worker rights, lest their brand’s image be tarnished, the practical reality is that if worker rights were genuinely respected in places like China, production costs would be higher, deliver times slower, and profits correspondingly lower. The last thing these brands want is for any of the countries where they exploit low-wage labor to actually enforce their own workplace laws, much less comply with international standards.
This is why there is a yawning gap between the public rhetoric of these corporations on labor rights issues and the actual manner in which they operate their supply chains. Their public statements are suffused with pious expressions of concern for workers and accounts of ostensibly strenuous efforts to promote labor rights compliance by their suppliers. In practice, these corporations maintain a production model that routinely exploits the very labor abuses they claim to abhor. The Times reporters exposed this mammoth hypocrisy, on the part of the world’s most revered and profitable company, by getting former Apple executives to speak candidly (albeit anonymously) on the subject – the kind of enterprising effort to pierce the corporate public relations veil that is seen all too rarely in mainstream journalism.
Here is new Apple CEO Tim Cook, articulating the company’s official position – that it is deeply committed to uprooting abuses in its supply chain, but that this arduous work that will take years to complete: “We care about every worker in our worldwide supply chain…Every year we inspect more factories, raising the bar for our partners… [W]e’ve made a great deal of progress and improved conditions for hundreds of thousands of workers. We know of no one in our industry doing as much as we are, in as many places, touching as many people.”
Meanwhile, here is a former Apple executive, telling the truth: “We’ve known about labor abuses in some factories for four years, and they’re still going on. Why? Because the system works for us. Suppliers would change everything tomorrow if Apple told them they didn’t have another choice. If half of iPhones were malfunctioning, do you think Apple would let it go on for four years?” The abuses in question include unconscionable safety practices that have led to numerous workplace deaths and injuries.
‘The speed and flexibility is breathtaking.’
And consider this charming tale, also told to the Times by a former Apple executive. The Times writes: “One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight. A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day. ‘The speed and flexibility is breathtaking,’ the executive said. ‘There’s no American plant that can match that.’”
A wonderful story about the responsiveness of Chinese manufacturers to their customers’ needs, no doubt. Except that the management methods upon which this awe-struck Apple executive heaps such fulsome praise constitute massive violations of Chinese labor law. These laws strictly limit overtime hours – a mandate routinely ignored in practice, to Apple’s evident delight.
Imagine finally closing your eyes after a grueling 12-hours shift on an ultra-high-speed production line, only to be shaken from sleep moments later and forced back onto the line for another dozen hours of punishment. Imagine doing this for a cruel joke of a wage, under the thumb of managers whose idea of motivational strategy is to penalize slower workers by making them stand at attention, immobile, for hours, as a lesson to their fellow employees. This is the price workers pay for the “breathtaking speed and flexibility” that enable Apple to implement, in a few days, design changes that would take a month at any factory whose managers did not have the power to drag the entire workforce out of bed when it suits Apple’s needs. (On the plus side, the workers do get a biscuit.)
This former Apple executive’s unusually candid description of what actually goes on at Apple’s overseas plants was, of course, dutifully denied by the company that runs the facility. Like all of Apple’s suppliers, that company, Foxconn, is well-schooled as to the official line on labor rights issues. According to the Times, Foxconn claims that “a midnight shift, such as the one described, was impossible ‘because we have strict regulations regarding the working hours of our employees based on their designated shifts, and every employee has computerized timecards that would bar them from working at any facility at a time outside of their approved shift.’” The Times notes that “employees, in interviews, have challenged those assertions.”
Indeed they have; recall that this is the same production facility where the brutal regime has driven substantial numbers of workers to suicide, which they usually commit by leaping from the roof of the overcrowded dormitories. (Foxconn’s solution to this horrific development? Putting up nets outside the dorms and forcing workers to sign pledges not to kill themselves.)
Here is Cook again defending the company to Apple’s US workforce: “Any suggestion that we don’t care is patently false and offensive to us.” And: “We insist that our manufacturing partners follow Apple’s strict code of conduct, and to make sure they do, the Supplier Responsibility team led more than 200 audits at facilities throughout our supply chain last year. These audits make sure that working conditions are safe and just…”
It’s a good thing these “auditors” weren’t around the night Foxconn was dragging thousands of exhausted workers out of bed at midnight in order to make sure Apple got all those iPhones to stores on time.
If It Wanted, Apple Could Triple Workers’ Wages World-Wide and Still Make $40 Billion in Profits
Apple’s labor practices, and its public hypocrisy, are particularly appalling when one considers the resources at the company’s disposal. In the fourth quarter of 2011 alone, Apple cleared more than $17.5 billion in pre-tax profits; total profits for the last twelve months were $43 billion, on $128 billion in revenue. Apple could triple the wages of every one of the nearly 700,000 manufacturing workers in its global supply chain (to a little less than $3.00 an hour in China) at a cost of roughly $3 billion. That is about 7% of pre-tax profits. Apple could implement these increases, providing a decent income to more than two million people – workers and their families – and still maintain a profit margin over 30%. It could address the grievous safety hazards in its factories for far less.
Unfortunately, Apple (like its competitors) will do none of this until and unless it is forced to do so by some combination of public pressure in the countries where its products are mainly sold and worker protest in the countries where they are made. By the perverse moral logic to which today’s captains of industry subscribe, a corporation would never voluntarily reduce its profits, however modestly, to accomplish an irrelevant purpose like paying a decent wage to the people around the world who make its products.
The good news is that with worker protest in China growing, and with unions and labor rights activists in the US beginning to recognize Apple’s vulnerability to an energetic corporate campaign, there is at least some prospect that Apple might eventually be forced to clean up its act. In the meantime, Apple will continue to demand the “speed and flexibility” it requires, while its communications department continues to publish fairy tales about benevolent corporate leaders who “care about every worker.”
Scott Nova is Executive Director of the Worker Rights Consortium.