This post will be very short. I realize I get off topic too much.
The New York Times recently did a piece on the working conditions in Foxconn. What they found was not new, at all. Suicides at Foxconn were well established long before that piece, as were working conditions. However the New York Times obviously has more subscribers and readers and the piece was picked up by many different media outlets thereafter.
Foxconn has many customers, Apple being one of its biggest. However Foxconn’s clients also include (in alphabetical order): Acer, Amazon.com, Cisco, Dell, Gateway ,Hewlett-Packard, Intel, Microsoft, Motorola Mobility, Nintendo, Nokia, Samsung, Sony, Toshiba, Vizio.
It seems to me that Apple has been unfairly singled out by the media for patronizing Foxconn. Why? I think it breaks down into two categories:
Some look for any excuse to bring Apple down. For example I saw this post on my Google+ stream:
I do not disagree with what’s expressed here: the author is against Foxconn’s practices which are akin to slave labor and will voice his opinion with his power as a consumer: boycotting Apple products (communicating with price, i.e. there is no price at which Apple can get this consumer to forget what Foxconn is doing).
My problem is, why Apple? And why not Samsung?
Honestly if you boycott Apple because of this, there is no reason why we should not boycott all the electronic companies of the world.
The other category are consumers of Apple products. Very few companies can do what Apple achieves with its products: many consumers feel they are part of something bigger when they buy their iPhone, iPad or Macbook Air. The relationship is well beyond brand loyalty. Apple is seen as a company that brings bleeding edge technology to the masses in a way that is uncomplicated and beautiful.
With such strong affections for Apple, these consumers feel they can ask Apple to demand improved conditions or to simply drop Foxconn.
Honestly, consumers are not so much upset at Apple as they are about their own guilt. Consumers feel a bit of cognitive dissonance because they love their iPhone or iPad but hate the Foxconn working conditions under which the products were made.
But Apple is an extremely smart company that is consumer focused, and I am sure they will do their best to right this wrong. Apple understands that when a consumer unboxes an iProduct, the experience is best guilt-free, and this Foxconn problem throws a wrench into that experience.
Air Jordans, anyone?
Finally, is anyone really that surprised by these working conditions? I guess I should not be so surprised. Many people simply do not know how these products are made, just like I would have no idea how sneakers are actually made. This wonderful This American Life episode details this ignorance:
Still I have an idea that Nike and other shoe companies exploit workers, H&M (a newer article here) and Forever21 exploit their workers. (That is the extent of my knowledge of “high end” clothing lines).
Often all you have to do is a little research and you can find alternatives, such as All American Clothing Co. where the clothes are grown and sewn in the U.S. and under fair working conditions (if someone can back this up with more sources than this, I would appreciate it).
Software vs Hardware
By the way, you did not see Facebook or Google in the list of customers of Foxconn. That is because Google and Facebook are primarily software companies (they build things on the web, with computer code). However like any company that hosts websites, Facebook and Google need servers and they purchase these servers from Dell, HP or IBM and so indirectly they are customers of Foxconn, just like all of us are.
Amazon is mostly software except for the fact that they make Kindles, and thus become direct customers of Foxconn.
Not simply about Labor Cost
Anyway Foxconn is raising wages in their factories by up to 25%. The NYTimes is happy because they probably think they’re the reason why, and it provided them good publicity.
This will either cut into Foxconn or Apple’s profit margins, or a little from both. Foxconn can’t really afford this (neither can Samsung or Dell, or any of the other companies listed) but Apple can definitely afford it (they have some of the highest profit margins of any company in the world).
However Apple, and all the other electronics manufacturing companies, will probably never move their factories back to the U.S. again. To answer why, you simply need to read this New York Times article titled, “"How the US Lost out on iPhone Work” (this one is well written, and well thought out).
The simple truth is this: all the parts needed to manufacturer an electronics product are in Asia/South Asia. If you want to be able to scale up/down production quickly, to assemble a product that contains within it parts from 20 different companies, the easiest place to do it is in Asia/South Asia. You cannot achieve that flexibility and response to global demand anywhere else. Software can be written and published anywhere but the Samsung Galaxy Nexus of the world need a factory where the glass screen, the AMOLED display, the TI processor, the RAM, the plastic casing, the radio for cellular calls can all be quickly shipped to one place and assembled on the spot. All of those parts are manufactured outside the U.S., there is no reason for anyone to have those items shipped to the U.S. as shipping cost increases, and time is lost in transit.
Here is a short excerpt from that NYTimes article:
Apple is doing what is best for Apple, and it is no different from what Samsung or HTC are doing.