Monday, December 29, 2014

Apple's harsh Chinese factories: Are we to blame?

With $13 billion in quarterly profits, Apple has to expect scrutiny. But an excellent report on harsh and risky conditions at a key Chinese supplier is a window onto a much bigger story.

Apple's harsh Chinese factories: Are we to blame?

Consumers have flocked to Apple Computer´s new offerings.
Consumers have flocked to Apple Computer's new offerings. Associated Press

With $13 billion in quarterly profits, largely driven by explosive sales for its iPhones and iPads, Apple has to expect extra scrutiny. But an excellent new report in the New York Times on harsh and risky conditions at Foxconn - a key Chinese supplier to Apple and many of its high-tech brethren - is a window onto a much bigger story.

Today's report, "In China, Human Costs Are Built Into an iPad," is a follow-up to a Sunday story, "How the U.S. Lost Out on iPhone Work," that left me disturbed.  As I blogged earlier this week, the description of what one former Apple executive called breathtaking speed and flexibility was reminiscent of forced labor, or of the captive-worker conditions of company towns in America in the 19th century.  Without stronger laws or collective-bargaining contracts to protect them, Chinese workers seemed at the mercy of a race to the bottom, one labor economist told me.  If they don't like the conditions, there are probably workers elsewhere available to help suppliers make products better, faster and cheaper.

Today's story, which credits Apple with efforts to improve conditions at the plants it deals with, focused on Sunday's missing element, the human cost of the incredible electronics that consumers have come to expect from Apple:

... Workers assembling iPhones, iPads and other devices often labor in harsh conditions, according to employees inside those plants, worker advocates and documents published by companies themselves. Problems are as varied as onerous work environments and serious — sometimes deadly — safety problems.

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Employees work excessive overtime, in some cases seven days a week, and live in crowded dorms. Some say they stand so long that their legs swell until they can hardly walk. Under-age workers have helped build Apple’s products, and the company’s suppliers have improperly disposed of hazardous waste and falsified records, according to company reports and advocacy groups that, within China, are often considered reliable, independent monitors.

More troubling, the groups say, is some suppliers’ disregard for workers’ health. Two years ago, 137 workers at an Apple supplier in eastern China were injured after they were ordered to use a poisonous chemical to clean iPhone screens. Within seven months last year, two explosions at iPad factories, including in Chengdu, killed four people and injured 77. Before those blasts, Apple had been alerted to hazardous conditions inside the Chengdu plant, according to a Chinese group that published that warning.

“If Apple was warned, and didn’t act, that’s reprehensible,” said Nicholas Ashford, a former chairman of the National Advisory Committee on Occupational Safety and Health, a group that advises the United States Labor Department. “But what’s morally repugnant in one country is accepted business practices in another, and companies take advantage of that.”

Apple is not the only electronics company doing business within a troubling supply system. Bleak working conditions have been documented at factories manufacturing products for Dell, Hewlett-Packard, I.B.M., Lenovo, Motorola, Nokia, Sony, Toshiba and others.

I can't do justice here to the great work by Charles Duhigg and David Barboza - you can find a single-page version here.  Ultimately, it suggests that Apple's "culture of secrecy" makes it less likely that the company will change its ways even if the result conflicts with its stated corporate values:

“We’ve had this conversation hundreds of times,” said a former executive in Apple’s supplier responsibility group. “There is a genuine, companywide commitment to the code of conduct. But taking it to the next level and creating real change conflicts with secrecy and business goals, and so there’s only so far we can go.” Former Apple employees say they were generally prohibited from engaging with most outside groups.

 “There’s a real culture of secrecy here that influences everything,” the former executive said.

Some other technology companies operate differently.

“We talk to a lot of outsiders,” said Gary Niekerk, director of corporate citizenship at Intel. “The world’s complex, and unless we’re dialoguing with outside groups, we miss a lot.”

Given Apple’s prominence and leadership in global manufacturing, if the company were to radically change its ways, it could overhaul how business is done. “Every company wants to be Apple,” said Sasha Lezhnev at the Enough Project, a group focused on corporate accountability. “If they committed to building a conflict-free iPhone, it would transform technology.”

But the Times makes another provocative point in the end: that U.S. consumers demand these incredible and persistent advances in consumer technology, and are thus to blame for a human toll comparable to the sweatshop conditions at shoe- and apparel-makers that progressive activists have highlighted in the past.

It quotes Heather White, a research fellow at Harvard and a former member of the Monitoring International Labor Standards committee at the National Academy of Sciences:

People like Ms. White of Harvard say that until consumers demand better conditions in overseas factories — as they did for companies like Nike and Gap, which today have overhauled conditions among suppliers — or regulators act, there is little impetus for radical change. Some Apple insiders agree.

“You can either manufacture in comfortable, worker-friendly factories, or you can reinvent the product every year, and make it better and faster and cheaper, which requires factories that seem harsh by American standards,” said a current Apple executive.

“And right now, customers care more about a new iPhone than working conditions in China.”

Do we really? I love my latest iPhone enough that I'm flippantly thinking, "Maybe I should ask Siri?" But personally, if I had to wait another six months or a year for the coolest new device, or pay another 10 or 20 percent for humane working conditions, I'd live with it.  Apple's huge profitability should make it uniquely able to act in ways that other companies, more worried about every last competitive disadvantage, may not be able to.

I don't think consumer demand is the main thing that drives this race to the bottom, which can probably only be stopped by stronger laws protecting workers' rights - including the right to collective bargaining.  But a little more consumer revulsion at the result couldn't hurt.

Jeff Gelles Inquirer Business Columnist
About this blog

Jeff Gelles, who writes the Inquirer's weekly Consumer 14.0 and Tech Life columns, takes a broad look at the marketplace of goods, services, and ideas.

Reach Jeff at jgelles@phillynews.com.

Jeff Gelles Inquirer Business Columnist
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