11:15am

Mon February 6, 2012
Technology

Chinese Labor Practices Sour Apple Consumers

Originally published on Tue February 7, 2012 12:47 pm

It's hard for those who have an iPhone, iPad, or iPod to describe what the device is worth to them, but it may be harder to measure the human cost of manufacturing Apple products.

In the past few weeks, reports have surfaced about poor working conditions in Chinese factories that manufacture Apple products. FoxConn Technology, which Apple contracts to make its products, has been accused of exposing workers to toxic chemicals, hiring underage workers, and improperly disposing of hazardous materials.

But Apple isn't the only company that's got an imperfect track record in workplace safety, and some, including Nicholas Kristof has said that employers like FoxConn have actually improved living conditions for workers who were once largely destitute farmhands.

"Apple has a unique position because of its scale and its design influence," says Rafe Needleman, an editor with the technology site CNET.

"But," he tells Michel Martin, host of NPR's Tell Me More, "The concept of the mega –factory being staffed by thousands, tens of thousands of workers is not unique to Apple."

Supplier Responsibility?

In May, two explosions in an iPad factories left four dead and 77 people injured, but it wasn't until the New York Times described conditions at Apple factories that CEO Tim Cook wrote to his employees with a promise to improve conditions.

"We care about every worker in our worldwide supply chain," he wrote. "Any accident is deeply troubling, and any issue with working conditions is cause for concern."

While Apple has taken efforts to improve what it calls "Supplier Responsibility," there are economic forces that slow significant change, says Needleman.

"Apple has an incredibly high profit margins," he says. "The could take some of those profits and funnel them back in to improving working conditions."

Costs Of Improving Consitions

Apple's profit margins have widened in recent years to over 30 percent, while Foxconn's have narrowed to around 1.5 percent.

To make any real change, Apple will eventually have to take a hit to its profitability. Rotating tasks among workers might help prevent repetitive motion injuries, for example, but it will rake up costs in training and logistics.

But Needleman says many consumers might be willing to pay more for a product that doesn't come at the expense of human lives and livelihoods.

"Consumers who get up in arms about something and say, 'hey, I'll pay $50.00 more for an iPhone that isn't breaking the back of somebody," he says. "That could make a difference."

And some of them are trying to do just that. A petition on Change.org calls on Apple to release a worker protection strategy and go public with independent reports about factory conditions. It was posted on Jan.31, and it's already gotten 181,026 people to sign.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

MICHEL MARTIN, HOST:

I'm Michel Martin and this is TELL ME MORE from NPR News. Coming up, there are millions of dollars in financial aid available to college students, but many of the people who need it most are intimidated by the process of applying for it. Sound familiar to anybody? I thought so. There are several efforts underway to guide parents and students through the paperwork. We'll tell you about one of them in a few minutes.

But first, we'd like to ask if there is a human rights crisis hiding in your pocket or perhaps your purse. There's been a lot of coverage lately about the treatment of workers at Chinese factories that help make Apple products, and recently the public radio program THIS AMERICAN LIFE aired a version of Mike Daisey's one man show, "The Agony and Ecstasy of Steve Jobs."

At one point he talks about a trip he took to China to a factory called FoxConn to see where and how his Apple products are made. Here's a short clip from that piece.

(SOUNDBITE OF SHOW, "THE AGONY AND ECSTASY OF STEVE JOBS")

MIKE DAISEY: The official workday in China is eight hours long, and that's a joke. I never met anyone who'd even heard of an eight hour shift. Everyone I talked to worked 12 hour shifts, standard, and often much longer than that. While I'm in country, a worker at FoxConn dies after working a 34-hour shift. I wish I could say that's exceptional, but it's happened before. I only mention it because it actually happened while I was there.

MARTIN: The New York Times recently published a series detailing labor problems being tied to companies that help make Apple products. One article describes factory explosions, the use of toxic chemicals, and crowded and unsanitary living conditions for workers.

We were wondering what it would take for products like SmartPhones to be produced in a more ethical fashion, so we've called up CNET editor Rafe Needleman, and he's with us now.

Welcome. Thanks so much for joining us.

RAFE NEEDLEMAN: Thank you.

MARTIN: First, could we just clarify what we're talking about here? Are the factories that we're talking about owned by Apple?

NEEDLEMAN: No, they're not. Apple outsources its manufacture of its iPhones and iPads to a company called FoxConn in China. FoxConn makes electronics for many companies and there are a lot of companies like FoxConn in China, where all of our small electronic devices are made.

MARTIN: So there's nothing distinctive about the conditions that characterize the factories where Apple products specifically are made? It's just that Apple is the best known and the most famous.

NEEDLEMAN: Apple has a unique position because of its scale and its design influence. It does push the way they're manufactured, but the concept of the mega-factory being staffed by thousands, tens of thousands of workers, is not unique to Apple.

MARTIN: But Apple has felt a need to respond to these articles and to this reporting. What are they saying?

NEEDLEMAN: Yeah. Apple CEO Tim Cook has said in a memo, we care deeply about working conditions of everybody in the Apple family, and to say otherwise is just, you know, not true. While all the companies selling phones use similar factories to make them, they can be involved at different levels.

One could say that Apple could do more or HP could do more. They can opt to say, you know what, here is money, give us product, and be hands off. Or they can opt to say, here is money, here are standards, give us product. Or they can opt to say, here are money, here are standards, and by the way, we are going to send surprise inspectors into your plant when you least expect it and make sure that you're up to our standards.

It's a question of how much Apple wants to be involved in the manufacture of the products that they are paying for, and what people are saying is that Apple is not involved enough.

MARTIN: The New York Times columnist, Nicholas Kristof, who's written widely and passionately about human rights issues around the world, has defended the labor conditions in China on occasion, saying that these have created employment opportunities and lifted living conditions in certain areas. Is that a widely held point of view?

NEEDLEMAN: Yeah. There is a very popular economic argument that goes that this is a stage that economies go through as they move from rural or agrarian to industrial and to service space, like ours is, that in order to get to the dream of a middle class-based economy, that you have to go through this manufacturing period where you're making a lot of stuff for cheap and lift people out of the subsistence living through factory employment, just like the Industrial Revolution did.

I'm not an economist. I don't know if that is a necessary step. Certainly the scale of it and the way the global economy makes it - pushes these things along and drives down the prices that people are willing to pay for these products. I think the scale of that is just unprecedented right now.

MARTIN: We're talking about new reporting about labor practices in factories that help make consumer electronics, specifically popular Apple products, among others. Our guest is Rafe Needleman of the tech publication, CNET.

So now I'd like to hear your perspective on this. Do you think that tech companies could do more to improve the working conditions at these factories that make their products?

NEEDLEMAN: Theoretically, of course. Apple has an incredibly high profit margin. They could take some of those profits and funnel them back into improving working conditions. It's not a simple problem to solve, however, even if they say we want people who are working on our products to live in better conditions, to be paid more, they then have to enforce that through their suppliers. And one of the problems that Apple has is that it is so big and it is making so many products that there are very, very few companies that can provide what Apple wants at the scale that Apple wants it.

So Apple can't go to FoxConn, its biggest supplier of iPhones, and say, you know what? You guys aren't living up to our expectations. We're going to find somebody else. There is nobody else. So it's a very difficult dance.

MARTIN: Why though? Is it that the labor practices in China are at a level where the company would not be responsive? I mean, one has to assume that if Apple is - they're one of Apple's biggest suppliers, but they would have an interest in being responsive. So why wouldn't they be responsive? Because nobody's telling them that they have to or because that's considered the norm in China, so therefore what's the incentive to change?

NEEDLEMAN: I'm sure the answer is simply economic. While Apple is making 30 percent margins on its phones, that doesn't mean that FoxConn is. These are unbelievably complicated and advanced electronic devices being made primarily by hand because they were designed to be made by hand.

And the whole product is built around these plants, so for Apple to go to FoxConn and say make the plants more habitable for their workers, FoxConn then has to take this argument with Apple at a remove and say, how are we going to make as much money as we have been before? How are we going to employ all these people? How are we going to continue to pay them? How are we going to keep our margins up? And Apple pushes FoxConn's margins way down.

MARTIN: After the publication of these reports, online petitions urging Apple to make an ethical iPhone have circulated the Web. One, the last time I checked, has more than 175,000 signatures. This was on a petition by Change.org.

Is there any precedent for this kind of consumer response to result in changes to manufacturing processes, for example?

NEEDLEMAN: There is. Nike is a good example of this. It was uncovered that Nike shoes were being made in rather deplorable working conditions, for the most part, and whether or not public outcry caused Nike to change or Nike just realized what was happening, that did begin to change. And now Nike grades its plants both on working conditions and on environmental conditions.

And arguably they have improved because people didn't want to be wearing human rights violations on their feet. And there are some parallels and consumers who get up in arms about something, who say you know what, I'll pay $50 more for an iPhone that is made without breaking the back of somebody, that could make a difference.

MARTIN: Any sign that it is making a difference?

NEEDLEMAN: Well, Tim Cook's response, after weeks of withering reports about - and the popularity of THIS AMERICAN LIFE episode with Mike Daisey - does show that Apple is taking it very seriously.

MARTIN: Recently, in the president's State of the Union address, he called upon American companies to bring some of these jobs back home, and I am wondering whether there is any discussion about that.

NEEDLEMAN: Well, as Charles Duhigg reported in the Times, he doesn't think these products will ever be made in the United States because we don't have the know-how to make them and the products are not designed to be made in our types of factories.

However, if you look at what's happening - what happened, historically, in automobile manufacture, we do know in this country how to make incredibly complex products that have very long and convoluted supply chains that employ a lot of people.

We can design products to be manufactured by American workers. It's a question of how much Apple wants to pay. It's a question of - you know, if you own Apple stock, you're very happy with Apple right now. Apple stock is phenomenal. It's the most valuable company, publicly traded company that we have, and that is because it is managed ruthlessly - and I say that from the economic perspective - to be incredibly profitable.

If we want Apple to be a company that funnels more of the manufacturing dollars back into the United States, we can have it. Apple can do it. It's just a question of when and how much we're willing to pay for that.

MARTIN: Rafe Needleman is editor at CNET. He's also host of the Reporters' Roundtable for CNET and he was kind enough to join us from their studios in San Francisco.

Rafe Needleman, thank you so much for speaking with us.

NEEDLEMAN: Well, thank you. Transcript provided by NPR, Copyright NPR.