Apple, Foxconn improve plants in China

APPLE AND Foxconn have improved working conditions at Chinese factories that make most of the world’s iPads and iPhones, according to auditors the firms enlisted to monitor the process, but tough tasks lie ahead.

The Fair Labor Association (FLA) said on Tuesday local laws require the companies – which came under fire over conditions at the plants blamed for a series of suicides in 2010 – to reduce hours by almost a third by 2013 for the hundreds of thousands working in Foxconn plants across southern China.

Foxconn said yesterday it would continue to cut overtime to less than nine hours a week from the current 20, even though that could raise labour costs while also making it difficult to attract workers.

“It is a challenge. When we reduce overtime it means we need to hire more people and implement more automation, more investment on robotic engineering. More workers also mean more dormitories and recreational facilities; it takes time,” said Louis Woo, special assistant to the CEO of Foxconn.

“But I expect more loyalty from workers as a result, and then we can save more costs on recruitment and retainment,” he said.

“Yield rates will also improve. Efficiency in terms of productivity, yield gain, retention and lower turnover rates should be able to improve next year.”

Earlier this year, the FLA – of which Apple is a member – found multiple violations of labour law, including extreme hours, after launching one of the largest investigations ever conducted of an American company’s operations outside the US.

Apple, the world’s most valuable company, and Foxconn – the trading name of Taiwan’s Hon Hai Precision Industry whose clients also include Dell Inc, Sony Corp and Hewlett-Packard Co – agreed to slash overtime, improve safety, hire new workers and upgrade dormitories.

Woo said Foxconn not only wants to do “the right thing” for its one million employees, it also wants to serve as a model for other companies.

In a report tracking the progress of those commitments, the FLA said it had verified that agreed-upon changes had been instituted and that Apple was trying to hold its partner, the world’s largest contract manufacturer, accountable.

Auret van Heerden, president and CEO of the FLA, said Foxconn faces a challenge from workers’ expectations.

“A lot of workers have clearly come to Shenzhen to make as much money as they can in as short a period as they can, and overtime hours are very important in that calculation,” he said.

Foreign companies have long grappled with working conditions in China.