2/3/2012 5:15 PM ET|
The human price of Apple's success
New reports document how the consumer electronics giant's reliance on Asian suppliers -- particularly those in China -- has had devastating effects on factory workers there.
As I write this, I'm looking over our family's iPad. It's beautiful -- as I'm sure the late Steve Jobs would have loved to hear -- elegant and easy to turn on and off instantly.
It's great for reading magazines, playing Angry Birds, sharing family photos, watching movies and so many other things. It's a marvel of design and engineering that brings joy and enlightenment to millions of people.
The iPad is just the culmination of a series of wonderful products that have transformed Apple (AAPL, news) into the leading consumer-electronics company of our time. It has vied with Exxon Mobil (XOM, news) as the most valuable publicly traded company in the world, with a market capitalization of more than $400 billion. Apple sold 37 million iPhones worldwide in its first fiscal quarter and blew past analysts' expectations for revenue and earnings.
But that joy, enlightenment and phenomenal success come at a price: The iPad and the iPhone are manufactured in some of the world's worst electronic sweatshops.
Recent articles in The New York Times have revealed as never before how Apple's development of a largely Asian supply chain in the past decade helped the company turn out tens of millions of gleaming new devices in record time while largely bypassing the U.S. workforce.
But the Chinese factories on which it relies, particularly the massive complexes run by Foxconn Technology Group, have been riddled with problems -- low pay, long hours and terrible working and living conditions, which have resulted in suicides and deaths and injuries from industrial accidents.
Apple has tried to hold its suppliers to higher standards in recent years, but two experts I spoke with said it hadn't done enough. The company's critics accuse it of squeezing suppliers' margins to make higher profits and constantly pushing for quick turnaround of new products, which almost guarantees safety won't come first.
Change under way
The Times articles and other discussions may be a catalyst for change. In the days before the stories appeared, Apple released the names of almost all its suppliers for the first time and quietly joined an organization known for its tough audits of safety standards at factories around the world.
Investors, too, are taking note. Managers of so-called socially conscious funds are divided on Apple -- some buy it, some don't -- but they're concerned that any serious consumer push-back could affect the company's bottom line and its soaring share price.
"This has to be a challenge to them of the first magnitude," said Bennett Freeman, senior vice president at Calvert Investments, whose socially conscious funds own Apple stock.
"Apple has earned a reputation for historic, almost epic product innovation. Apple can't have it both ways. They have a responsibility to their customers and shareholders," he told me. "The Times piece . . . crystallized the extent and severity of their risk."
The articles said, in short, that Apple has become reliant on a global chain of suppliers like Foxconn, a Taiwan-based electronics manufacturing giant, whose massive complexes in several Chinese cities each employ hundreds of thousands of workers. Foxconn manufactures about 40% of the world's consumer-electronics products for companies such as Dell (DELL, news), Hewlett-Packard (HPQ, news), Microsoft (MSFT, news) and Sony (SNE, news).
Conditions can be brutal. Workers routinely work 12-hour shifts six days a week and are paid less than $20 a day. Many live in overcrowded dormitories where several are crammed into small rooms with no air conditioning. There have been many reports of underage workers employed there, although a recent Apple audit of its suppliers found that number had decreased.
Work is repetitive and stressful: 17 Foxconn workers in China have committed suicide over the last few years. So, Foxconn installed huge nets to break would-be jumpers' falls.
Workers also were exposed to toxic chemicals and dangerous levels of dust, which caused a fatal explosion in Foxconn's Chengdu, China, plant last year.
So, why single out Apple if Foxconn and other suppliers manufacture products for so many other companies?
"On paper the company has instituted programs that we see among the better performers," said Meggin Thwing Eastman, a senior environmental, social and governance analyst at MSCI who specializes in technology and telecom companies. "(But) I have some doubts about the execution. We see things at Apple that we don't see at other companies."
More from MoneyShow.com:
VIDEO ON MSN MONEY
This article is absurd.
I have been sourcing products in Asia for over 35 years. Let me tell you that Apple may be one of the biggest and most successful companies manufacturing in places like south China, but they are certainly not alone. Where do you think your TV set was manufactured? How about your DVD player? Where do you think your computer monitor was made? Your cable box? Your electric toothbrush? Your wireless phone system? Your garage door opener? The list goes on and on. Somehow the media has vilified Apple because they are so huge, but the guns should not be pointed at Apple. Maybe they should be pointed at Washington, DC.
As a country, we have turned a blind eye towards the manufacturing of goods in China for decades. We have allowed jobs to move out of this country and we have ignored the human issues as companies have focused on profits and not on jobs lost or nor on the abuses that exist in China and elsewhere in Asia. And now that Apple is so profitable and so successful, the media has made them out to be the singular bad guys. But they seem to be ignoring all the thousands of other companies that have been doing this for 30 or 40 years and our own government that not only have allowed this to happen, but also have ignored the issue for all this time.
Yes, Apple is making a lot of money because they are very smart. But so are thousands of other companies. Our government has the clout to fix this, but they don't seem interested and never have. Lots of people get rich because labor is cheap in China and other places.
Don't blame just Apple. Blame Washington.
its free trade/job exporting great....for the rich and corporate america.until big money can no longer buy our government these kinds of travesties will continue. The american standard of living will continue to decline for all but the very rich.i was watching fox news last night as multimillionaires discussed how to eliminate the minimum wage. It was sickening watching these pathetic excuses for humanity ringing their hands in glee at the prospect of employing americans at the slave wages they currently pay their chinese workers
Well these bastards will get what they want a bunch of dollars and factories filled with slaves. But no one able to buy there stuff anymore. And money becomes pointless. And working for them does to. And they all will harvest those pigs at the spit.
And there are these monsters who want to claim sweat shops are wonder-bread for "emerging nations". These nations are $hit wholes because they have no education their government generally is not a democracy of any form. It isn't because they need sweat shops to build capital as these other monsters declare. These monsters will say its a better alternative than farming or prostitution etc. Problem, prostitution around these factories soar because it becomes an alternate job source and cheap thrills for poverty waged laborers. And many of these bastards sold their land and home and made an expensive one way trip to these sweat shops. Only to be trapped there. Many will never make enough to return home or do anything else. Hence the suicides.
Living in dorms and having to pay rent out of your own pay for those crowded dorms. Miserable. We know Steve Jobs is either roasting in hell right now with the rest of the people who's done this. Or better yet, he's reincarnated Chinese kid. He'll be sweating it out in the shops his former life created in no time.
Rich Farkas is spot on with the fact that nearly all consumer electronics are built by the same companies (Foxconn and the like) under similar conditions. There is nothing unique about Apple in this regard.
However, Apple is he *one* company that is big enough to make some changes. We will have to see how it plays out.
Everyone is this country are IDIOTS. Lets fix our counrty first before we go fixing others. Look at the suicide rate of OUR Armed Forces its insane. And they work longer hours on deployment than these workers. In 2010 the Air Force had 54, 33 in the Navy, the Marines had 46, and the Army had an outrageous 144 suicides. If you dont belive me look it up on google for yourself. We should care more about our own country and its people than some third world counrty.
id like to see tariffs again.yes we would have to pay a little more but our fellow americans would have jobs and they in turn would employ other americans.as it is now money is being funneled to the very rich and slave third world labor.this is causing a declining standard of living here.germany has a 19 percent tariff on imported manufactured goods and has surpassed us in exports and has improved its standard of living.
government policies like the tax code and trade treaties determine what kind of country we have.high taxes on the rich and tariffs that discourage outsourcing means more money in the hands of workers and a stronger more stable america.one that can care for people that cant work and its elderly.free trade and low taxes funnel money to the very rich and other countries.this is what we have.who wants this?the rich and the government they own.
Since Apple is the largest tech company now, it stands to reason that you pressure the largest company to put pressure on its manufactures to improve it's workers conditions. You don't use a 125 lbs man us knock down a locked door, you use a 325 lb man to knock down the door.
Also and more importantly, the other companies that use foxconn, etc., did not just have the 2nd largest quarterly profit ever. Apple has $97 billion in bank, $66 billion offshore, so they have the wherewithal to make changes. Apple sold 37 million iphones in the last quarter alone. You just know that they are pumping out a lot of stuff and putting pressure on their suppliers to squeeze out more and more profit. That means less profit for foxconn and less money to improve conditions and for wages for its workers.
The more and more you examine apple, the more and more dirty they get. In many ways, they are worse than walmart! At least I can go in a walmart and not buy something made in China. At Apple, everything is made in China.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The major averages began the new trading week on a slightly lower note with small caps leading the weakness. The Russell 2000 shed 0.3% while the S&P 500 slipped less than a point with six sectors ending in the red.
Equity indices began the day in negative territory with only the Nasdaq (-0.04%) making a very brief appearance in the green. After sliding through the first hour of action, the major averages reversed and spent the remainder of the session climbing off ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'