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Who Makes Apple’s Gadgets and Under What Conditions?

February 14, 2012 at 12:00 AM EDT
While Apple's popularity has grown with products like the iPad, iPod and iPhone, so has criticism of the labor practices at Chinese factories where the products are made. Jeffrey Brown discusses the criticism and an ongoing audit of worker conditions with Peter Burrows of Bloomberg Businessweek.
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JEFFREY BROWN: Who makes our gadgets and under what conditions? Apple face some tough questions.

They’re some of the bestselling, even best-loved products of modern times, Apple’s iPads, iPods and iPhones. But as their popularity has grown, so has criticism of labor practices at Chinese factories where the products are made.

In response, Apple announced on Monday that the Fair Labor Association, an independent watchdog group, has begun on-site audits and inspections of plants owned by manufacturing giant Foxconn. Various reports, including in recent weeks a series in The New York Times, have told of serious and deadly safety violations, excessive overtime hours, and underage employees at Foxconn facilities.

The new audit started at a plant in Shenzhen, where a rash of suicides in 2010 prompted managers to install nets to stop distraught workers from jumping off the roof.

Writer and performer Mike Daisey highlighted the issue almost a year ago in his theater piece “The Agony and Ecstasy of Steve Jobs.”

MIKE DAISEY, “The Agony and Ecstasy of Steve Jobs”: Every year, they say, well, we’re going to try harder.

It’s not — there’s no serious effort. And that’s because we don’t see those workers as human beings. We don’t really understand what’s going on because we refuse to put our hands in it and actually get involved.

JEFFREY BROWN: That may be changing. Last week, protesters gathered at Apple stores in several U.S. cities demanding that the next iPhone model be made — quote — “ethically.”

One protester, Mark Shields, started a petition on Change.org urging Apple to respond to the allegations of abuse.

MARK SHIELDS, activist: What gave me a knot in my stomach was hearing about how people in these factories are treated. Apple has changed how we listen to music, how we see movies, how we use our iPhones, how we use computers. They have the creativity and the capital to make this better. They can make their products without horrible human suffering.

JEFFREY BROWN: Apple says the findings and recommendations from the investigation will be posted for the public to see in early March.

And for more on all this, we turn to Peter Burrows, senior writer for Bloomberg BusinessWeek, with many years of reporting on the tech industry and Apple.

Peter, first tell us a bit more about these factories. These are huge places, right? What’s their exact relationship to Apple?

PETER BURROWS, Bloomberg BusinessWeek: These are some of the largest industrial complexes in the world.

Hon Hai has one plant that has over 200,000 people. It’s really a small city. It has its own soccer stadiums, police force, chicken farms. It goes on and on. It also has dorms where, you know, a dozen people or more sometimes stay.

This is a company — Foxconn employs 1.2 million people. And it’s very interesting. I mean, there is a very different set of situations — things going on in China. There’s hundreds of thousands of people, young people, beginning of their lives maybe before they get married tend to come into the cities and get work at plants like these.

They work for a couple of years in many cases and go home. Now, they’re looking for overtime. They’re not looking for some of the kinds of abuse or unsafe conditions that we’ve been hearing about last couple of years.

JEFFREY BROWN: Well, as we talk about some of these kinds of abuses, or alleged abuses, as the criticism has grown over the last few years, what’s Apple’s response been up to now, before this?

PETER BURROWS: Not that much.

There have been some internal sort of tech industry efforts to get a handle on this. Apple was sort of late to join those groups, which it considered to be ineffectual. And Apple, you know, on a lot of issues — you know, they obviously talk very well about their products and very effectively.

On issues like this, they tend to not say very much until they feel like they have results. You know, I think they’ve been — it seems like they began working on this in a bigger way last year. They did 200 audits of some of these supplier factories last year. And it made some progress and actually been a bit more transparent in some ways than other companies.

But, you know, it certainly hasn’t been the kind of cause celebre it is now.

JEFFREY BROWN: Well, how well-documented would you say these kinds of practices are, whether it’s the safety violations, underage workers, the very long hours that people put in? How much do we really know about all this?

PETER BURROWS: Well, you know, The Times and others have done great journalistic work. Other than that, it is difficult. You know, the companies — to rely on the companies. The rules don’t require it in China, as far as I know.

But Apple itself has admitted of — these 200 audits last year, they said they found I think it was over like 108 instances where companies were not paying the proper overtime. They found instances where people, some of these workers were being asked to pay sort of exorbitant recruiting fees to the people who found them the jobs.

So, and we’ve had these rashes of suicides, at least on the one occasion back in 2010.

JEFFREY BROWN: Now, this audit group going in, the Fair Labor Association, it’s said to be independent. But I gather there’s already critics, people who have called into question these practices and called Apple to task, taken them to task.

They’re already questioning whether this association is as independent, whether something strong will come out of this.

PETER BURROWS: I think the FLA is probably known to be as independent as — and as well-known and as influential as any of the groups I’ve come across.

Before this, basically, the tech industry really was policing itself. It created a code of conduct back in 2004, I believe, where they said these are the kinds of things we don’t want to happen in the plants of our suppliers. But there wasn’t very much teeth in it.

You know, they couldn’t — companies were on their own to decide what to do about it. And the fact of the matter is, very few of these big contracting firms lost any business because of any violations. So I think, you know, there’s a couple of things here. As I say, the FLA is probably a big step up in terms of having a watchdog.

Also, Apple has clout that no other company does. Hon Hai gets 21 percent of its $60 billion in annual revenue from Apple. So, if Apple indeed intends to take this seriously, I think Foxconn is going to have to as well.

JEFFREY BROWN: Well, I was wondering about that. Apple’s one company, but it clearly has huge influence.

If it does take steps, would you expect such steps to impact the wider industry?

PETER BURROWS: There is certainly that chance.

I mean, this is — American companies go to these large Chinese outsourcing companies because they’re cheap. They’re very good, but they’re also cheap. And if Apple were to insist on reforms that, in fact, raised its costs, then some of these other companies might possibly follow suit rather than risk the kind of P.R. problems Apple is facing, and, you know, raise prices themselves to, you know, to pay the overtime, to make — you know, provide the better work conditions, et cetera.

JEFFREY BROWN: All right, first results seen in March, according to Apple.

Peter Burrows Bloomberg BusinessWeek, thanks so much.

PETER BURROWS: Thank you.