JEFFREY BROWN: And we turn to a pledge to improve working conditions at one of Apple's major suppliers in China.
As Apple surged toward its status as the world's most valuable company, the calls for it to account for how its wildly popular iPads and iPhones are made have grown. Last month, the California-based firm announced it had asked the Fair Labor Association, a monitoring group, to investigate Foxconn, Apple's main contract manufacturer in China.
Foxconn works for dozens of other firms as well. Altogether, it produces some 40 percent of the world's electronics, with a work force of 1.2 million. In a report about Foxconn released yesterday, the FLA cited excessive overtime, exceeding 60 hours a week, and problems with overtime compensation, several health and safety risks and crucial communication gaps that have led to a widespread sense of unsafe working conditions among workers.
The findings shed light on allegations of unfair labor practices that had triggered protests at Apple stores.
MARK SHIELDS, activist: Apple has changed the way we listen to music, how we see movies, how we use our iPhones, how we use our computers. They have the creativity and the capital to make this better. They can make their products without horrible human suffering.
JEFFREY BROWN: The FLA also laid out recommendations that included a maximum 60-hour workweek and changes to Foxconn's overtime compensation policy.
In a statement, an Apple spokesman said -- quote -- "We appreciate the work the FLA has done to assess conditions at Foxconn, and we fully support their recommendations."
For its part, Foxconn vowed to cap workweeks at 49 hours, hire thousands of new employees, and improve safety.
Earlier today, I talked to Auret Van Heerden, the head of the Fair Labor Association, who oversaw the investigation and report on Foxconn's labor practices.
Mr. Van Heerden, welcome.
Now, you cited the fact that some 43 percent of the workers had experienced or witnessed an accident. So these are very dangerous places to work, right?
AURET VAN HEERDEN, CEO, Fair Labor Association: Yes and no.
The 43 percent shouldn't be taken as an accident statistic. It's a perception. And, in fact, when we drove down, we found that Foxconn had put in place all of the formal procedures that you need to manage the accident risks in those facilities.
What they're missing is the communications piece. They're not getting that message across to workers, and they're not winning the confidence and the trust of workers as far as the safety of the health -- and the health of the workplace is concerned.
JEFFREY BROWN: Now, you also cited long working hours and insufficient wages to make a living. Can you give us some specific examples of things you heard?
AURET VAN HEERDEN: So, workers in peak periods are working upwards of 60 hours a week. Something between 60 and 70 is the norm at the peak. But some are working beyond that.
And, even more importantly, sometimes they're working as much as 10 or 11 days straight without a day off. So, that's clearly a period where they're suffering from fatigue and the risk of accidents increases.
JEFFREY BROWN: When you add this up, were you surprised, and how would you assess the seriousness of the violations you found?
AURET VAN HEERDEN: We weren't surprised.
I must say that these are pretty much the range that we normally find in Chinese factories. And given Foxconn's size and their resources, they actually are making much faster progress than most of the factories that we work with.
JEFFREY BROWN: And what of Apple? Do you see Apple as an honest broker here and sincere in its desire to bring change?
AURET VAN HEERDEN: They are. They're very engaged.
I've been to Apple with top management. We have had very, very detailed discussions about our findings and about the remedial items. And Apple have been at the table at all of those discussions and pushing hard for these improvements.
JEFFREY BROWN: Another issue in the report was worker representation. Now, you found that unions and other worker groups were typically dominated by people chosen by the company, and not the workers themselves. How important a finding was that?
AURET VAN HEERDEN: We think it's a very big part of this story, because it's typical for Chinese trade unions and Chinese factories to have committees that are selected by management.
And even if there is an election process, the nominees are really handpicked by management. And so you end up with a committee that should be reflecting workers' concerns and workers' needs, but it's made up of people who come from the ranks of management. So it's just not achieving its objectives.
And what we found in many different dimensions is that workers aren't aware of issues. They're not -- if they are aware of it, they don't believe it. And so there's a credibility gap between a lot of the good work which is taking place, a lot of the good policies and procedures, and workers' perception of those same policies and procedures.
JEFFREY BROWN: So when you look at the agreements made by Foxconn, do you think it has the potential to set a new standard, both for the Western tech industry and for their factories in China?
AURET VAN HEERDEN: I do.
I think the potential impact is huge. And, for me, that's really the most exciting part of this story, to see how Apple and Foxconn and the FLA can come together and come to agreements which will directly improve the lives of 1.2 million workers, and indirectly set the bar for the rest of the sector, because if you think about it, as soon as Apple and Foxconn improve the wages and working conditions of these workers, workers will flock to Foxconn from other factories in the area.
And so their competitors will be obliged to improve their terms and conditions in order to attract and retain workers. And so we kick off a race to the top, instead of the race to the bottom that so often dominates.
JEFFREY BROWN: Of course, Foxconn has apparently agreed to changes in the past, and we know there have been audits by Apple in the past. Is there any assurance that, this time, there will be real change through follow-up monitoring and verification?
AURET VAN HEERDEN: Yes.
I think we have two assurances here. The first is that the FLA will continue to monitor the implementation of these commitments. We have detailed action items, hundreds of them. We have the names of the people responsible. We have the deliverable and the deadline.
And we will be sending our assessors back periodically to update and verify the status of those action items. But, secondly, they've made this commitment publicly. And the media and the consumers and the external stakeholders are all going to be watching very closely to see whether they live up to them.
And I really don't do not believe that Apple and Foxconn would have made this kind of commitment if they weren't planning on delivering.
JEFFREY BROWN: So your sense is that public interest and public pressure really has had an impact, these companies have felt it?
AURET VAN HEERDEN: Absolutely. I think the consumer interest is critical to this.
JEFFREY BROWN: Auret Van Heerden is the head of the Fair Labor Association.
Thanks for joining us.
AURET VAN HEERDEN: Thank you very much.