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Updated Monday, December 31, 2012 at 08:03 AM

Signs of change take hold in electronics factories in China

By CHARLES DUHIGGKEITH BRADSHER
The New York Times

CHENGDU, China — One day last summer, Pu Xiaolan was halfway through a shift inspecting iPad cases when she received a beige wooden chair with white stripes and a high, sturdy back.

At first, Pu wondered if someone had made a mistake. But when her bosses walked by, they just nodded curtly. So Pu gently sat down and leaned back. Her body relaxed.

The rumors were true.

When Pu was hired at this Foxconn plant a year earlier, she received a short, green plastic stool that left her unsupported back so sore that she could barely sleep at night. Eventually, she was promoted to a wooden chair, but the backrest was much too small to lean against. The managers of this 164,000-employee factory, she surmised, believed that comfort encouraged sloth.

But in March, unbeknown to Pu, a critical meeting had occurred between Foxconn’s top executives and a high-ranking Apple official. The companies had committed themselves to a series of wide-ranging reforms. Foxconn, China’s largest private employer, pledged to sharply curtail workers’ hours and significantly increase wages — reforms that, if fully carried out next year as planned, could create a ripple effect that benefits tens of millions of workers across the electronics industry, employment experts say.

The changes also extend to California, where Apple is based. Apple, the electronics industry’s behemoth, in the last year has tripled its corporate social-responsibility staff, has re-evaluated how it works with manufacturers, has asked competitors to help curb excessive overtime in China and has reached out to advocacy groups it once rebuffed.

Executives at companies like Hewlett-Packard and Intel say those shifts have convinced many electronics companies that they must also overhaul how they interact with foreign plants and workers — often at a cost to their bottom lines, though, analysts say, probably not so much as to affect consumer prices. As Apple and Foxconn became fodder for “Saturday Night Live” and questions during presidential debates, gadget designers and manufacturers concluded the industry’s reputation was at risk.

“The days of easy globalization are done,” said an Apple executive who, like many people interviewed for this article, requested anonymity because of confidentiality agreements. “We know that we have to get into the muck now.”

Even with these changes, chronic problems remain at overseas factories. Many laborers still work illegal overtime and some employees’ safety remains at risk, according to interviews and reports published by advocacy organizations.

An inspector’s push

“This is a disgrace!” shouted Terry Gou, founder and chairman of Foxconn, the world’s largest electronics manufacturer and Apple’s most important industrial partner.

It was March of this year and Gou — seen by activists as a longtime obstacle to improving conditions inside his factories — was meeting with his top deputies in Shenzhen, China. In 2011, The New York Times had begun sending Apple and Foxconn extensive questions about working conditions in factories manufacturing Apple products. The resulting articles in late January detailed problems ranging from excessive overtime and underage workers to sometimes deadly hazards, such as workers’ using a poisonous chemical to clean iPhone screens at another manufacturer, and an explosion in Pu’s Foxconn plant that killed four workers.

In January, Apple publicly released the names of many of its suppliers for the first time. Additionally, the company made the unusual move of joining the Fair Labor Association, one of the largest workplace-monitoring groups. Auditors from that association soon were inspecting Apple’s partners in China, starting with Foxconn.

Now, Gou was learning the results of those examinations. Foxconn was still failing to stop illegal overtime, the association’s lead inspector told Gou and his lieutenants, according to multiple people with knowledge of the meeting. The company was failing to keep student interns off night shifts. Foxconn had not put sufficient safety policies into practice and had exposed potentially hundreds of thousands of workers to at least 43 violations of Chinese laws and regulations.

“The world is watching!” Gou yelled, according to multiple people. “We are going to fix this, right here!”

But the inspector was not done.

He turned to the only Apple executive in the room, the senior vice president for operations, Jeff Williams. Apple needed to change as well, the inspector said. Apple, to its credit, had been working for years to improve conditions in overseas factories, but the company was treating such problems too much like engineering puzzles, the inspector said.

“Long-term solutions require a messier, more human approach,” that inspector, Auret van Heerden of the Fair Labor Association, told Williams. Instead of concentrating on writing more policies, Apple needed to listen better to workers’ complaints and advocacy groups’ recommendations.

Some of those suggestions surprised Williams, say people who worked with him. Since 2007, Apple had built one of the most extensive auditing programs in the electronics industry, inspecting more than 800 facilities. It was a point of pride for Williams and the company’s top leadership.

When Williams, who declined to comment for this article, returned from that March meeting to California, changes began. Among them, say people with firsthand knowledge, was the hiring of roughly 30 professionals into Apple’s social-responsibility unit in the last year, which tripled the size of that division and brought high-profile corporate activists into the company. Two widely respected former Apple executives — Jacky Haynes and Bob Bainbridge — were recruited back to help lead the unit, reporting ultimately to Williams and the chief executive, Tim Cook.

“Everyone knows Bob and Jacky,” said a former Apple executive. “It sends a message that Jeff and Tim expect everyone to get on board.”

Foxconn also has shifted. After the meeting with the Fair Labor Association, Foxconn announced that by July 2013, no employee would be allowed to work more than an average of 49 hours a week — the limit set by Chinese law. Previously, some Foxconn employees worked schedules that approached 100 hours a week. No other major manufacturer has pledged to abide by China’s work-hour laws in such a public manner. Foxconn, which is based in Taiwan, also promised to increase wages, so employees’ total pay would not decline despite fewer hours — the equivalent of a 50 percent raise for many workers, analysts say.

Secrecy, transparency

Despite those reforms, however, worker advocates inside Apple and with outside groups say the electronic industry’s problems will not genuinely diminish until Apple — the world’s most valuable company — starts filling a public-leadership role similar to that of companies in other industries with overseas problems, like Nike in footwear manufacturing and Patagonia in apparel.

Such public leadership and transparency can run counter to a culture of secrecy that pervades Apple. Employees often don’t know what their lunch companions or next-door office mates are working on. This secrecy has helped Apple stay ahead of competitors, but it has been a problem when it spills into the broader corporate culture, past executives say.

Apple declined requests for interviews. In a statement, it said the company embraced its “unique position to lead” and had taken working conditions very seriously for a long time. “No one in our industry is doing as much as we are, in as many places, touching as many people as we do. Through years of hard work and steadfast commitment, we have set workplace, dormitory and safety standards, sought help from the world’s leading experts, and established groundbreaking educational programs for workers.

“We have been upfront about the challenges we face and are attacking issues aggressively,” the statement continues. “We believe deeply in transparency and have demonstrated this through reporting our shortcomings and exposing violations.”

This year, Apple began publishing monthly summaries of suppliers’ compliance with overtime standards. In October, Apple hosted other technology companies for a private discussion on responses to excessive work hours overseas. While Apple’s annual supplier-responsibility reports do not contain details on specific factories, they are still among the most thorough in the electronics business.

But Apple has not sought the high-profile leadership opportunities that have set off transformations in other industries.

More-human approach

Almost 200 miles southeast of the factory where Pu received her new chair is another plant that is experimenting with improving workers’ quality of life — and it shows the trade-offs of such gains.

The factory, in Chongqing, makes computers for Hewlett-Packard, a company with little of Apple’s glamour. It is operated by Quanta, a little-known Taiwanese manufacturer.

Inside the plant, amid thousands of workers in bright white uniforms, are occasional flashes of pink worn by people like Zhang Xuemei, a bubbly 19-year-old with glinting earrings whose sole job is to chat with co-workers.

For eight hours a day, Zhang collects complaints about the factory’s free meals and dorms. She listens to workers who are divorcing, homesick or arguing with managers. When she finds someone suffering, she refers them to the company’s full-time doctor or professional counselors.

Quanta’s 10-story dormitories feel like a college campus. There is a free movie theater, television rooms, a large martial-arts gym, two spacious karaoke bars, a huge cafeteria and an aerobics hall playing a Chinese remix of “Gangnam Style.”

Neither Quanta nor Hewlett-Packard claims it has solved every labor woe. And the amenities are partly selfish: one of the biggest problems for Chinese factories is that workers are constantly leaving. Hewlett-Packard hopes that by improving living conditions, turnover and training costs will fall.

Last year, a worker-advocacy group criticized another Quanta plant, in Shanghai, for harsh working conditions found at many factories, including extensive overtime and poor food. In Chongqing, Hewlett-Packard has agreed to pay slightly higher prices initially so Quanta can offer workers a better quality of life. Such payments are the price all companies should bear for more humane factories, Hewlett-Packard executives say.

There are costs for workers, too. Quanta’s employees earn slightly less than their peers at Foxconn.

What’s more, Quanta’s emphasis on hours that are easier on employees means they are prohibited from overtime shifts that advocates say are abusive, but which some workers insist they want.

Keith Bradsher reported from Chengdu and Chongqing, and Charles Duhigg from New York. Yadan Ouyang contributed reporting from Chengdu and Chongqing.



Workers assemble Hewlett-Packard computers at a Quanta factory in Chongqing, China. After the hardships of workers in China’s factories were exposed, corporate customers have begun to implement changes.




The New York Times
Pu Xiaolan, a worker at the Foxconn plant in Chengdu, China, has noticed some improvements in the factory since she was hired a year ago.








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