As we are constantly reminded here, Apple takes 80% of the phone industry profits and thus deserve proportionate blame for working conditions.
They make $575 in profit from an iPhone but pay the Foxconn workers $7 to assemble it. They could double the pay and still make a very huge profit. On the other hand, many other companies like Amazon and Microsoft sell the hardware for a loss, hoping to make it up on software and media purchases.
Meanwhile, the other companies are not doing very well, and labor cost increases for them might put them out of business entirely and then the workers won't even have a job. HTC doesn't have $100 billion in the bank and recently reported a bad quarter. This is why Apple is criticized more since it has most leeway of all the companies mentioned in the article to increase wages.
That $575 number is nonsensical; the iPhone 4S (the most expensive model) costs $599 off-contract. These phones do not cost $25 to make. The real number is somewhere around $300, most of which paid by the carrier: http://www.asymco.com/2012/02/26/iphone-sine-qua-non/.
Regardless, doubling the pay for workers does not solve the real issue here. Their wages are already above average for Chinese factory workers in that area. If you want these workers to be paid a first-world wage, that's a much larger issue than how much Apple pays their final assembly workers.
Also, Foxconn does not build just phones. It's used by most desktop and laptop manufacturers, where Apple is certainly not in the lead, and to assemble all game consoles, where Apple doesn't even have products. Microsoft, for example, is responsible for the workers in the incident mentioned here: http://kotaku.com/5874706/report-mass-suicide-threats-at-xbo... (I don't think Microsoft would have an issue paying more, for example.)
Now this is not to underplay the problems in Chinese manufacturing, of which there are many. But Apple is certainly not singularly able to make any changes here.
>"While Apple generates more than $575 in profit for every iOS device, and according to estimates in 2007 Apple earned more than $800 on every iPhone sold through ATT, Horace Dediu reports that Android generated less than $550m in revenues for Google between 2008 and the end of 2011, earning only $1.70 per year, per Android device — explaining how Apple is sucking up two thirds of the profit in the mobile phone business.
That '$575 in profit' is, from the context, how much profit they make on average per year from an iOS device, not just the profit margin on the sale price, otherwise the comparisons to android's yearly profit would not make much sense.
$575 profit per iPhone? I think you mixed up profit with something else, maybe average sale price.
In a free market, profit isn't determined by cost or your intuition about "fairness". Price is determined by supply and demand, and profit is price minus cost.
Foxxconn already pays well above average wages while providing a safer workplace than the average US manufacturer, and a lower suicide rate than the Chinese average. And this is still going up even as working hours decrease.
Whether all these criticisms are completely legitimate or not (for example I think workers should be allowed to work more overtime if they voluntarily choose to, to get more money, instead of being capped at 49hours/week), Apple is responding to them as well as anyone could ask for.
Apple's competitors are not getting the same scrutiny. Since Apple is handling the issue great, isn't there room for some of that attention to land on others with much worse practices?
Further, Apple has nowhere near 80% of the production or employees or anything like that. There are other big players as far as how many Chinese workers they are involved with, which I think is the relevant metric for how important reform is.
If you look at Tim Worstall's (kinda op-ed) article on the second page, you can see that the author says that if the fatalities rate in Foxconn was the same as that in the US, we would expect to have 35 fatalities / year. Then he says that we only heard about 3-4 workers hurt at Foxconn, hence the rate is lower. That argument is flawed because what we hear on the news cannot be construed to represent all fatalities at Foxconn. I suspect that the fatalities rate at Foxconn is not publicized (because it doesn't have to be).
Another issue is that to determine the relative safety of the workplaces, the author is only looking at workplace fatalities. What about looking at accidents that leave the workers unable to work or maimed?
Bottom line, I don't think the incomplete data that we have supports the assertion that Foxconn is a safer workplace.
The data does support the case. It may be incorrect, or incomplete. But why would they be hiding fatality stats? Why would they get away with that when they are subject to the crazy levels of scrutiny that we see today?
Safety management is based on identifying and reducing hazards, which reduces accidents, near misses, lost time injuries, serious injuries and ultimately fatalities. With a large enough number of workers, as we have in this case, fatality number is a very good proxy for the other stats.
Oh, it does? Let's look at the article together and see if we can find that data:
>> (The US rate is) 3.5 per 100,000: we would expect, if the Foxconn factories were no more dangerous than the average American workplace, 35 workplace deaths a year among those 1 million workers. Yes, each of those deaths, each of those injuries, in those aluminium dust explosions is a tragedy. But if we were being realistic rather than spouting nonsense over such matters we would not be using evidence of three or four deaths as evidence of how Apple, Foxconn or even China are ignoring worker safety in pursuit of filthy lucre. At a very minimum we would be looking at the total workplace death rate rather than cherry picking one specific incident.
The author's saying he's heard of 3-4 people killed... so how does that map to 7 in the infographic? Where exactly are the Foxconn stats coming from? Because the "data" offered in this article is "as-seen-on-TV". Is there even a system of reporting mandated by the national govt to collect data? In the absence of actual vetted data, how can you conclude that Foxconn manufacturing is 5-10 times safer than avg US manufacturing?
>> But why would they be hiding fatality stats?
If you are Foxconn, do you want people talking about Foxconn and fatalities in the same sentence? And if the govt doesn't require it, do you feel compelled to use your own internal resources to voluntarily compile and publish stats that make you look bad?
It's relatively easy to hide accident stats. It's very difficult to hide fatalities - especially over time.
I would be unsurprised at better safety stats than the US. With DuPont as one of several exceptions, the safety culture in the USA is still one of compliance. The mining record is awful versus global large companies.
Apple and other customers are able to demand and get certain requirements met. A key part of that would be safety, and the first rule is integrity in measurement.
I've seen plants in Colombia and Mozambique operate at industry leading levels of safety. China can do it too - it really helps when you have a workforce that is motivated and eager for the relatively high paid work.
Fair point about comparison with other USA industries. The overriding tone of the overall conversation (not just on HN) is whether Apple et al. are outsourcing to a place with lower standards, including safety. Comparing Foxconn stats to US norms is then a valid approach.
> How would you die while assembling an iPad?
Since you asked - here are some typical risks. Happily these are all mitigable.
Falling from heights while in the store - for parts or for shipping.
Hit by a moving light vehicle inside the factory - forklift etc
Hit by a light or heavy vehicle outside the factory - e.g. when in loading operations
Incorrect handling of hazardous materials resulting in explosion
Incorrect handing of molten materials (plastics, metals)
Poor guarding on major equipment catching clothes and dragging worker into equipment. Ditto with poor isolation equipment prior to maintenance (machine switched on while someone is inside it)
Electrocution due to lack of isolation of electrified equipment before commencing maintenance work
Inhalation of fumes and other toxic emissions
Crushing by a press or other heavy industrial machine during operation, maintenance or installation
Crushed by stacks of inventory (parts, finished product) falling
Electrical fire or other sort of fire
Food poisoning, collapse of building, any incidents in staff accommodation and so on.
>Whereas Android generates $1.70/device/year and thus an Android device with a two year life generates about $3.5 to Google over its life, Apple obtained $576.3 for each iOS device it sold in 2011[4]. The economics of Android are nothing like the economics of iOS.
Slashdot has always reminded me of that clueless friend that always remembers the numbers from a news story but doesn't remember the units or have any sense of them in a meaningful context.
I don't know why people even read Asymco. His data why seemingly true, because he shows you charts and whatnot, it's usually very misleading.
Apple doesn't make $575 in profit per iPhone. The components alone cost around $300, and they only get like $650 from the carrier, but you also have to take into account all the extra costs, marketing, shipping, salaries, R&D, and so on. At most they probably make around $200-$300 in profit for iPhone, depending on the version.
The Android data is also misleading. He's taking it from what Google said in the trial. You don't think Google would try to downplay the revenues they get from Android in the trial through some smart accounting?
"As we are constantly reminded here, Apple takes 80% of the phone industry profits and thus deserve proportionate blame for working conditions."
Blame needs to be proportional to amount produced, not amount profited. If I have one phone manufactured and I charge $11 million for it (and actually find a buyer), but you produce a million $10 phones, your impact on the workers is far greater.
"On the other hand, many other companies like Amazon and Microsoft sell the hardware for a loss, hoping to make it up on software and media purchases."
So if tomorrow Apple decided to sell their phones at half price, thereby eliminating all profits, then suddenly no one will be able to say anything to Apple about their manufacturing and worker treatment?
"Meanwhile, the other companies are not doing very well, and labor cost increases for them might put them out of business entirely and then the workers won't even have a job. ... This is why Apple is criticized more since it has most leeway of all the companies mentioned in the article to increase wages."
So it all amounts to how much you charge the end user. If a company charges more for their product they must ensure the workers of the companies they contract with are paid/treated fairly, but if a company chooses to sell devices at little to not profit, they can treat the workers however they want.
It sounds to me more like if a company makes a device and provides it to you cheaply, you'll look the other way on how they handle manufacturing.
I did not say Microsoft and Samsung should be excluded from criticism, I said Apple deserves proportionally more blame because they can easily afford to pay more wages unlike other OEMs some of who are struggling to stay afloat.
>They make $575 in profit from an iPhone but pay the Foxconn workers $7 to assemble it. They could double the pay and still make a very huge profit.
Assembling the iPhone is a small and very insignificant part of the manufacturing process. What about the manufacturing of the steel, glass, LCD panels, logic boards, processors and IC chips, antennas, speakers, microphones, screws, cameras, batteries, and cables?
Obviously if it's unethical for Apple to contract the assembling of the iPhones to a manufacturer that pays high wages relative to the average Chinese job, then it must also be unethical to buy components from suppliers that also pay their factory workers a similar wage. Clearly, doubling the wage for all factory workers who work on any component of the iPhone will have a huge impact on the manufacturing cost far beyond the extra $7 you suggest it to be.
They make $575 in profit from an iPhone but pay the Foxconn workers $7 to assemble it. They could double the pay and still make a very huge profit. On the other hand, many other companies like Amazon and Microsoft sell the hardware for a loss, hoping to make it up on software and media purchases.
Meanwhile, the other companies are not doing very well, and labor cost increases for them might put them out of business entirely and then the workers won't even have a job. HTC doesn't have $100 billion in the bank and recently reported a bad quarter. This is why Apple is criticized more since it has most leeway of all the companies mentioned in the article to increase wages.