This is a guest post by Maninder Pal Singh. Maninder is an Industrial Automation entrepreneur and has had several encounters in Shenzhen. He shares with us his perspective on the criticism of Foxconn factory conditions that has become a major media story and debate worldwide. You can follow Maninder on Twitter.
Apple is the most successful company of our time. It has created new products, new benchmarks and new economies. All this is being done not by following conventional management wisdom but by evolving its own success mantra. One unique policy was contract manufacturing.
Apple’s major contract manufacturer is Foxconn
Foxconn (Hon Hai Precision Industry Co., Ltd.) is a Taiwanese company – yes it’s not a Chinese company. Foxconn has 13 factories in nine Chinese cities, more than in any other country. That is the reason it’s normally referred to as a Chinese company
Foxconn’s largest factory worldwide is in Longhua, Shenzhen. Shenzhen is the electronics manufacturing capital of the world & Foxconn is the poster boy of Shenzhen. Foxconn factory in Shenzhen is spread over 3 square kms and houses more than 300,000 employees. Their impact is such that the area is normally referred to as iPod city or Foxconn City. It has all the facilities of a sub-city: Its own TV network, worker dormitories, swimming pool, grocery store, bank, restaurants, bookstore, and hospital.
There have been a lot concerns and protests over the worker’s conditions in Foxconn factories and I am trying to put some facts together.
Foxconn plant is an electronics factory where the work is divided between state of the art CNC machines and workers.
A typical process when manufacturing is CNC Milling machines working on a piece of metal and carving out the exact frame e.g. in a MacBook Air, the base is carved out from a single piece of aluminium. Thereafter components move on a conveyor and workers sitting along the conveyor pick those component and do their required operation which could be a simple soldering or mounting a chip and place it back on the conveyor which is then picked by another worker to perform his set of duty.
Now Examining the allegations on Foxconn.
US media says that some workers who work for hours standing, drop a nut so that they can pick it up and stretch their legs
My Take : In any assembly line workers are sitting along a conveyor, they pickup a component from the conveyor, put it on their work station and put it back after the job is done. If someone knows a different process then I am from Mars. Samsung, LG name a company and this is the assembly line process. In Walmart a typical worker stands for hours at the cash register and even their rest room breaks are rationed.
Foxconn exploits its workers by making them work for long hours
My Take : If this was the case, why would the Chinese workers travel thousands of kms and queue up in a hope of getting a job at Foxconn? Most of the Western Media admits that is 1-2 km queue when Foxconn has an opening. Moreover a lot of manufacturing has moved to second tier cities, but still workers travel to Shenzhen to work at a reputable name like Foxconn.
The Suicides are on the rise
My Take: The media never brings up the news that there were 46 suicides at France Telecom, 9 at Foxconn is the only stuff they are interested in. Mexicans working in meat industry in Colorado are the worst exploited lot.
Foxconn underpays its workers
My Take: Minimum wage in Shenzhen is RMB 2,000 per month (1RMB = INR 8) (1 USD = 6.2 RMB) and this is in addition to benefits including free or subsidized housing and meals, medical coverage, and other government required insurance and trust funds. Minimum wages as per government notifications in New Delhi is USD .60 per hour and For Foxconn it is USD. 1.24 per hour and unlike the meat processing plants in the US, drugs are not distributed to the illegal Mexican workforce just to avoid work place injury compensations.
Understanding China’s Economies of Scale
My understanding is that labour cost in China is amongst the highest in Asia. The reason Chinese can make cheaper priced products is because they have robust domestic demand, cheaper power, good infrastructure, massive number of engineers available & export incentives by the government.
Case Study 1
Queen Spa in Shenzhen – 480,000 sq feet employing 2000 + people, @ 50 USD you can stay for 24 hours, enjoy a Chinese therapy massage, complimentary steam, sauna, Jacuzzi pools, bathing cubicles with high end toiletries, breakfast, fresh fruit, tea, coffee.
Case Study 2
Hwaseong Fishing Harbour (Restaurant) – Most popular seafood restaurant in Shenzhen, has a sitting capacity of more than 2000 people (conservative estimate) average cost USD 10~15. The time you choose your seafood (alive) to your plate: 10-15 mins.
Workers in Asia have to hunt for a job, normally they get jobs in bigger cities.They stay away from their families, keep their cost of survival low, send most of the money they earn back to the families. For them its a once in life time opportunity to work in places like Foxconn, Queen Spa, Hwaseong Fishing Harbour. Worker voluntarily put extra working hours so that they can earn more. Westerners see this as exploitation. I think this is much better economics, pride, hard-work, return.
Remember cost of living in China is very low, you cant compare their salaries with US workers. By creating a mountain out of the mole US media is not helping anybody, in the end, ABB robots can join Fanuc CNC milling machines and these people will be unemployed. Then maybe US media will invent a new term “Machine Rights”.
This article was originally published here.
