Foxconn Factories: How Bad Is It?

After a rash of employee suicides, the Foxconn manufacturing giant has made a number of changes to its operations, including a recently-reported requirement that workers sign a pledge not to kill themselves. Recently an investigative group has looked into worker conditions at its factories. From PC Magazine:

A watchdog group traveled to two of Foxconn’s more remote factories to interview workers, and found that most were working long hours for little pay, battling exposure to dust and harmful chemicals, and undergoing “military style” training sessions.

[...] SACOM recently visited Foxconn factories in Zhengzhou in the Henan Province and Chengdu in the Sichuan Province, both of which produce the Apple iPad, as well as HP laptops. They talked to employees who were on breaks or just arriving at work to get a sense of how they are treated as Foxconn employees.

Not surprisingly, money is a top gripe. According to those interviewed, Foxconn will typically promise wages between CNY 1600 (about $246) and CNY 2000 ($307) per month, which is pretty good for rural China. But in reality, workers are earning closer to CNY 950 ($146) per week. They can earn more by doing overtime, but getting paid for that overtime can sometimes be a hassle. Many workers reported that their paychecks are consistently missing shifts, and getting their money is an arduous process.

In the wake of last year’s suicides, Foxconn did increase its workers wages, but as noted by SACOM, some crafty number work by Foxconn meant that workers did not get as much as was promised.

Yet another report says that worker conditions have improved, but that the company’s finances have not:

Employee turnover and suicides are down—yet so are profits and the stock price of Hon Hai Precision Industry, the flagship of the Foxconn group. On Apr. 27, Hon Hai announced that fourth-quarter earnings dropped 26 percent, to $742 million, over the same period a year earlier, even as revenue jumped 56 percent, to $33.1 billion. Its Taipei-listed shares have fallen 20 percent in the past year, too, making it one of the worst performers among Taiwan’s 50 largest companies. Foxconn International, the Hong Kong-listed unit, in March reported a full-year net loss of $28 million on sales of $853 million.

Chairman Terry Gou is working to show investors and outsourcing customers that he’s positioned the company for a rebound. The first step: get costs under control. Foxconn workers in Shenzhen aren’t the only ones getting raises; pay has been rising in other cities, too. “The coastal areas are facing the worst labor shortages for three decades,” Credit Suisse economist Dong Tao wrote in a May 1 report. Gou, 60, has been shifting production away from southern China toward interior cities such as Chengdu, Wuhan, and Chongqing, where labor is about one-third cheaper. To help pay for the long march inland, Hon Hai last month announced the lowest annual dividend in at least 15 years. Gou is also looking at expansion in Slovakia, Turkey, and Brazil. Last month Brazil’s President, Dilma Rousseff, announced Foxconn may spearhead a $12 billion plan to expand electronics manufacturing in her country.

Read more about Foxconn via CDT.