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Foxconn's factory in Foshan City, located in southern China's Guangdong province, is seen here in June. Foxconn has announced plans to build a new Northern China factory, amid financial losses.  (Source: AFP/Getty Images)
China's largest consumer electronics manufacturer is struggling under international scrutiny

A local notice posted on the government bulletin board in Henan city of Hebei points to Foxconn moving ahead with plans to build another massive city-sized manufacturing town nearby. 

The creation of the new Northern plant marks Foxconn's latest bid to stem the tide of suicides and disgruntled employees.  Foxconn has tried a variety of schemes to stem the suicides -- buddhist monks, letters asking employees not to kill themselves, and most recently safety nets.

However, the moves that may be having the biggest effect are also the most expensive.  Foxconn raised wages for its employees and additionally may be relocating some production to cheaper Vietnam or building replacing employees with robots at a Taiwanese facility.

It's also begrudgingly going ahead with plans to build the Henan plant in Northern China, despite the fact that it will have to pay the employees higher wages.  By moving its production closer to its migrant worker's homes it believes they will be happier.  Many employees report being distraught at leaving their families and traveling long distances to reach the current plants.

Employees at the new plant will be paid a basic wage of $176 a month during their three-month probation period, with total income up to $340 a month (with overtime).  After passing examinations, the monthly wage would rise to $300 a month, with total income of up to $440 a month.  Overtime is limited to 3 days a week, and one day a week will be guaranteed off.  

These higher wages are having an impact on the bottom line of Foxconn's parent company Hon Hai Precision Ltd.  The Taiwanese firm released a document [PDF] stating that due to these and other factors, its first half losses for this year would increase from the first half loss it posted last year.

Foxconn's dilemma is that it needs cheap labor, but moving to new facilities in Vietnam or Taiwan could incur many additional costs.  Building new plants in China, where Foxconn is already well established is respectively cheaper.  Plus China has an immense worker pool with an estimated 150 million migrant workers.  Many of these workers are at a prime age for manual labor, with two-thirds of them between the ages of 16 and 30.



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sup with this
By bhougha10 on 6/30/2010 12:38:28 PM , Rating: 1
I wonder if the people of the West will every stand up for thier kids future and stop buying from these slave labor countries?




RE: sup with this
By muhahaaha on 6/30/2010 1:32:59 PM , Rating: 1
It all comes down to the almighty dollar.

Some 10 year old in China is toiling 140 hours a week on assembling iPads for pennies?

Typical person: "So what, gimme gimme my shiny toy."

I realize a lot of other companies exploit these low income people, but Apple is the worst offender.

And then they have the arrogance to outright lie about the facts.

And they have Wall-street in their pocket with free kickbacks and a$$ sucking the media.

If I wasn't a stable person, I'd probably be ready to head down to Cupertino with my new Wicked Laser 1 watt toy and burn Steve's friggin eyes out.


RE: sup with this
By jimhsu on 6/30/2010 3:02:21 PM , Rating: 2
Sorry, I fail to understand this argument.

You see, if you choose to refuse to buy the "shiny new toy" from the manufacturer with "slave labor" - that's a lose-lose situation. In fact you're the least hurt by your own decision - the 10 year old toiling for pennies now suddenly faces layoff to support his aging mother and disabled father. Unemployment benefits? You wish. The manufacturer loses money from consumers like you, and thus has to relocate to even poorer countries (Vietnam, etc) to preserve their bottom line. Apple gets replaced by some other competitor with even less of a conscience - because conscience results in monetary losses for shareholders.

If you don't want to "buy from China", start your own company and market your own "China-free" products. Judging from this forum, you might do quite well -- or maybe not. Otherwise, all you're doing is putting 10 year olds out of jobs with your decision.



RE: sup with this
By wallijonn on 6/30/2010 6:55:21 PM , Rating: 2
quote:
all you're doing is putting 10 year olds out of jobs with your decision.


That's why we have child labour laws.


RE: sup with this
By John Sawyer on 7/1/2010 6:40:30 AM , Rating: 2
How exactly is Apple worse than other companies who use the same manufacturing facilities?


RE: sup with this
By GuinnessKMF on 6/30/2010 2:34:08 PM , Rating: 2
That's actually more of the problem, people are only concerned about their kid's futures, not humanity's kid's futures.


Title?
By Shatbot on 6/30/2010 11:12:05 AM , Rating: 2
12 Suicide payouts made Foxcon post a loss. Those margins are razor thin to say the least!




RE: Title?
By Earthmonger on 6/30/10, Rating: 0
RE: Title?
By Strunf on 6/30/2010 12:37:40 PM , Rating: 2
"People went into these jobs willingly."
Depends, I know many people that take crappy jobs just cause at the end of the month they make enough to sustain their family... and I live in a country that doesn't let people die of hunger, imagine what would be in a country where no one gives a crap about you and your family. If you think today we can't force people to work you don't have any idea of what the reality is to a great deal of the population around the world.


RE: Title?
By Penti on 6/30/2010 12:51:31 PM , Rating: 2
Your retarded way more then any unstable Chinese people. Foxconn is an employer with 450 000 employees in China. Nobody moves out from the states when some bat crazy guy comes in and starts shooting his former or current coworkers. And that might happen at a mid-sized employer or part of a smaller concern then Hon Hai/Foxconn. Assembly line workers aren't any high-payed workers that can just quite they live on the damn factory parks. Neither is it a very flexible workplace and neither are their rights in the highest regard. But that's no reason to invest where things are even worse and people get even less payed and will have a tougher time to live on the wages like in Vietnam. You will have suicides there too if you build factories with hundreds of thousands of workers.

Yes they should make their jobs more meaningful and less monotone or physically detrimental. But companies like Foxconn are usually better at building high-tech factories in China then western companies from say Japan or Sweden. Where Sweden firms have even stated that they see humans as replacements for robots and the kind of automation that where done here in the early-mid 90's. Taiwanese have been in China since the late 80's. They have never really seen it as a low-tech place to build high-tech goods with too many manual elements. The bulk of their production capability is often there, their most advanced plants, that's not the case for many western firms ventures there.

Depressed and suicidal people are everywhere, if they become "unstable" I'd say they would have pretty hard time changing there situation move home 500 miles to your dirt poor family might not be an option. It's not precedent any way. You have payouts for suicides in your life insurances in the states, which you might get from your employer any way. No real diff.


RE: Title?
By wallijonn on 6/30/2010 7:04:16 PM , Rating: 3
quote:
I come from Arizona. A "Right To Work" state. People went into these jobs willingly. They need to honor their jobs or be cast off.


All "Right to Work" means is that one has the choice not to join a union, that a union can't make you pay dues, nor that to get a job you'll have to join a union.

You think Foxconn has a union? How many unions in China? Do you think American unions would make you work 140 hours a week, or have to work 6 or 7 days a week?

It's been awhile since the adage, "If you don't come in on Sunday don't bother coming in on Monday" applied to Americans. You can thank the unions for that.


RE: Title?
By chick0n on 6/30/10, Rating: 0
As tragic as it sounds...
By quiksilvr on 6/30/2010 11:09:08 AM , Rating: 3
It looks like the workers that committed suicide really helped improve the quality of life for the other workers. They get nearly twice as much money and are guaranteed a day off a week. I know it sounds pretty bad to not even be making $500 a month, but for China's standards it's unprecedented.

I hope those that died may rest in peace and am sorry for the families that had suffered, but know that your deaths were not ignored and forced Foxconn to make life better for the other workers.




RE: As tragic as it sounds...
By jimhsu on 6/30/2010 3:11:01 PM , Rating: 3
I'm Taiwanese, but I've visited China before. To put $500 a month into perspective, convert it to yuan (6.78Y =1$). Ignoring places like XinTianDi in Shanghai and other overpriced Westernized places, one yuan has (very roughly) the approximate spending power of one dollar in America. Noodle soup at a stall? 2-4Y, 8-10 for the high end stuff (compare to similar USD prices at Chines noodle shops in the US). Average rent in a small apartment at Hangzhou (ignore Shanghai's inflated real estate market)? A few thousand yuan. Taxi rate? A dozen yuan or two - compare with New York.

In order to make rough quality of life comparisons, think of them making $3350 a month in the US - that's a rough comparison.


I hate to say this but...
By MrBlastman on 6/30/2010 11:09:14 AM , Rating: 2
The girl in the picture is keeping her head down. Guo must be smiling about that.

"Keep your heads down and get back to work!" I can imagine him saying this as he holds a sexy, young girl half his age in his other arm while eating caviar.




RE: I hate to say this but...
By corduroygt on 6/30/2010 11:41:02 AM , Rating: 1
Hey, I like it when a hot girl keeps her head down and gets right down to business :)


RE: I hate to say this but...
By MrBlastman on 6/30/2010 12:41:57 PM , Rating: 2
I can just imagine Guo now...

"Ahh yes, way to keep your head down and solder that joint. Wait, you missed a spot, don't discharge the capacitor too quickly now..."


RE: I hate to say this but...
By dflynchimp on 6/30/2010 12:06:30 PM , Rating: 1
I'm most likely fishing for neg mods here, but something has to be said.

The initial compensation paid out to suicded employee's families by Foxconn was extremely generous, I don't have exact figures, but it amounted to something that the average employee might not even make in a lifetime of work. Taking into account the fact that labor costs are low in china to begin with, this is not that far fetched.

It also isn't that far fetched that some of the suicidees were motivated by this compensation.

Foxconn isn't the only Taiwanese/western company with factories in China, but if you actually looked at the figures and data you'd know that they not only pay more than other comparable companies, but their compensation for worker death is also high the the point of the unprecedented.

Do not villainize Guo so quickly because you blindly bought into facetious and partial newscasting, which we all know tends towards the sensationalized.

I know in the U.S we tend to value our lives above most things out of ideals ingrained to us since birth, but let's face it, many people in the rest of the world (Religious extremists, hired assassins, etc) have no problem giving up their lives if the incentives are high enough.


New Plant
By Thorsen on 6/30/2010 12:15:22 PM , Rating: 3
Will have no physical access to roof....




RE: New Plant
By Estee on 6/30/2010 8:34:45 PM , Rating: 2
A couple of things to note on this, as I discussed with Foxconn internal management/employees:

- This was something in process a while back. Foxconn did not become the world's largest CM by sitting on its laurels. They new that the Shenzhen market would go hot and costs would rise accordingly which would necessitate and eventual relocation on some (i'll get to this next) production

- The thought is that companies that want more value / experience would stay in Shenzhen (LH), but of course would have to pay the price delta (i.e. Apple). The small margin products (like computers) would go to other Foxconn sites

- Even internal management doesn't understand the basis of all the employee salary raises. One line-manager told me that even in some cases, the day-to-day uneducated line workers are now making more money than the engineers there! Foxconn is notoriously cheap and stingy when it comes to costs, so this be a business decision based on a simple principle: kill your competition! Foxconn has many locations setup inland already (as well as a cheaper supersite - see below). If they artificially drive up worker costs in the more predominantly urban areas (Shenzhen), it would force other CM's to move out. However, Foxconn already has many sites setup in China, where the other CMs don't. This would effectively kill them and make Foxconn the defacto supplier of cheap labor again which would enable them to renegotiate labor margins again even with the higher employee salaries.

- There is one wild card here that none of the media outlets have discussed (due to the sensationalism of the suicides): Vietnam. Foxconn has invested in a super-site/city that will trump all of their China factories. This was built with a 5-10 year plan in mind for mucho-mass production products (think phones - hint hint). It is 3-4X the size of the largest Chinese plant at this time and could accomodate up to 600K+ people. No one knows why Terry G. (CEO of Foxconn) has used this trumping card, as he is notoriously frugal and very business-savvy.


"We are going to continue to work with them to make sure they understand the reality of the Internet.  A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis














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