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Apple will lose 0.7 percent of its iPad profits to give the workers that assemble its device a 20 percent raise. Workers at Foxconn are currently struggling after a string of suicides and enduring reportedly poor working conditions.  (Source: Kin Cheung/AP)
A small cut to Apple's profit margin may make a big difference in workers' lives

It took a string of suicides to spur it to action, but Apple is finally taking a big step towards trying to ensure that the workers who build its bestselling iPads, iPods, and iPhones enjoy a decent standard of living.

Apple's products are almost entirely manufactured by Foxconn, a China-based unit of Taiwan's Hon Hai Precision Industry.  Foxconn builds the sleek devices at its Shenzhen plant in Southern China.  While many companies (Microsoft, HP, Dell, Nintendo, Sony, etc.) utilize Foxconn's manufacturing services, the Shenzhen facility primarily serves Apple -- and it's also the site of all of the recent suicides.

The suicides were perhaps foreshadowed by an internal probe by Apple that revealed that several of its international manufacturing partners were committing abusive employment practices, such as using child labor or demanding unpaid overtime.  According to reports, the latter was particularly common-place at the Shenzhen facility.

According to a report by Chinese news organization Sina, Apple has now quietly committed a dramatic gesture, offering to finance the majority of the 20 percent raise in pay to the Shenzhen workers.  The raise was long promised to workers, but had remained undelivered for some time now.

The 20 percent raise will cost Apple a little, but not very much.  It is estimated to raise the costs of labor for the iPad from 2.3 percent of the cost to 3.0 percent of the cost.  Apple still looks to make hundreds in profit off of each unit sold (breakdowns estimated Apple makes at least $200 per iPad sold).

For the Foxconn workers living in the factory city of Shenzhen, though, the raise will make a world of difference.  While some will question why Apple didn't push for higher wages in the first place, it's important to appreciate that it is at least taking action now.  One can only hope that HP, Dell, Microsoft, and others step up to the plate and offer to subsidize similar raises at their manufacturing locations -- even if they haven't been struck by the spate of suicides that occurred at Apple's plant.

Apple has not yet officially acknowledge the report, though it has previously stated that it was concerned about the working conditions at Shenzhen and that it was evaluating its options.

In other news, a fire broke out at the Shenzhen plant this week.  It reportedly was unrelated to the suicides.  The fire did not do any major damage to equipment, according to reports, and is not expected to impact Apple's production schedule.


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can we have a follow up?
By semo on 6/1/2010 5:33:29 AM , Rating: 3
quote:
will cost Apple a little, but not very much
yeah we get it, it's not a lot for them...

anywho, I'd like to know the outcome in a month's time. I hate how the general consensus of developed countries these days is that we can just sprinkle some money on the poor people and they'll be happy.

Don't forget that the fruit machine is not the employer of all these workers. These sacrificed profits will pass through many hands before they get to their intended target, if at all. It is vital that an inside probe (be it a journalist or some company) tries to uncover exactly what the atmosphere is like over there in say about a month... i.e., are things better (in a month's time that is), did the pay rise materialize, are employees still forced to do overtime and so on.




RE: can we have a follow up?
By jeepga on 6/1/2010 8:34:41 AM , Rating: 3
quote:
I hate how the general consensus of developed countries these days is that we can just sprinkle some money on the poor people and they'll be happy.


I couldn't agree more. The picture would be of the fat rich American throwing a handful of money over the crowd with a proud look on his face as the rabble claws for the dollar bills sprinkled on the ground.

Apple gave up almost nothing. And the workers aren't getting much when you consider the unpaid overtime. Most people won't dispute Apple's right to make money, but the gross profits they make are greed not capitalism.

The Apple's massive group of worshippers gasped and paused with the news of the suicides and the factory conditions. The marketing machine knew they had to do something. But, as it turned out they didn't need to do much to satisfy their worshippers.


RE: can we have a follow up?
By Hiawa23 on 6/1/2010 2:22:27 PM , Rating: 2
Apple gave up almost nothing. And the workers aren't getting much when you consider the unpaid overtime. Most people won't dispute Apple's right to make money, but the gross profits they make are greed not capitalism.

amen...


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