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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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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.

"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer

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