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Comments come two years after he called employees unruly "animals" and comparing himself to a cattlemaster

Terry Gou, 63 -- the CEO and major shareholder of Hon Hai Precision Industry Comp, Ltd. (TPE:2317) -- is making headlines again for interesting comments he made at his company's annual shareholders’ meeting.
 
I. Mission to Replace Migrant Workers With Machines is Moving Ahead
 
At one point he dropped a hint that Hon Hai's massive subsidiary Foxconn may have completed work on an automated plant for its top consumer electronics client, Apple, Inc. (AAPL).  The factory lies in Chengudu, China he says, elaborating:
 
We haven’t talked much about the factory, but it’s manufacturing a product from a very famous company.
 
Foxconn also makes motherboards and laptops for most major PC OEMs, with orders of several million for most of the world's top PC makers.  It also manufactures all of the current generation of video game consoles and Amazon.com, Inc.'s (AMZN) Kindle eReaders/tablets.
 
Foxconn RobotFoxconn's new robots are seeing signs of success. [Image Source: AFP/News9]

But it seems likely that Apple would get first privilege at Foxconn's new automated assembly line for a number of reasons.  As the primary manufacturer of the roughly 60 million iOS devices Apple sold in Q1, Apple is likely far and away Foxconn's largest client, with annual device orders approaching a quarter billion units.
 
Apple is also one of the most demanding clients, as it is always trying to squeeze its manufacturers' to lower costs, while demanding some of the industry's most challenging smartphone assembly techniques and an uncompromising level of secrecy.  That makes robots particularly attractive as they never ask for raises or leak prototypes of your upcoming product designs.
 
Foxconn Chairman
Foxconn CEO Terry Gou

If Apple is the recipient of the new factory, it could be a rather interesting relationship as Foxconn's robotics effort is backed by a key alliance with Apple's nemesis, Google Inc. (GOOG).  After initially struggling in its automation bid, it appears that Foxconn is finally turning the corner.  Foxconn's latest robots -- enhanced by Google's growing robotics prowess -- are being manufactured in-house at a rate of roughly 30,000 robots per year.  For now, Foxconn is closely holding these robotic workers.  Mr. Guo comments:
 
We don’t sell them, because we don’t have enough for our own use yet.
 
Some are less than happy with the Taiwanese CEO, complaining that he's abusing his workers, while looking to replace them with robots.  But that's what's come to be expected in recent years as Foxconn's success -- and controversies -- have exploded.
 
II. Billionaire -- "[My employees] are also animals... [and] animals gives me a headache"
 
While he prefers to be referred to by his Anglicized name, Terry Gou, Mr. Gou's true name is Gou Tai-ming.  He got in on the ground floor of the U.S. outsourcing trend, designing connectors for the Atari console at a small startup factory in Taiwan in 1980.  By 1988 he had moved to China, setting up a factory in Shenzhen.
 
Today, Foxconn has expanded astronomically to account for a whopping 40 percent of all consumer electronics manufacturing worldwide.  While it has facilities in Europe, Mexico, and South America, the heart of its manufacturing empire still lies in China where it has 13 factories in nine cities.  Foxconn is China's biggest employer and its Shenzhen facility is a veritable "city" of its own, with between 250,000 and 450,000 seasonal employees.
 
Most of the assembly of Apple products has traditionally been done in Shenzhen.
 
Controversy began in July 2009 when an employee who lost an iPhone prototype was beaten by plant guards and then fell to his death.  Foxconn claimed that the employee committed suicide, but some believed that he was murdered.
 
And if there was any ambiguity in that case, a spate of suicides in 2010 was far less ambiguous.  Reportedly a total of 14 employees killed themselves at Foxconn's Apple-geared plant that year.  While this wasn't that high a suicide rate compared to U.S. suicide rates, it nonetheless drew controversy as local media reports indicated a "hellish" working environment.  Foxconn admitted to making many employees work 12 hours a day, six days a week.  And some employees were reportedly working even longer -- working up to 18 hours.

Foxconn employees
Chinese protest Foxconn's harsh working conditions. [Image Source: AP]
 
Aside from the employees who committed suicide -- who were compensated under the company's insurance plan -- at least one employee was allegedly "worked to death".  Foxconn refused to give that employee's family anything.
 
Perhaps more than anything, Mr. Guo's response rubbed many the wrong way.  At his 2012 annual shareholders meeting two years ago, he remarked in Chinese [translated]:
 
Hon Hai has a workforce of over one million worldwide and as human beings are also animals, to manage one million animals gives me a headache.
 
The attitude struck many as heartless for someone with so much money governing a workforce that he paid so little.  Indeed many of his policies -- including punishing employees who talk while working on the assembly line or who take too many lavatory breaks -- seem to border on inhumane.
 
Foxconn employees
Foxconn's weary workers are asked to skip meals to attend unpaid meetings and are punished for taking too many bathroom breaks. [Image Source: Southern Weekly]

In 2010 when the suicides struck, Foxconn employees were making around $140 USD a month ($1,680 USD/year), according to ABC News, while Mr. Guo's 13 percent stake in Hon Hai made him worth roughly $5.9B USD.  
 
Others countered such criticism pointing to the charitable work Mr. Guo had done in his parents’ former hometown in Gewan, Shanxi Province, China.
 
III. Foxconn Owner Continues to Blame Dead Sweatshop Workers for Suicides
 
Today criticism about Foxconn's rising levels of unpaid employee overtime and its admission to using underage "interns" -- illegal under China's laws -- continues to draw ire from international observers, even as his defenders counter such such accusations.

His defenders, though, will have a tough time defending some of his remarks at the shareholders meeting.  He first characterized the dead workers as greedy gold-diggers, complaining:
 
We at first gave a compensation that was so high, the families of the suicide victims’ would never be able to spend it all.
 
To put that claim in context, employees who attempted suicide, but failed were given roughly CN¥180,000 in a one-off "humanitarian" payment -- or about $29,000 USD.  The families of those who actually succeeded in killing themself on average were paid around CN¥100,000 -- or roughly ~$16,000 USD.  At the 2010 national average wage for migrant manufacturers ($196 USD per month) that's roughly seven years worth of pay for the workers who killed themselves or 12 years for those who failed.  It's a lot of money for a migrant worker's family, to be certain, but "more than they could spend" seems like a pretty harsh exaggeration.
 
But he didn't stop there.  He cited a statistic he claimed to have read in "some news article" that stated that mosquitos were the leading cause of death worldwide, followed by suicide.  Actually neither suicide nor malaria are in the top ten causes of death, let alone the top two, according to the World Health Organization (WHO).

From that flawed statistic, his rant took an even more troubling turn.  He remarked:
 
This [the suicides] is what happens when your company reaches a certain scale.  It wasn’t because the workers were tired.  Some of it was because the work is monotonous, but 90 percent of it had to do with personal relationships or because of family disputes.
 
It's sad to see such comments, but this isn't the first time we've seen them, certainly.  In 2010 he stated:
 
If a worker in Taiwan commits suicide because of emotional problems, his employer won't be held responsible, but we are taken to task in China because they are living and sleeping in our dormitories.
 
That claim seems highly specious as the family members and friends of the dead workers almost all claimed that their chief reason for wanting to kill themselves was feelings of hopelessness about their harsh job and low pay.  Many family members said their deceased sons or daughters had sadly wanted to send a message about Foxconn's abusively low pay.
 
And ironically, if that was the employees' intent it worked.  Perhaps Mr. Guo is more bitter that today base employee wages for Foxconn's migrant workers in China are roughly CN¥2500 (~$402 USD/month) on average -- nearly three times what they were in 2010.  The unruly "animals" had cut into Mr. Guo's profit.

Terry Gou marriage
While his employees are reportedly enduring hellish working conditions, billionaire Foxconn chief is enjoying a dream life.  He recently married his much younger dance teacher (left).
[Image Source: Taiwan News/Forbes] 

In his book, The Sayings Of Terry Gou, which employees are virtually forced to read and quote, he comments:
 
A leader must have the decisive courage to be a dictator for the common good... Behind every accomplished disciple, there is a stern mentor... You can't go wrong trying to stick with the strictest and most demanding boss.
 
Together his words paint a picture that this billionaire king of Chinese manufacturing views himself as a wrangler of sorts, forever driving his obedient herd about in its pens.  In Mr. Guo's own words his employees are animals -- and like many ranchers he seems to have little sympathy if one of his herd "falls off".  After all, to him they're just animals -- he can always find more to replace those that fall, be they men or machines.

Source: PC World



Comments     Threshold


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RE: stay on article
By JasonMick (blog) on 6/30/2014 1:41:15 PM , Rating: 2
quote:
Comparing how the CEO of any company lives in contrast to the lowest end of the company's spectrum is inane. Disregarding responsibility, education and experience of a CEO and making brainless assembly line workers seem like the down trodden. These workers want to work, its not slavery!
I agree with you to some extent, that the employees want to work... but I never suggested otherwise.

However, I disagree in general that a celebrity or power figure's personal life shouldn't reflect on them. When you think of Henry VIII, do you think of his military campaigns? No, the first thing you associate him with is his lifestyle. Lifestyle does reflect on one's personality. Look at Bill Gates or Warren Buffet. They live rather humbly for their wealth... and not surprisingly they were relatively altruistic and supported a well paid workforce OVERALL.

This guy's lifestyle is very pertinent because while he has humble beginnings he's become and egomaniac to the point where he forces his employees to quote his nuggets of "wisdom". That kind of attitude has a direct affect on the working conditions at Foxconn.

Only when employees threatened to send his whole business to the ground did he budge on salaries. Even today he's fighting them tooth and nail to keep hour high and wages lower. Employees are fighting back by damaging electronics and striking; he's responding by replacing them slowly with robots.

But some of the robot transition is overstated. The migrant worker population is actually dwindling thanks to China's relatively successful education push and growing engineering class.

Thankfully mankind is advancing ahead where this sort of industrial baron mentality is vanishing.

Its a catch 22 for the plutocracy. You need people to make SOME money so they can buy your products, but at the same time you have to keep them poor and uneducated so as to consolidate wealth for yourself and prevent new wealth from displacing your horde. But as technology advances it's harder to stop meritocracy as you're dealing with a workforce that's slowly becoming more educated. One tactic to try to keep their grip will likely be to try to financially subvert and stir chaos in developing nations. But that will only work for so long, as you can't fooll all the people all the time.
quote:
When these robotic assembly lines take over and cause all these 'poor folks' to be unemployed lets see how society reacts. Dammed if you do, dammed if you don't.
Yes, because in the U.S. and Europe the economy just collapsed with the advent of automation. Your concern is not atypical; many have said the exact same thing historically. However that doesn't make such fearmongering any less silly, particularly given how many times its been disproven.

You need someone to design the robots, and if you free up people from do menial chores (farming, manufacturing) people can start creative businesses or service business (e.g. become artists, musicians, designers, architects, restaurant owners, coffeshop owners, etc.).

Automation is a good thing.


RE: stay on article
By Reclaimer77 on 6/30/14, Rating: -1
RE: stay on article
By MrBlastman on 6/30/2014 2:13:03 PM , Rating: 3
See, the problem is, what we have now in America at least is a rising upper class that has seized all the power in our country. They control both political parties, they control our Congress, our State Governments. The list goes on here. If you look at our economic conditions, they are indicative of a select group of "haves" hoarding for themselves. Most of the problems in our Government can be attributed to those with wealth and power skewing it to their advantage while disadvantaging others.

You can still get ahead in our Country. It requires hard work. It also requires a fair bit of luck, the ability to recognize that luck and then act on it. It helps to know the right people, too.

quote:
Even in America, people don't get rich working at entry level factory jobs. Hello? I guess all of our CEO's are scum too? I mean come on, enough with this goddamned Socialist "I'm the 99%" nonsense, it's getting us nowhere fast.


I don't think most people in America are calling for us to be Socialist. We are only seeking to reinstate the Middle Class for what it was and stood for. At the moment, there is practically no true "Middle Class," or it is dwindling fast.

You can't have a flourishing Economy if the majority of income is skewed towards an extremely small percentage of people. It benefits everyone in the long run to have it less top-heavy.

I'm not saying re-distribute! (Though that could occur "naturally" if it becomes too extreme). What I am saying is bring things back down to levels of "sanity."


RE: stay on article
By Reclaimer77 on 6/30/14, Rating: -1
RE: stay on article
By Rukkian on 6/30/2014 4:29:32 PM , Rating: 5
quote:
See you guys always get this wrong. The rich "control" nothing. They don't own the Government, not at all.

What's been happening is the Government, who holds all the power, has instituted a pay-to-play system.

Even local Government's work this way. If you want to play, you gotta pay.


So who do you think has the money to "pay to play"? Do you think it is the people with no money at the bottom?
Who do you think put the laws in place to allow this? Since you have to pay to play (been that way for quite awhile, but it is snowballing), the laws get changed by the people with the money so they can make even more money to get even more influence, etc, etc.

I am not saying anything can be done, just wanting to know why you think
quote:
The rich "control" nothing.


RE: stay on article
By djcameron on 6/30/2014 4:08:42 PM , Rating: 2
Practically no middle-class? BS. Most people, even the relatively poor, have iPhones, a car, money for cigarettes, at least one flat screen TV in their house/apartment, designer clothing, a computer, and more.


RE: stay on article
By MrBlastman on 6/30/2014 5:03:20 PM , Rating: 1
Don't be fooled. These are trinkets to placate the masses, nothing more. They give us the "illusion" of being in control.

Once you fall under their spell, you're basically powerless. You accept what they tell you to like and never question it again.


RE: stay on article
By KCjoker on 6/30/2014 6:39:26 PM , Rating: 2
If those trinkets don't matter then what does? It's always people complaining how the rich have big houses, luxury cars,etc that they don't "NEED"....aren't those trinkets?


RE: stay on article
By fleshconsumed on 7/1/2014 10:37:23 AM , Rating: 2
ROFLMAO since when an iPhone is a good middle class indicator? Those things are $200 plus contract. Just because a starbucks barista can afford one does not speak of how well he's doing in his life, it speaks of how cheap an iPhone is. I'm sure years back someone made the same argument, oh, this guy has a push button phone instead of rotary one, he must be doing real swell. See how ridiculous that sounds?

Why don't we go by the net worth instead? Last I read median (i.e. middle class) net worth in US is around 50K. The article I read did not specify what it included, but I would have to presume it included retirement accounts and any house equity. 50K. That's how well the middle class is doing in US. Not sure how you feel, but to me that doesn't really feel very middle class to me.


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