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OM in the News: Apple Audits its Suppliers in China

April 4, 2012

Apple effectively just wrapped its own knuckles publicly, with the publication of an audit of the working conditions at Foxconn, its biggest Chinese supplier. Apple CEO Tim Cook, showing serious leadership, completed the factory tours and committed his company to improvements and further monitoring of its Asian supply chain–particularly regarding

Tim Cook at Foxconn

overtime. Does this mean that the days are gone when Foxconnn would rouse 8,000 workers from their sleep in company dorms to put them on the iPhone assembly line at midnight?

The Wall Street Journal (March 30,2012) reports widespread breaches of work rules at Foxconn, including 60 hour work weeks and other health and safety violations. (The Journal piece includes a 4 minute video on Cook’s visit and an analysis of the impact of the audit on Apple’s reputation and sales.)  The audit of 35,000 workers building iPads, iPhones, and iPods at 3 Foxconn factories, found the majority of workers exceeding China’s legal maximum of 36 overtime hours a month–with the average working 80 hours.  The probe is one of the most detailed investigations of a Chinese manufacturer and the 1st major outside audit of Apple’s supply chain. Foxconn would have to hire tens of thousands of extra workers to comply.

The investigation, conducted  by the Fair Labor Association (FLA),  also found an array of  issues such as inadequate risk analysis and missing protective systems. More than 43% of the workers had experienced or witnessed an accident and “felt generally insecure,” said the FLA.

Foxconnn is already among the best of suppliers in China in terms of working conditions. Conditions at many of the others are incredibly grim. By putting pressure on the top end, Apple is likely doing all Chinese workers a favor.

Discussion questions:

1. Why did Tim Cook visit his Chinese suppliers?

2. How long will it take to implement major changes in working conditions in this supply chain?

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