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OM in the News: Nepali Hostages in the Apple Global Supply Chain

November 15, 2013

nepali passportCEO Tim Cook planned the most aggressive production and launch schedule ever attempted by Apple. Even though few units had been produced by Sept.12, 2012, the iPhone 5 would go on the market in the U.S. and 8 other countries 9 days later. By year’s end it would be in stores in 100 countries and would sell at a rate of 3.7 million per week.

Yet, just months later, one of Apple’s main contract suppliers would be accused of holding foreign workers virtual prisoners in company dorms for 6 weeks, neither feeding them nor paying them. In this fascinating article, Businessweek (Nov.11-17, 2013) introduces us to 27-year old Nepali Bibek Dhong’s travails as fear and hunger turn to rage. Writes Businessweek: “Some men smashed windows. Others threw televisions from floors 6 to 7 stories above Dhong. When Malaysian police arrived, rather than making arrests, the officers ordered the company to start sending food.”

That supplier, Flextronics, made the cameras for the iPhone– then shipped them to the Chinese manufacturer Foxconn for final phone assembly. As Flextronics had to crank up its supply chain, it required sourcing and importing people—an army of them—to man factory lines. Staffing production lines in Malaysia goes this way; Companies tap an unregulated transnational network of thousands of recruiters. They fan out into the farm fields and impoverished cities of Indonesia, Cambodia, Myanmar, Vietnam, and Nepal. The positions they’re trying to fill are so coveted that they’re not merely offered, they’re sold. The brokers take fees from families, representing as much as a year or more of wages; frequently the fees are paid with loans that can take years to pay off.

For the iPhone 5 rollout, a recruiter working for Flextronics contacted brokers in Nepal, in September, 2012, urgently seeking 1,500 men to make cameras. Once in Malaysia, Flextronics managers keep workers’ passports locked in a safe until moneys to recruiters were paid up. Although Apple calls that bonded labor, one step removed from slavery, it blames the abuses on companies that rely on a daisy chain of payment-demanding brokers and recruiters.

Classroom discussion questions:

1. What is Apple’s responsibility in this supply chain?

2. Why do workers seek out such jobs?

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