Monday, January 23, 2012

Who's at Fault for FoxConn?

Next time I start making noises about how we're getting close to a post-scarcity economy, somebody slap me and make me reread this New York Times article about FoxConn, the million-employee Chinese company that makes iPhones, iPads, XBoxes, and most of the other electronic flotsam people like me can't seem to get enough of.

Someone does still make stuff in this world, it's just that those makers are young Chinese people living eight to a dorm room in the province of Shenzhen. And the reason they're the chosen isn't just because they'll work for low wages. That thing about the dorms is part of it, too.

When Steve Jobs decreed, barely more than a month before the iPhone's launch in 2007, that the device had to have a glass screen instead of a plastic one, Foxconn came to the rescue.

Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.” 
Yeah, big surprise. American companies can't roust their workers -- who have homes and families -- at midnight and make them go to work with no notice. Maybe that's because they're not almost slaves.

So remember when you hear something like this (quoting the Times article) --
Factories in Asia “can scale up and down faster” and “Asian supply chains have surpassed what’s in the U.S.” The result is that “we can’t compete at this point,” the executive said. 
-- that the part about "scale up and down faster" is only doable because the workers have no lives except work, since they put in a minimum six days a week, 12 hours a day -- many earning less than $17 per day -- and they live on site. (I wonder if they manage to load 16 tons in that amount of time?)

And the nimble hands of the captive assemblers aren't the whole of it. Tech companies complain that they can't find enough mid-level engineers in the U.S. to support their massive scale of manufacturing. But the Times article followed one such American engineer who used to work for Apple but found his job sent overseas to a Chinese engineer who makes less than $12 an hour -- which is an excellent wage in her city.

Another quote that blew my mind was this:
[In the late 1990s] the cost, excluding the materials, of building a $1,500 computer in Elk Grove was $22 a machine. In Singapore, it was $6. In Taiwan, $4.85. Wages weren’t the major reason for the disparities. Rather it was costs like inventory and how long it took workers to finish a task. 
This comparison is offered as if it is self-explanatory as a justification for moving manufacturing to Singapore or Taiwan. But a little arithmetic shows that savings is hardly more than 1% of the price of the computer. This type of narrow penny-pinching is at the root of the problem.

To keep their jobs in the U.S., the engineer was told, "we would have to do 12-hour days, and come in on Saturdays.... I had a family. I wanted to see my kids play soccer.”

Like so many problems we face, this one comes down to a question of what kind of world we want to live in. And it will take Chinese workers organizing for their right to fair wages and a way of life that's personally sustainable. If Bill McKibben is right that there are 75,000 underreported riots and demonstrations in China each year -- if Cory Doctorow's book For the Win has any resonance with reality -- maybe there is some hope of that.


Blissed-Out Grandma said...

Another eye-opener from you! Wow. I like to think that eventually people do begin to demand their rights.

Ms Sparrow said...

I saw a TV news story about the huge dorms housing workers. The workers have no social lives whatsoever. What a stultifying existence!

Emily said...

That last quote is ridiculous. The cost of "inventory" would include materials. To exclude materials means you are only considering labor costs.

What they aren't mentioning is the impact of the different countries tax rates. One of the big reasons to manufacture outside of the US is to take advantage of a 0% corporate tax in Singapore. Another reason is lower wages.

The sad thing is, a lot of those workers probably think they have a pretty good deal going. The standard of living and culture is so vastly different from what we are used to here in the US.

Great post!