Foxconn: A Minefield for Ethical Labor?

It’s difficult to compete with slave labor.

In spite of recent scrutiny over questionable labor engagement practices and working conditions, Chinese contractor Foxconn, who assemble Apple’s iPhone line – among other items – is again in the spotlight.

The David Barboza and Charles Duhigg reported in yesterday’s New York Times that Foxconn has acknowledged using student “interns” on their production lines, especially when urgent deadlines are to be met. Students have complained that they are often forced to do so by their teachers. They are not paid a wage for the work that they perform.

Foxconn has acknowledged using student “interns” on manufacturing lines, but says they are free to leave at any time. But two worker advocacy groups said Monday that they had spoken with students who said they had been forced by their teachers to assemble iPhones at a Foxconn factory in Zhengzhou, in north-central China.

Sales from the release of Apple’s new iPhone 5 are expected to be staggering. Washington Post reporter Brad Plumer reports that sales could reach 8 million units, which could mean a minimum $3.2 billion boost to the US economy. That’s “billion,” with a “B” – from a few sku’s (stock keeping units). That kind of demand is enough to make The Material Girl blush with admiration. Plumer’s article was printed in today’s Toronto Star:

The conventional wisdom holds that we shouldn’t expect too many tech miracles from the iPhone 5. The latest iteration of Apple’s popular smartphone will mainly just be an incremental upgrade over previous versions. Ho-hum.

But what about an economic miracle? In an eyebrow-raising new research note, JPMorgan Chase’s Michael Feroli estimates that iPhone 5 sales could boost U.S. economic growth in the fourth quarter by up to 0.5 per cent. That could mean the difference between a disappointing rate of economic growth and a half-decent one.

Feroli’s calculations are fairly straightforward: He figures that the new iPhone 5 will sell for $600 per unit. If each phone contains about $200 in imported parts, then each iPhone sale adds about $400 to GDP. (Imports get subtracted from GDP calculations.) If Apple manages to sell 8 million iPhones, then that’s a $3.2 billion boost to the economy right there, increasing growth by a 0.33 per cent annualized pace. If the government statisticians add in a hedonic adjustment to account for the fact that new iPhones are superior to the old ones, that could boost GDP numbers even further.

(Read more…)

It is not news that the US economy is largely dependent upon the voracious appetite of the American consumer. That such a level of conspicuous consumption – especially of a non-essential electronic gadget – would occur in the midst of one of the most troublesome economic downturns in more than a generation, might come as a mild surprise to some. All Hail insatiable demand!

That said, we in the Developed World are faced with a dilemma: if we really believe in fair labor practices, what is to be done with the Foxconns of this world, who supply us with our toys at such reasonable prices? The Foxconns appear to be willing to adopt whatever system of ethics is required to win the contract, and ensure low cost on time delivery, with the backing of their domestic governments.

Here are three suggestions:

- that brands such as Apple refuse to engage contract manufacturers such as Foxconn as long as they cannot guarantee labor standards that meet western ethical specifications, at their own cost.

- that consumers refuse to buy finished goods from brand owners such as Apple as long as unethical practices are evident within their supply chains.

- that brand owners such as Apple begin to repatriate production operations to turf that is aligned more closely with western value systems such as care for the environment and respect for the worker.

Would American consumers be willing to pay the price? Or will they simply text-and-ignore?

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