Sunday, January 29, 2012


Apple's outrageous success has a dark side. But does that mean it's time to stop buying Apple products?

Before we go there, let's get a few things out of the way. The focus of the New York Times iPad human cost story was Apple because:

Fame: Like anything that is constantly in the public eye (such as, say, a Republican presidential candidate) Apple is a magnet for reporters. There's lots and lots of reporting about Apple, some invariably negative.

Profits: While analysts and journalists trip over each other to applaud Apple's profit juggernaut, the way Apple achieves those profits can be pretty ugly. And the company's most recent quarterly profit of $13 billion puts it right up there with the likes of Exxon--a firm synonymous in some people's minds with the Valdez oil spill--and Exxon has certainly not been immune to harsh criticism.

Secrecy: Apple's hermetically tight secrecy serves as an open invitation for probing.

But should you boycott Apple products, as many commenters have suggested and some publications are now calling on you to do? That question opens a pandora's box that taken to its logical conclusion would mean eschewing pretty much all devices made in China--including the one on which you're reading this post.

And stop buying these things, too:

Furniture and home accessories made in Guangzhou
Lingerie made in Shenzhen
Char-broil grills and gas stoves made in Foshan
Nickel-cadmium batteries made in Guangzhou
Devices that use IBM parts made in Shenzhen

Obviously, that only scratches the surface. The larger point is that human-intensive mass production is ugly and has a long history of ugliness.

Let's begin with Japan--Asia's device manufacturing goliath in the '60s, '70s, and '80s. I lived in Japan for many years and worked at one time as an analyst. I remember a long discussion I had with a Japanese analyst colleague about the working conditions at a large, well-known Japanese device manufacturer (which will remain anonymous as this was told to me in confidence).

What I remember most distinctly was my colleague's description of the stark segregation between upper-level management and workers at a particular factory (which he had witnessed as a former employee of this company). The production line workers were treated like cattle (or chattel, take your pick), with little regard for working conditions, while upper-level management were treated as humans.

And lousy working conditions were not just isolated cases. In the manufacturing sector in Japan at that time, certain factories, which made products for the biggest Japanese consumer-electronics companies, employed workers who could be laid off in an instant (no lifetime employment here). In short: lousy pay, lousy working conditions, and lousy job security.

Dare I mention the good old U.S.A.? When America was an up-and-coming industrial power in the late 19th and early 20th centuries, factory conditions were squalid.

In fact, factory horror stories almost seem to be a right of passage for new industrial economies. Ever heard of the Triangle Shirtwaist Factory fire in Manhattan? Almost 150 factory workers died. That made the factories building Apple products look like the Four Seasons.

Yes, that was a long time ago, but I'm always amazed how little is learned from the past. And I'll bet that even today there are factories out there not much better than the Triangle Shirtwaist Factory (and worse than Foxconn). That's a bet I'm confident I'd win.

So, you really want to fix the working conditions for people on the iPad production line? Then insist that Apple make products in the U.S. according to U.S. laws. (Though recent examples of working conditions at U.S. defense contractors don't necessarily inspire confidence in the U.S., either. And Amazon has had its own problems at U.S. facilities.)

But that's a pipe dream, of course. Apple will never do that. Such a move is diametrically opposed to the principals of the company's low-cost production model. And how many Americans would live in dormitories and make a 24/7 on-call commitment to Foxconn for low wages?. (Note that Foxconn is building a plant in Brazil because the cost of labor is cheap there too).

The best Apple can do (apparently) is get processors for its Macs from U.S.-based Intel, and A5 and A6 chips from Samsung's Austin, Texas, plant. There are other opportunities too, such as getting flash memory chips from U.S.-based IMFT (Intel-Micron Flash Technologies). But IMFT is now building its newest plant in Singapore.

The point is, those U.S. plants, relatively speaking, are not worker intensive. And that's what the U.S. has become pretty good at. Very high-end high-tech manufacturing that doesn't require many workers.

Like it or not, high-tech worker-intensive manufacturing--what Foxconn does--is an unstoppable Chinese juggernaut. And peek inside a lot of those factories--like factories in Japan and the U.S. years back--and you'll get sick watching the sausage get made.

So, the most realistic solution is for Apple to keep pressuring Foxconn to improve working conditions while also taking responsibility by toning down the impossible demands it makes on the Chinese supply chain.

more @;cnetRiver

No comments: