The Information’s Wayne Ma takes a deep dive into manufacturing challenges on the subcontinent.
From “Inside Apple’s Search for an Indian Supply Chain” ($) posted Thursday:
Finding suppliers that could produce components locally proved difficult. One major issue was compliance with Apple’s supplier standards for health, safety and the environment, which are among the toughest in the consumer electronics business. Many Indian companies were unable to or unwilling to fix problems Apple’s auditors uncovered, according to people familiar with the matter.
For example, one Indian supplier Apple approached in 2018 was Superpacks, which operated a packaging factory in Bangalore. Apple sent auditors to assess whether its supplier responsibility practices were up to Apple’s standards. The audits revealed dozens of violations. The site had no safety measures for storing chemicals, lacked monitoring for noise and wastewater, and didn’t have several environmental and construction permits. It didn’t properly test drinking water for workers and the site lacked a fire hydrant system, according to a person close to Apple.
Apple spent months pushing Superpacks to fix the violations. However, the Indian company stopped giving updates and missed deadlines for fixes. Apple ultimately didn’t give it a business contract. Superpacks didn’t respond to a request for comment.
One reason why suppliers aren’t willing to improve factories in India to meet Apple’s requirements is because of its small order sizes. Current and former employees at Apple suppliers such as Shenzhen Yuto, Salcomp and Sunwoda, which make packaging, power adapters and batteries, say order sizes in India are in the thousands per month. By contrast, Apple’s orders in China are in the hundreds of thousands per week, according to people familiar with the matter.
My take: Imagine walking away from an Apple contract because the initial order was only in the thousands per month.
See also: The Apple 3.0 India archives