80 Apple factories violated Chinese temp worker laws last year — report

From “Apple Turned Blind Eye to Supplier Breaches of Chinese Labor Laws” ($) posted by The Information Wednesday:

In 2014, Apple executives became alarmed when China enacted a new labor law meant to protect workers’ rights. The law required that no more than 10% of a factory’s workforce be temporary workers. Typically these employees have fewer benefits and legal protections than permanent ones, but Apple’s suppliers increasingly relied on them in China’s tightening labor market.

Apple surveyed 362 of its supplier factories in China that year and discovered that nearly half were over the quota for temporary workers. Eighty factories used temporary workers for more than half their labor force, according to an internal Apple presentation reviewed by The Information. Apple asked its suppliers to come up with plans to reduce their use of temporary workers by a March 2016 deadline, when a two-year grace period for the law expired. However, by the time the law went into effect, little progress had been made.

According to four former Apple employees familiar with its labor issues, Apple for years took no major action against its suppliers for violating the temp-worker labor law out of concerns it would create costs, drain resources and delay product launches. Three of the ex-Apple employees were members of its supplier responsibility team, which is in charge of monitoring violations and enforcing penalties, while the fourth was a senior manager familiar with its operations in China.

My take: The perils of just-in-time manufacturing. At least Apple went looking for labor violations before it ignored them.

14 Comments

  1. David Emery said:
    “According to four former Apple employees familiar with its labor issues, ”

    Makes me wonder why these are -former- Apple employees. Two competing thoughts come to mind:
    1. They failed to do their jobs and Apple fired them.
    2. They left because Apple failed to act on their findings.

    Particularly in labor markets impacted by COVID restrictions, more investigation is needed before coming to a conclusion about underlying causes. I could well see an attempt to surge manufacturing that exceeded, temporarily, hiring limits. But the one thing we know, in our click-focused replacement for journalism, anything bad about Apple generates lots of clicks.

    0
    December 9, 2020
    • Gregg Thurman said:
      But the one thing we know, in our click-focused replacement for journalism, anything bad about Apple generates lots of clicks.

      And causes Black Swan dips like we just had, and right after I added to my position with DEC 11 $121/$123 Call Spreads.

      For now I’m thinking AAPL is resilient enough to recapture $123 and more by this Friday’s Close.

      What bothers me about this report isn’t that they called out Apple, but that the authors DID NOT include Samsung, LG, Google and all the others that use pretty much the same suppliers.

      3
      December 9, 2020
  2. Dan Scropos said:
    “Apple factories” is where I stopped reading.

    4
    December 9, 2020
  3. Adam Foster said:
    Wow, I went to work seeing 126 almost print and I just stopped for lunch seeing todays one day chart… phooey!

    1
    December 9, 2020
  4. Joe Murphy said:
    @
    “… Apple asked its suppliers to come up with plans to reduce their use of temporary workers by a March 2016 deadline, when a two-year grace period for the law expired….”

    “… Apple for years took no major action against its suppliers for violating the temp-worker labor law…”

    Without the occurrence’s actual timeline, I question the accuracy of the story. Questionable accuracy seems to be SOP.

    3
    December 9, 2020
  5. Fred Stein said:
    This story gets rewritten every now and then with new un-named sources and new allegations. Later we find no substance.

    4
    December 9, 2020
    • Rodney Avilla said:
      If you want substance, you came to the right place. Apparently PED has reason to conclude that Apple ignored findings of labor violations, based on ‘his take’. However, the article does not claim that Apple did nothing, only that they did not take any ‘major action’ against the suppliers. So, what determines major vs minor action? And how would they even have that information, as to what happens between Apple and suppliers, unless they are in Apple management (or the suppliers)?

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      December 9, 2020
  6. Fred Stein said:
    Muck-raking.

    I found this in 9to5 Mac (I don’t subscribe to The Information); “Our ‘surprise and delight’ business model requires a huge volume of labor for only a short period of time as we ramp products,” according to an internal Apple presentation in 2015″.

    The 10% rule was passed in 2014 with a 2 year grace period, i.e. until 2016, to comply.

    1
    December 9, 2020
  7. Jerry Doyle said:
    “…. Apple asked its suppliers to come up with (corrective action) plans to reduce their use of temporary workers by a March 2016 deadline.”

    Apple fulfilled its obligation. Apple does not enforce Chinese laws. Apple is no legal entity and has no legal enforcement authority in a foreign country.

    Apple saw suppliers not complying with an indigenous country law. Apple subsequently informed suppliers to take corrective action. If the suppliers failed to take corrective action, then the People’s Republic of China (PRC) is the entity that has legal authority to enforce the law, not Apple.

    Apple did not turn a blind eye to the problem. Apple notified its suppliers of the violation, asked its suppliers to take corrective action and once Apple completed that process it becomes the PRC’s responsibility to see “enforcement” of the country’s laws are carried out responsibly.

    The article is limited in its reporting. Whose to say that Apple didn’t alert the PRC. I suspect it was the PRC who turned a blind eye.

    There’s only so much Apple can do and it seems to me that they did it.

    This is another in a series of examples where American companies operating in foreign companies can only do so much. It seems to me that Apple acted responsibly. It may be that the suppliers did not follow the law and if so, then it is up to the PRC to enforce the law, not Apple who has no legal enforcement authority.

    3
    December 9, 2020
  8. Phil Service said:
    Click bait. Perhaps I am naive, but I think that Apple execs actually value personal and corporate integrity. I’d be interested in their side of the story. As for whether this story had any effect on AAPL, I’d just note that a lot of stocks had a bad afternoon.

    0
    December 9, 2020
  9. Steven Philips said:
    Could it be because a ton of AG’s went after Fecesbook?

    2
    December 9, 2020
  10. Robert Stack said:
    Fecesbook? Is that an original? 🙂

    0
    December 10, 2020
  11. Steven Philips said:
    I don’t know. Maybe. It just popped into my head. Reflection of my subliminal (or not so…) attitude?

    0
    December 10, 2020

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