Apple is the World’s Whipping Boy for Worker Conditions, Jobs, Profits – Fair?

by Darwin on March 5, 2012


One Bad Apple...

You know, back in the day, Americans used to celebrate successful people and companies. Today, we vilify them. I don’t know if this is a new manifestation of Obama’s “hate the rich, hate the successful, spread the wealth” mantra or it’s just a sign ‘o the times, but when even the beloved Apple (who even the Occupy crowd, hippies and capitalist bashers can’t seem to live without) comes under fire for what is standard practice in global commerce, I can’t help but question it.

There is a significant assymetry in attention and criticism Apple has been getting of late with everything from working conditions in China to the jobs situation in the US. It seems as though every day, I see a new front page headline about working conditions at FoxConn, one of Apple’s many overseas suppliers to Apple having to defend themselves by providing estimates of how many jobs they created in the US indirectly and directly (CNBC article today).

As I was cleaning out my DVR this week, there was a full segment on CBS Sunday Morning (great show if you don’t watch it already) with some goofy activist that puts on his own Broadway stage show criticizing Apple for the working conditions of FoxConn in China.  Using drama and prolonged pauses to emphasize his points, he chastised the company for doing what pretty much every other multinational does – outsource tedious, low-skill work to third parties overseas.  Yet he only finds fault with Apple, because they are a “leader”.  I think it’s the easiest way to grab headlines personally.  If you want to criticize working conditions of factory workers making the Zune (remember that POS), I don’t think the MSM would pick it up.

Here are my thoughts on everything from jobs to working conditions to profits and I’m interested in your thoughts:

  • Working Conditions in Factories of Suppliers – I’m in total agreement that all multinationals should have robust and reasonable controls in place to ensure worker abuses aren’t occurring in the facilities of the third parties they employ. I used to source bio/pharmaceutical manufacturing in other countries and we had very thorough controls in place whereby companies had to commit to (in writing) the conditions their workers were subject to. This included things like no child labor, policies on safety and industrial hygiene, breaks, hours worked and such. If a company could not or did not answer to our satisfaction they wouldn’t even be considered. And once they moved to the next step, we audited them and looked for signs of violations as well. Things like barracks on-site or interviews with workers could sometimes give some clues, but admittedly, if a company tries hard enough, they could hide some levels of bad behavior. It would appear as though Apple did, and continues to follow the same reasonable precautions with their suppliers – probably as good as or better than the job their competitors are doing (who enjoy relative anonymity on the topic).  Some of the things I’m seeing criticized include work hours, where now, FoxConn claims workers can’t exceed 60 hours per week. I don’t think 60 hours is outrageous. I used to work 80-100 in my early days and so did a lot of our staff. Child labor is unacceptable though, and apparently, a cursory check of workers leaving the gates of some facilities in China indicate they are as young as 13 or 14. So, that’s something that shouldn’t be tolerated.  But the bigger question is… where’s Microsoft? Samsung? Nokia? And every other phone, hardware and computer manufacturer? Why is Apple the only one under the Microscope? FoxConn has dozens of large multinational clients and yet, Apple is the one being held to task for their behavior.
  • Profits – Here we go again.  Just like we used to see big pharma and big oil vilified, now there’s a lot of attention being focused on Apple’s profits and cash hoard (see what’s in store for a massive Apple Dividend).  People question whether Apple should enjoy the profit margins they do or if they’re just being greedy by outsourcing their low-skill assembly work.  Why not employ Americans with fat paychecks and stock options?  Why not spread some of that $100 Billion cash hoard around?  This is becoming a common refrain and since nothing surprises me any more, I’m curious how long it will be until Apple’s new leadership is hauled before Congress to explain their success.  How dare they!
  • Companies outsource.  It’s capitalism.  It’s reality.  If you’d love to see thousands of Americans hovering over little circuit boards tediously assembling electronics with company healthcare, benefits, then be my guest.  But you’d buy a competing product instead which, while it may be a generation behind, it would always sell for a fraction of the cost.  Just like electricity put lamplighters out of business and cars put the horse and carriage out of business, our country has evolved.  The world has changed (You’re Likely to be a Temp in the Future and Learning a Foreign Language is now Useless),   Our efforts and manpower is best spent on value-add, complex manufacturing, design and services, rather than rote assembly.  I’ll admit it, I don’t know why naive complainers won’t.  Apple WILL NOT in-source this work – ever.  So let’s stop pretending like we can legislate or criticize it into a reality.
  • Jobs in America – The fact that Apple feels compelled to defend itself by hiring consultants to analyze their impact to the US economy on everything from the additional UPS drivers to retail store clerks is just plain stupid. Apple doesn’t owe America more jobs nor does it owe anyone an apology. Apple will pay Billions of dollars in state, local and federal taxes this year and in the years ahead. We all know that Apple has created plenty of jobs in the US both directly and indirectly, but why do they need to justify to what degree? Who’s business is that? Why are they being vilified?
Is Apple Deserving of This Recent Scrutiny and Criticism?


{ 12 comments… read them below or add one }

Dave @ Gen Y Finances March 6, 2012 at 9:27 am

You nailed it with this post. The media and pundits always pick on the companies that are the most successful. Right now, it is Apple. I think the best point you make is why don’t they chastise these other tech companies (Microsoft, Samsung, etc..) for using the same suppliers!


Ken Faulkenberry March 6, 2012 at 9:37 am

Thank you for standing up and defending freedom and capitalism. Both are under attack from the entire left and increasingly coming from the right now too.
We need to introduce poeple to the constitution and provide them with a lesson on economics. Unfortunately, the first is not being taught and the second is being taught largely from a socialist point of view across our great nation. Wake up America!


Darwin March 6, 2012 at 9:11 pm

When Apple is hauled before Congress, that will be the last straw…


John | Married (with Debt) March 6, 2012 at 12:19 pm

I think Apple is just an easy target because people came to realize that Steve Jobs was such a prickly and unlikable character.

I can almost picture him in his office laughing about child labor.


Darwin March 6, 2012 at 9:12 pm

That’s pretty funny; he does look like a real prick in retrospect. Nobody said it when he was alive (not in print); but it’s been an all-out trashing since his passing. I could kinda see him snickering away I suppose. But I’m sure he had corporate officers, PR folks and attorneys making sure they weren’t going to look bad (or worse than they do now) over the years.


krantcents March 6, 2012 at 1:19 pm

Anybody who wants to find something objectionable can find it in outsourcing. I think clothing manufacturing overseas is far worse than electronics. I think overseas manufacturing, particularly electronics will start to make sense to bring home as we run out of less expensive labor forces and automate our manufacturing.


Darwin March 6, 2012 at 9:14 pm

If it were automated, it could make more sense, just like automotive, microchips, etc. But the type of work is quite manual; I suppose until labor costs finally increase (which they are in China) enough to justify replacing humans with machinery for that particular type of work, it will continue.


Andrew March 6, 2012 at 9:32 pm

Fair? No, not really. But similar to what Nike had to endure. Interesting that the only difference is the type of product. Once low-tech shoes, now hi-tech electronics.


Invest It Wisely March 7, 2012 at 11:45 am

Child labour is very unpalatable, but from the other side of the coin, who are we to judge families around the world who are trying to make ends meet? Maybe that child helps keep the family fed a little bit longer. It’s easy for rich people to judge the things that poor people do, since they’re not in the same situation.

P.S. I did some child labour myself when I was 10, delivering papers. It wasn’t so bad. 😉


Invest It Wisely March 7, 2012 at 11:46 am

Another thought; all of this pressure could very well hurt the workers more since Foxconn is now under a lot of pressure to build up a huge army of robots to replace many of the more tedious and dangerous jobs. This might increase total employment or it might decrease it significantly…


JP@Novel Investor March 9, 2012 at 3:07 pm

Have to agree the anti-profit rhetoric needs to stop. I wonder how many of the complainers have retirement funds that own Apple or if they turn a blind eye to it.


Investor Junkie March 10, 2012 at 1:00 am

But..but.. Apple is adding up to 3,600 jobs in Texas (notice they aren’t expanding in CA)

Completely agree on the post BTW. I do look at AAPL as a buying opportunity if this hurts the price of their stock. So far it doesn’t seem to have effected their stock price.

The funny thing with the news of this information, their stock price or sales hasn’t been affected.

What’s that?..preorders of the new Apple iPad sold out already? Say it isn’t so.

People vote with their wallet. If people in reality cared about this, then they will stop buying their products. People love how many consumer items are cheap (because they are made with a cheaper workforce) but then complain about how it’s made. You can’t have it both ways! It’s simple economics.


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