Apple, Hon Hai improve labour conditions at key mainland plants

Three biggest iPhone and iPad mainland plants have improved working conditions after a series of suicides and accidents, US audit finds

PUBLISHED : Thursday, 23 August, 2012, 12:00am
UPDATED : Thursday, 23 August, 2012, 2:13am

Apple and its primary manufacturing contractor, Hon Hai Precision Industry, have made "steady progress" in trimming working hours and boosting safety measures at their three biggest mainland factories since more than 50 violations were uncovered by a comprehensive audit in February.

The positive assessment was made yesterday by independent auditor Fair Labour Association based on a follow-up inspection from June 25 to July 6 that the group conducted with its Hong Kong-based associates, Openview Service and Social Compliance Service Asia.

The association said Taiwan-based Hon Hai, whose electronics manufacturing subsidiaries are collectively known under the trade name of Foxconn Technology Group, had completed 284 of the 360 tasks set under a remediation plan that the company committed to implement after the initial audit.

These actions were implemented across Foxconn's iPhone and iPad manufacturing plants at Guanlan and Longhua in Guangdong province and Chengdu in Sichuan province. The group was hit by a spate of well-publicised worker suicides and industrial accidents in the past two years.

Apart from wage increases, Hon Hai has cut working time to 60 hours a week, with the goal of meeting the 40-hour legal limit next July; buttressed health and safety training of workers; enhanced equipment testing and maintenance; extended unemployment insurance coverage to migrant workers; and placed stricter working hours for interns.

"Although questions remain about the long-term commitment by Hon Hai to maintaining these improved labour standards, we view this outcome as a positive to its reputation, even if at a financial cost," Bernstein Research senior analyst Alberto Moel said in a report yesterday.

Bernstein has estimated that the Taiwanese firm's total labour costs will increase by about NT$40 billion (HK$10.3 billion) as a result of complying with the association's remediation programme. The Foxconn group has more than 1.2 million employees on the mainland.

"We estimate the realised cost to date of the audit at about NT$20 billion," Moel said.

The balance of those costs would be spread out from July to June next year. "We would expect Apple to share the cost burden," he said.

On January 13, Apple became the first technology company admitted to the Washington-based Fair Labour Association. The non-profit group was established in 1999, from a task force created by US president Bill Clinton, with a mission to end sweatshop conditions in factories worldwide.

Jeff Williams, Apple's senior vice-president of operations, has described the association's audit as a way for the company "to drive improvements for workers and provide even greater transparency into our supply chain".