Tuesday, October 25, 2011

Apple Inc. is Rotten to the Core

At Apple's plants in China (and elsewhere in Asia), secrecy abounds, the workers are treated like slaves and live under horrendous conditions, child labor is used, and a few have committed suicide. Will Steve Jobs new biography have anything to say about that?

The massive manufacturing complex in the South China city of Longhua resembles an industrial fortress. To enter the facility, workers swipe security cards at the gate. Guards check the occupants of each vehicle with fingerprint recognition scanners.

Container trucks and fork lifts rumble nonstop across the sprawling compound, serving a grid of factories that churn out electronics goods for top global brands around the clock.

Inside the walled city -- one of several compounds run by Foxconn International, a major supplier for Apple Inc -- employees are provided with most of their daily needs. There are dormitories, canteens, recreation facilities, even banks, post offices and bakeries (but their living conditions are horrible).

Here's a link to another video of a CNN investigation of Foxconn International's plants in China. (Embedding of this video was not permitted by the request of CNN)

The rank-and-file within the compound have little reason to venture outside. That had reduced the likelihood of leaks, which in turn had lessened the risk of incurring the wrath of Apple and its chief executive, Steve Jobs, whose product launches had turned into long-running, tightly controlled media spectacles.

Many of Apple's finished gadgets, from iPods to iPads, are assembled at industrial compounds like the one in Longhua. And when it comes to guarding Apple's secrets, Foxconn, a unit of Taiwan's Hon Hai Precision Industry, and other suppliers throughout the region, leave little to chance.

A uniformed worker outside the Foxconn factory in Longhua, about an hour from Hong Kong said, "Security is tight everywhere inside the factories. They use metal detectors and search us. If you have any metal objects on you when you leave, they just call the police."

Hon Hai spokesman Edmund Ding declined to comment for this article, as did Apple.

But industry sources in China and elsewhere in Southeast Asia say that Apple goes to what one person in the business termed "extreme lengths" to protect even the smallest details of its new products under development.

Many of the Cupertino California-based company's tactics read like something from a spy novel: information is assiduously guarded and handed out only on a need-to-know basis; employees suspected of leaks may be investigated by the contractor; and the company makes it clear that it will not hesitate to sue if secrets are spilled.

On occasion, Apple will give contract manufacturers different products, just to try them out. That way, the source of any leaks becomes immediately obvious, people familiar with the supply chain said.

And unlike other electronics makers, some of whom prefer the convenience of one-stop shopping, Apple doesn't rely on a single firm to supply everything for a product. The industry sources say the company will often minutely divvy up projects.

A senior official at a subsidiary of Hon Hai Precision Industry said, "This ensures that the only people who have all the secrets to any Apple product is Apple itself. Other tech companies will also look for their own sources of components to compare, but none of them do as many things in-house as Apple does."

The upshot is that even the people who man the assembly lines have no idea what the finished product will look like.

An official at one supplier said, "The typical production line worker will not see the product until the very last minute when actual production takes place. It's all concentrated in the hands of a few product development teams."

The discretion that Apple demands from its suppliers is merely an extension of the way the company operates at its own corporate headquarters in Cupertino, former employees say.

Apple's obsession with secrecy is the stuff of legend in Silicon Valley. Over the years, it has fired executives over leaks and sued bloggers to stop trade secrets from being exposed.

A tight-lipped ethos permeates working life, particularly in the run-up to the launch of a new device. Projects are siloed in carefully controlled work groups, rooms are guarded by strict key card access, and many have no firm idea about what even their colleagues in the same office are working on.

One former employee, who worked in the marketing department at the time of the iPhone launch, said workers understand that secrecy is part of Apple's mystique, and the silence is self-enforced at the most basic level.

He said, "I didn't even talk about it with my wife. It's a culture of silence and it's just accepted. You get used to not talking about your work, it becomes normal because everybody is doing the same thing."

In China, a Reuters reporter found out the hard way how seriously some Apple suppliers take security.

Tipped by a worker outside the Longhua complex that a nearby Foxconn plant was manufacturing parts for Apple too, our correspondent hopped in a taxi for a visit to the facility in Guanlan, which makes products for a range of companies.

As he stood on the public road taking photos of the front gate and security checkpoint, a guard shouted. The reporter continued snapping photos before jumping into a waiting taxi. The guard blocked the vehicle and ordered the driver to stop, threatening to strip him of his taxi license.

The correspondent got out and insisted he was within his rights as he was on the main road. The guard grabbed his arm. A second guard ran over, and with a crowd of Foxconn workers watching, they tried dragging him into the factory.

The reporter asked to be let go. When that didn't happen, he jerked himself free and started walking off. The older guard kicked him in the leg, while the second threatened to hit him again if he moved. A few minutes later, a Foxconn security car came along but the reporter refused to board it. He called the police instead.

After the authorities arrived and mediated, the guards apologized and the matter was settled. The reporter left without filing a complaint, though the police gave him the option of doing so.

"You're free to do what you want," the policeman explained, "But this is Foxconn and they have a special status here. Please understand."

It is unlikely that Apple tells security guards across the Pacific how to go about their business.

The company, which spends billions of dollars on components and contract manufacturers, has a code of conduct that spells out how those working in its supply chain should be treated -- "Suppliers must be committed to a workplace free of harassment," states one. To ensure compliance, Apple periodically audits its suppliers. But the scuffle in Guanlan does underscore the intense pressure many contractors feel to clamp down on the information flow.

Another way Apple keeps leaks to a minimum is to bring suppliers in at the absolute last minute. An official at a component supplier, who, like nearly everyone else interviewed for this story, would speak only on condition of anonymity said, "What usually happens is that we will receive a call from Apple, and by then they usually already have some idea of what exactly they want. They usually give us a couple of options, we present some stuff to them, and they look at quite a lot of samples before coming to a final decision, sometimes just weeks before the rumored launch."

Apple also helps keep its components out of the mainstream by insisting on custom designs rather than off-the-shelf parts -- a practice that leaves many suppliers frustrated. An official at a South Korean supplier who said he has participated in Apple projects complained that the company sometimes makes unreasonable requests. He said, "Apple also wants unique size and specifications. That means we won't be able to use a common platform or rework those components to serve other clients. And if there's any inventory left, it cannot be used any other way."

Not surprisingly, landing a contract with Apple will always include a confidentiality clause. And they usually come with stiff penalties in the event that a breach is discovered, said sources at some suppliers. These insiders added that such agreements often come on top of unannounced checks by Apple officials to maintain standards.

Two sources familiar with the matter said they were not aware of any company that has been fined for breaching a confidentiality pact. But they say a number a suppliers have been verbally warned that they were in danger of losing their contract if suspected leaks persisted. The difficulty lies in proving the source of a leak. In the absence of solid evidence, the most Apple can do is to switch suppliers once the contract runs out, the sources said.

One of the sources said, "Unless there's a recording or an email that can be clearly identified to a certain Apple supplier, it's all going to be a blame game with everyone pointing fingers at everyone else."

Hon Hai, the huge Taiwanese manufacturer with units in China, has gone to great lengths in the past to maintain its own secrecy. In a high-profile case in China in 2006, Hon Hai sued two Chinese reporters and asked for 30 million yuan ($4.4 million) in damages for exposing alleged sub-par employment practices. The amount was later reduced to a symbolic 1 yuan, after stinging public criticism was directed at Apple. Various groups including Reporters Without Borders wrote to Apple chief Steve Jobs asking him to intercede in the case.

Apple's audit of Hon Hai's facilities after the case found that it was in compliance with a majority of its requirements under its supplier's code of conduct. But the company did find a number of violations that it was working to address, though it declined to disclose the specifics.

Hard-pressed Foxconn workers dress in T-shirts with an I Love Foxconn slogan during a rally to raise morale. (This is truly pathetic.)

Read: Revealed: Inside the Chinese suicide sweatshop where workers toil in 34-hour shifts to make your iPod Critics have dubbed iPhone maker Foxconn's complex an 'i-Nightmare factory'.

Where they live.

You are NOT allowed to commit suicide: Workers in Chinese iPad factories forced to sign pledges: In another case that made global headlines last year, an employee in China for Foxconn was believed to have jumped to his death after being interrogated by his employer. According to local press reports, he was under suspicion of taking an iPhone prototype -- to which he had access -- out of the factory.

A film by Grant J. Kidney

Apple’s former chief has recently perished. Yes, this was a tragedy as Steve Jobs, like the rest of us, was a human being with thoughts, feelings, and dreams. However, we must also take into consideration the many lives which ended in suicide due to the harsh conditions workers employed by Apple’s insidious subsidiaries must suffer through.

And how many of the unemployed in America today could have been working and earning a "living wage"?

Foxconn had seen an uptick in suicides last year among its workers that had led to concerns over conditions at the factory. Bloomberg reported that one worker at the Foxconn factory described life as "meaningless" and "very tough" at the factory. In an attempt to provide better pay and working conditions for workers at the factory, Apple cut its own profits by a mere 0.7 percent to give the workers at the factory a raise of about 30 percent. After that HUGE raise, the workers at the factory made a meager $172 a month (with forced overtime, about $1 an hour).

Foxconn had announced that it would be offering some of its workers up to a 66 percent increase in pay if they can pass a "performance evaluation". The pay raise would require a three-month evaluation and if the worker passes, they would get a raise of up to 2,000 yuan per month, which works out to about $293 here in the United States.

Foxconn founder and chairman Terry Gou had said, "This wage increase has been instituted to safeguard the dignity of workers, accelerate economic transformation, support Foxconn's long-term objective of continued evolution from a manufacturing leader to a technology leader, and to rally and sustain the best of our workforce. We are working diligently to ensure that our workplace standards and remuneration not only continue to meet the rapidly changing needs of our employees, but that they are the best in class." (Sounds like B.S.)

In the long term Foxconn is considering moving to Vietnam in order to lower labor costs, or replacing employees with robots at an automated facility in Taiwan.

Known for assembling Apple's iPhones and iPads in China, Taiwan's Foxconn Technology Group plans to use more robots, with one report saying the company will use one million of them in the next three years, to cope with rising labor costs (I suppose $1 an hour is too damn much).

Reuters reports that so far (as of last year) ten workers at the Foxconn factory in Longhua, China have killed themselves. All of the ten workers were reportedly migrant workers that left the poor areas of China to find work. For now, it's using other measures to try to cut the suicide rate in China in the short term.

Steel wire meshes have been fitted to windows at Foxconn's factory to stop workers jumping after a rash of suicides believed to be due to harsh management practices.

Suicide Nets

Among these measures appear to be a set of newly installed safety nets at some of its facilities. A tipster sent a photo of some of these nets in to the website Gizmodo. As the site points out, the company has put out no official release about the nets, which span between the residential high rises that employees have previously jumped from. The nets may serve some other purpose, but it appears they may have at least been in part put up to cushion employees' falls.

Most U.S. manufacturers turn a blind eye to these kind of issues in China. However, after much criticism Apple has taken to conducting yearly working condition studies. Its latest one showed a variety of problems including overworked, underpaid employees...and the use of child labor. (READ "America's Race to the Bottom)

Will child labor claims stop you buying Apple? Besides China, Apple also has factories working for it in Taiwan, Singapore, the Philippines, Malaysia, Thailand, and the Czech Republic.

According to the report, over the course of 2010, Apple found 37 core violations across 127 supplier facilities in Asia, where a core violation is defined as a serious breach of Apple’s code of conduct prohibiting worker abuse, underage labor, slave labor, etc.

In one factory, Apple discovered that employees were repeatedly being exposed to toxic chemicals. Four other facilities presented false payroll records to Apple, or tried to bribe Apple’s audit team. Another facility threatened employees being interviewed by Apple’s audit team. But for all its faults, Apple remains one of the most conscientious companies in tech, compared to other American multi-national corporations. Evidently companies like Microsoft and others are just as guilty.

COMMENTARY by Kyle Bryant - I have often reported on Apple CEO Steve Job's absolute control of every aspect of new product research and development and production. Steve is notorious for secrecy. You often hear of the "Culture of Fear" that Steve Jobs has created to insure absolute secrecy. Everything is on a need to know basis, from concept to product launch. Design work is compartmentalized. Design teams work on separate parts of a new product. Only a few people at Apple know what the final product even looks like. Security is just as tight at all of Apple's production partner's--company's located in South Korea, Taiwan and China.

One of these companies is Taiwan's Foxconn International, a manufacturer of consumer electronics products, with several plants located in China. When I first read this article, I was incredulous and appalled at what I have read about Foxconn's plants in China, their high security and secrecy, and the oppressive treatment of their factory workers. In the twelve months prior to February 2010, eleven Foxconn International factory workers have committed suicide without any explanation.

Rumors abound of the oppressive working conditions, 15-20 hour work days, sometimes without breaks, just so that Apple's products can be delivered on time. Worker's have been sworn to secrecy. The shear number of suicides defy all statistical odds. How can so many workers from one Foxconn International plant commit suicide? Were these factory workers killed by Foxconn International for violating secrecy or not meeting their production quota's, then the evidence covered up, and their deaths blamed as a suicide? Makes you wonder, doesn't it?

To Apple Evangelists everywhere, Steve Jobs can do no wrong even after death. However the Culture of Fear and use of slave labor camps like Foxconn International continue under new CEO Tim Cook. Keep in mind that before he became Chief Operating Officer, Cook was handpicked by Steve Jobs to be personally responsible for manufacturing all Apple products. It was Cook submitted the names of the plants he selected to Steve Jobs for his final approval.

The Legend of Jobs is ever lasting. He is like Moses freeing the evangelists from the land of IBM "Big Brother" computer rule. Apple Evangelists everywhere will forever love Steve Jobs, and millions shed tears for him after his death, and they love and obsessed with every single Apple product-- the iMac, iPod, iPhone, iPad, iTunes, Apple Stores. Everything. Once you become an Apple Evangelist you swear blind allegiance and are brand loyal for life.

It does not matter to these Apple evangelists that the simple, beautiful and elegant products produced for them were made under the most cruel and oppressive work conditions imaginable, and are nothing short of virtual slave labor camps.

Enjoy your iPhone 4, admire the sleek clean lines of your iPad 2, and the cool music blowing out of your iPod MultiTouch. It is youwho look the other way, ignore the cries of help from tormented Chinese factory workers working at Foxconn International, and ignore the painful cries of the parents, husbands, wives and loved ones who lost someone special after he or she jumped off the roof of the Foxconn International plant.

Here's a link at YouTube to a video of a CNN investigation of Foxconn International's plants in China.

The suicides prompted 20 Chinese universities to compile a report on Foxconn, which they decried as a labor camp. This video is a visual footage of the report "Workers as Machines: Military management in Foxconn" (See the worker's dormitories...they're slums!) "Deconstructing Foxconn" from Jack Qiu on Vimeo.

The iPhone 4S will come at several price levels, from $199 for a 16-gigabyte model to $399 for a 64GB version. The new Apple CEO Tim Cook gets $383.6 Million worth of Apple stock, while his workers only get $1 or less an hour to make a phone costing you $400...which the "techies" say gets a big fat "F".






  1. China created 9.94 million new jobs by the end of last month, exceeding its target of nine million jobs this year! In a related item, Chinese Prime Minister Wen Jiabao recently declared that his government will consider the creation of new jobs an URGENT PRIORITY, due to lower economic growth and the need to guarantee employment for millions of university graduates and migrant workers.


  2. That is terrible! I had no idea!

  3. The first world sucks the blood of the third world. We are talking about Apple because it is the last trending thing, but all electronic manufacturers build their goods in the same place, under the same or worst conditions. Same as many other industries.