Apple Reportedly Will Provide Subsidies to Foxconn Workers

[Kludge]

(soz for old age)

Tuesday, June 01, 2010
We'll wait for the dust on this latest report to settle for offering up a virtual high-five to the Apple workers. The subsidies will reportedly amount to 1 percent to 2 percent of the profits from Apple products.

Apple's sudden profit sharing generosity stems from the company's own investigation into the numerous suicides that have taken place among Foxconn employees for the past several months. As the Chinese website tells it, Apple feels that low wages are playing a big role in the suicides, and it's Apple's hope that these subsidies will alleviate some of the financial pressures Foxconn workers are facing.

Read more: [/URL][URL]http://hothardware.com/News/Apple%2DReportedly%2DWill%2DProvide%2DSubsidies%2D to%2DFoxconn%2DWorkers/#ixzz0psyfWOMD (http://hothardware.com/News/Apple%2DReportedly%2DWill%2DProvide%2DSubsidies%2D to%2DFoxconn%2DWorkers/#ixzz0psyfWOMD)


Poster´s note: Many parts for Apple products come from Foxconn. Bad PR for Foxconn is bad PR for Apple.

[TheBlackPeterSchiff]

No way, greedy capitalist corporation would never willingly offer bonuses to their workers without the government telling them too.

[Kludge]

On Foxconn´s part, they raised many employees´ wages over 30% and had them sign - what I imagine is remarkably effective - a no-suicide agreement (apparently now rescinded) reading, in part:

I am aware of the contents of the open letter as well as the variety of services and care the company is providing. I promise the following:
1. If I encounter problems and difficulties after entering the company, I will ask for help from the "Employee Care Center" and other related departments.
2. In terms of my own responsibilities, if I have great difficulties or frustrations I will reach out to relatives to resolve them or report them to the company director, I will also agree to contact and communicate with colleagues, personal staff and relatives. However, I will not harm myself or others; I agree that, in order for the company to protect me and others, it can send me to a hospital should I exhibit abnormal physical or mental problems.
3. In the event of non-accidental injuries (including suicide, self mutilation, etc.), I agree that the company has acted properly in accordance with relevant laws and regulations, and will not sue the company, bring excessive demands, take drastic actions that would damage the company's reputation or cause trouble that would hurt normal operations.
I confirm that I have read and am aware of these issues
________________ (signature)
Employee number:
Residence number:
Date:

(http://www.examiner.com/examiner/x-39728-Tech-Buzz-Examiner~y2010m5d28-Foxconn-to-raise-wages-tries-nosuicide-woker-agreement (http://www.examiner.com/examiner/x-39728-Tech-Buzz-Examiner%7Ey2010m5d28-Foxconn-to-raise-wages-tries-nosuicide-woker-agreement))

[Mini-Me]

Sometimes it seems like Apple has multiple personalities (which is probably the case, given Steve Jobs is not the only executive ;)). They're one of the most jealous and greedy companies ever when it comes to vendor lock-in (worse than Microsoft), but then they go and sponsor llvm and clang, and now they're paying Foxconn workers more without competitive forces even pressuring them to.

They already have some unusually high profit margins to cut into though, and building a good reputation (or at least avoiding a horrible one) is good for business. Whether this was out of genuine charity or just good business, it's worth praising...after the dust settles of course, as Kludge put. :)

EDIT: LOL. Kludge's second post definitely clarifies which case this is (protecting their reputation). Still, it's definitely a step forward, despite the silliness of their employee contract.

[Danke]

Kludge, you have upper management potential.

[Kludge]

Kludge, you have upper management potential.

Just a couple hours ago, I named myself President, CAO, and COO of the Chosen Church of Change.

I also became the Board of Manager.......s...?

[helmuth_hubener]

This is one of those things that is just stupid, "objectively", so-to-speak. The workers are all there voluntarily, Chinese are probably beating down the doors to work at Foxconn. The suicide rate there is lower than in Steve Jobs' hometown (Palo Alto?). To pay them more will be a waste of a billion dollars or whatever. Just throw that money down the toilet.

But, they've gotta do it, because the consumers are morons on the issue of "sweat shops". One must cater and kowtow to bewildered foolishness if all your customers are bewildered fools. Don't get me wrong, I love Apple and I love Steve Jobs.

Similar issue: Apple makes all its products supe-recyclable and eco-friendly now. No PVC plastic (because we know how deadly working with PVC daily has been to plumbers, lol), greenhouse gas reports, I mean, it's ridiculous. See here: http://www.apple.com/environment/ . Total waste, all this environmental consciousness. But, it is hip and cool to be environmentally addled. And Apple is nothing of not hip and cool. So, the stupidity of customers make it economically profitable to do economically stupid things in the name of our new God, The Environment.

[RonPaulwillWin]

Apple still sucks :)

[Fox McCloud]

this will jack up the price of apple products, for sure..who's to say how much, but it will jack up the prices...the end result being they'll have less customers--it may only be 100 or 5,000, but it'll still be less.

Apparently, they felt they'd lose more customers by not giving the subsidy or they're just trying to make their own selves feel good (I suspect the latter).

[BenIsForRon]

This is one of those things that is just stupid, "objectively", so-to-speak. The workers are all there voluntarily, Chinese are probably beating down the doors to work at Foxconn. The suicide rate there is lower than in Steve Jobs' hometown (Palo Alto?). To pay them more will be a waste of a billion dollars or whatever. Just throw that money down the toilet.

But, they've gotta do it, because the consumers are morons on the issue of "sweat shops". One must cater and kowtow to bewildered foolishness if all your customers are bewildered fools. Don't get me wrong, I love Apple and I love Steve Jobs.

Similar issue: Apple makes all its products supe-recyclable and eco-friendly now. No PVC plastic (because we know how deadly working with PVC daily has been to plumbers, lol), greenhouse gas reports, I mean, it's ridiculous. See here: http://www.apple.com/environment/ . Total waste, all this environmental consciousness. But, it is hip and cool to be environmentally addled. And Apple is nothing of not hip and cool. So, the stupidity of customers make it economically profitable to do economically stupid things in the name of our new God, The Environment.

Consumers are morons because they'd like to see the people who make their stuff enjoy a higher standard of living? You are fucking insane.



this will jack up the price of apple products, for sure..who's to say how much, but it will jack up the prices...the end result being they'll have less customers--it may only be 100 or 5,000, but it'll still be less.

Apparently, they felt they'd lose more customers by not giving the subsidy or they're just trying to make their own selves feel good (I suspect the latter).

Ok, so the apple guys feel good, and the Chinese workers can afford better health and education for their kids. It's a win-win. I don't think Ipods going up in price a few dollars would hurt sells that much.

[RyanRSheets]

Consumers are morons because they'd like to see the people who make their stuff enjoy a higher standard of living? You are fucking insane.

Agreed. If the consumer didn't give a damn about the producer, they wouldn't trade in the first place, they'd steal.

[helmuth_hubener]

Consumers are morons because they'd like to see the people who make their stuff enjoy a higher standard of living? You are fucking insane.

"Higher"... than what? Raising wages to unnaturally high levels will lower the standard of living of some Chinese, and raise it for others. Those working for Foxconn will be better off, assuming Foxconn do not adjust in some way to account for the higher wage requirement (informally requiring additional value from workers, for example unreported hours). Those who would like to work there will be worse off, because the stack of 1 million job appliations will become 2 million, 3 million, and it becomes impossible to get a job there.

Now, one could ask: who am I to question the subjective preferences of consumers? Whatever consumers want, the market will provide, and this is no exception. It's no one else's business to butt in and tell them they're wrong and that they know better and force them to choose other choices. That's true. But it is my prerogative to have an opinion, and my opinion is that environmentalism is bogus, and anti-"sweatshop"-ism is bogus. Companies have to cater to the consumers' bogus delusions, but they remain nevertheless delusions. When Nike decides to pay all their Bangladeshi shoemakers $6.00/hr, it does not help Bangladeshis in general, and certainly not long-term. It just creates a bizarre island of ridiculously high wages to allieviate the guilt of know-nothing American yuppies.

Another example: rBGH-free milk. Total, laughable ignorance fueled the anti-rBGH craze in the late '90s. But, that was what the moron consumers wanted, so now we have "Farmer-certified rBGH-free" milk in all our supermarkets.

Couple articles on "sweatshops":
http://mises.org/daily/2384
http://www.lewrockwell.com/vuk/vuk9.html

[EndDaFed]

God forbid Jobs has to forgo 0.70 cents profit on each and every god damn piece of shit apple product. I guess some here wouldn't be happy until the slaves shut up and have cattle numbers tattooed to their foreheads. God damn those consumers for actually having a empathy.

[furface]

God forbid Jobs has to forgo 0.70 cents profit on each and every god damn piece of shit apple product. I guess some here wouldn't be happy until the slaves shut up and have cattle numbers tattooed to their foreheads.

I've often wondered about the connection between the Machead and the Obamabot. They're pretty much similar forms of Sheeple. All Machead's are Obamabots I'm sure, but not all Obamabots are Macheads.

Steve Jobs is a religious cult leader, not a corporate American businessman, if there is any difference nowadays.

[EndDaFed]

Oh yes I am an Obamabot because I am not an uncaring psychopath. :rolleyes:

[furface]

Oh yes I am an Obamabot because I am not an uncaring psychopath. :rolleyes:

You're saying that owning a Mac makes you a caring person? Whoa, Apple bots really are a cult.

[EndDaFed]

You're saying that owning a Mac makes you a caring person? Whoa, Apple bots really are a cult.

Every morning I wake up I sacrifice a PC to our lord and god Steve Jobs. :rolleyes:

[MelissaWV]

I also heard they had a net installed around the building(s). ;)

[helmuth_hubener]

I also heard they had a net installed around the building(s). ;)

Ha! Now there's creative and frugal solution!

[Fox McCloud]

Ok, so the apple guys feel good, and the Chinese workers can afford better health and education for their kids. It's a win-win. I don't think Ipods going up in price a few dollars would hurt sells that much.

you fail to realize that the majority of sales are conducted on the margin; the reason the iPod is priced where it currently is is because it brings in the most money possible--if they raise that price there will be a reduction in sales.

This only hurts the consumer, but I'm all for Apple doing it if they want to, as its' purely voluntary.

That said, it's still silly.

[BlackTerrel]

I'm totally cool with them doing this and I'd be cool if they didn't do it as well. Their right. At a certain point if doing business in China becomes expensive enough they'll start doing more manufacturing here which would be fine by me as well.

Say what you want about Apple - brilliant company and they make a ton of money because they make a ton of shit that people that want. That's how capitalism is supposed to work. Not financial engineering, skimming money off the top, suing people or any other such bullshit.

I wonder how many people who are not employed by Apple make a living off the company? I make mine creating useful apps and silly game for the iPhone (and hopefully soon the iPad). Innovation is good.

[BenIsForRon]

you fail to realize that the majority of sales are conducted on the margin; the reason the iPod is priced where it currently is is because it brings in the most money possible--if they raise that price there will be a reduction in sales.

This only hurts the consumer, but I'm all for Apple doing it if they want to, as its' purely voluntary.

That said, it's still silly.

We're talking about the iPod here. iPod's are priced way higher than other MP3 players with similar features. But people still buy the iPod, because it's an iPod. A marginal increase in price will not change that.

By the way, what do YOU think would be the best way for the people of China to get to the middle class? Continue working 80 hours a week while the government and the factory owners reap all the profits?

[0zzy]

There are people hear which are now criticizing even a private business giving their workers better pay? Whattttttttttttttttttt?

Whatttttttttttttt?

They misunderstand the ideologies of free markets, or maybe I do. But last I checked, a private company wanting to raise wages to their workers can do it if they please, and it will help whomever. Perhaps it will breed better workers, and other companies will have to compete and raise prices, and the consumer might pay more, but that is because the free market is at work not because of government intervention.

[Kludge]

On one hand, Apple is taking choice away from the consumer to donate as they choose by raising prices to support corporate-level philanthropy (or their public image).

On the other hand, consumers cannot easily donate to underpaid/overworked Foxconn employees.

While I am glad Apple is doing this, I will be oh-so-slightly less enthusiastic about buying a slightly-higher-priced product from Apple in the future.

[BenIsForRon]

While I am glad Apple is doing this, I will be oh-so-slightly less enthusiastic about buying a slightly-higher-priced product from Apple in the future.

You should be more enthusiastic, for the same reason I'm more enthusiastic about buying produce from a local farmer than from the supermarket. The farmer keeps more of the profits, because less goes to middlemen and CEO's.

[Kludge]

You should be more enthusiastic, for the same reason I'm more enthusiastic about buying produce from a local farmer than from the supermarket. The farmer keeps more of the profits, because less goes to middlemen and CEO's.

It inevitably supports the assembly-line model of living. No artisans... no creativity... no innovation -- unless you´re one of the privileged class who can afford an education.

Somehow, I doubt the children of these employees will see any educational benefit due to Foxconn´s raises & Apple´s "bonus." At the end of the day, they´ll all still be factory-slaves who are over-worked, under-paid, and stuck in their socioeconomic situation. God -- and they´re living under Chinese rule! I would be enthusiastic if I were convinced these Chinese workers had any individual identity instead of myself being repulsed by Statist nonsense like the "Eight Honors and Eight Shames."

[Danke]

Frick, I'm agreeing with Benis and BT! :D:p

[Fox McCloud]

We're talking about the iPod here. iPod's are priced way higher than other MP3 players with similar features. But people still buy the iPod, because it's an iPod. A marginal increase in price will not change that.

Yes it will; Apple has already calculated the maximum price they can charge for their products to gain the most advantage without creating surpluses or shortages. Raising the price above this level will create surpluses, which means they'll have to cut back somewhere, which means, surprise, surprise, someone's job is likely to be cut back or lost.


By the way, what do YOU think would be the best way for the people of China to get to the middle class? Continue working 80 hours a week while the government and the factory owners reap all the profits?

more capital investment, of course; it's how our workers became as productive as they currently our and why we have such high wages. Government mandates or silly economic policies are not going to help the Chinese worker one iota.

And again, let me make it clear, I support Apple's right to do this, since they're a private entity, and therefore it's all voluntary, I just think it's foolish economics on their behalf; it's like during the 90's where you had companies that offered incentives if you bought into the "buy American" bullcrap; extra incentives, etc. Again, I'd support a company doing this, but it's still very foolish economics on the company's behalf to do this.


You should be more enthusiastic, for the same reason I'm more enthusiastic about buying produce from a local farmer than from the supermarket. The farmer keeps more of the profits, because less goes to middlemen and CEO's.

ahh, the good old buy-local fallacy. The so called "middle-men" here are essential to the entire process, as the product wouldn't be able to get to the end user without them; they're the ones that facilitate the trade between the producer and consumer--the farmer has calculated it's far more profitable to "hire" someone else to do it than to do it himself (after all, he can't produce in the field and sell at the same time, now can he?)

You may want to check out these articles:

http://mises.org/daily/3026
http://mises.org/daily/3059

again here, I support your right to engage in trade and commerce in how you desire, but that doesn't mean it's necessarily a good thing from an economic perspective.


Perhaps it will breed better workers,

this is an argument the minimum wage supporters have been using for ages now, and the same goes here; if raising rages truly "breeds better workers", then companies would do it purely on their own to reap the benefits...namely profit.

[BlackTerrel]

Frick, I'm agreeing with Benis and BT! :D:p

I knew this day would come

YouTube - Dr Evil's Laughing Scene (http://www.youtube.com/watch?v=7edeOEuXdMU)

[helmuth_hubener]

There are people hear which are now criticizing even a private business giving their workers better pay? Whattttttttttttttttttt?

Whatttttttttttttt?

They misunderstand the ideologies of free markets, or maybe I do. But last I checked, a private company wanting to raise wages to their workers can do it if they please, and it will help whomever. Perhaps it will breed better workers, and other companies will have to compete and raise prices, and the consumer might pay more, but that is because the free market is at work not because of government intervention.
You don't misunderstand, you are exactly right -- they can do it if they please. No one here wants to force Apple to do anything, least of all me. Fox McCloud is exactly, perfectly right, and has expressed this right view very well.

One can believe in the free market without agreeing with the choices and opinions of every market actor. Many market actors are morons.

This wage-raising is a market action, that's true. But it is not being done for normal market reasons. Normal market reasons for paying an increased price for labor would be e.g. decreasing worker turnover, attracting higher quality workers, solving a worker shortage, etc. This particular wage-raising is being done for public relations reasons, to appease a mistaken view the public has about the evils of factories in poor countries. These "sweatshops", and free enterprise in general, is what's pulling these places out of poverty. The presence of enterprise is why most of these Asian countries will no longer be third-world in 30 years or so. The lack of enterprise is why most of the African countries are on track to stay in the third world, in starvation-level poverty, forever. Yes, working 80 hours is definitely a path to greater prosperity. Especially when you save, as the Chinese do, an average of 50% of your income! Can you believe that? Can you imagine making a dollar a day and saving 50 cents? Anyway, yes, that is what will make China "middle class" as the poster said. It is what will make China *rich*. Wealth is produced. When people are productive, they becomes wealthy.

[Mini-Me]

this will jack up the price of apple products, for sure..who's to say how much, but it will jack up the prices...the end result being they'll have less customers--it may only be 100 or 5,000, but it'll still be less.

Apparently, they felt they'd lose more customers by not giving the subsidy or they're just trying to make their own selves feel good (I suspect the latter).

It won't. I can't remember the exact numbers written in an article I read yesterday, but Apple's profit on the iPad is over a hundred dollars per unit (maybe a couple hundred?), whereas this is only setting them back a few bucks per unit. Apple isn't operating anywhere near the wire; they have higher profit margins than almost any other company I've ever heard of, and it's because of the ridiculous premiums that people are willing to pay for the fashion statement. Since the cost of this wage boost is about two orders of magnitude lower than their profit margin, there's no real reason why they "have" to increase prices now. ;)

[Mini-Me]

We're talking about the iPod here. iPod's are priced way higher than other MP3 players with similar features. But people still buy the iPod, because it's an iPod. A marginal increase in price will not change that.

By the way, what do YOU think would be the best way for the people of China to get to the middle class? Continue working 80 hours a week while the government and the factory owners reap all the profits?

The best way would probably be to launch the assholes in charge of Chinese monetary policy into the sun. The cost of the rockets would be more than offset by the long-term gains. ;)

This move by Apple doesn't hurt though, and I'm glad to see it happen, even if it only helps a little.

[MelissaWV]

We're talking about the iPod here. iPod's are priced way higher than other MP3 players with similar features. But people still buy the iPod, because it's an iPod. A marginal increase in price will not change that.

By the way, what do YOU think would be the best way for the people of China to get to the middle class? Continue working 80 hours a week while the government and the factory owners reap all the profits?

Nah, I don't have an iPod. I have a Walkman (yes, they make an mp3 version) because it fit better in my hand and was less expensive, and it hasn't failed me yet. Oh and yes I'm aware their workers probably don't do any better.

[BlackTerrel]

It won't. I can't remember the exact numbers written in an article I read yesterday, but Apple's profit on the iPad is over a hundred dollars per unit (maybe a couple hundred?), whereas this is only setting them back a few bucks per unit. Apple isn't operating anywhere near the wire; they have higher profit margins than almost any other company I've ever heard of, and it's because of the ridiculous premiums that people are willing to pay for the fashion statement. Since the cost of this wage boost is about two orders of magnitude lower than their profit margin, there's no real reason why they "have" to increase prices now. ;)

Exactly.

Apple charges as much as they can get away with (like any company). Just to use easy numbers say it costs Apple $500 for an iPad and they sell it for $1,000. And now by doing this it costs them $502.

This would not cause them to increase their price to $1,002. If they thought they could sell it for $1,002 they would have already done it. And if they thought they can sell for $1,200 they'll do that.

[Fox McCloud]

Exactly.

Apple charges as much as they can get away with (like any company). Just to use easy numbers say it costs Apple $500 for an iPad and they sell it for $1,000. And now by doing this it costs them $502.

This would not cause them to increase their price to $1,002. If they thought they could sell it for $1,002 they would have already done it. And if they thought they can sell for $1,200 they'll do that.

if they can't pass the cost on, then they'll have to cut back, somewhere, in their own workforce, as I explained, or it'll hurt stock prices a tad which will slightly deter investors, which well, means less capital for the company.

There isn't a single way around the harm the subsidy will cause.

[Kludge]

Wednesday, July 21, 2010 - by Paul Lilly (paul.l@hothardware.com)

Things have been relatively quiet recently concerning worker suicides over at Foxconn (http://hothardware.com/tags/foxconn.aspx), but it appears our optimism might have been a premature. Reports have been surfacing that yet another worker has fallen off a building to his death, and like the ones before him, this one is believed to be a suicide.

This latest incident occurred at a factory owned by Chimei Innolux Corp., a Hon Hai (Foxconn) affiliate specializing in the production of flat-panel displays. The man who jumped/fell wasn't directly employed by Chimei, but contracted through an outsourcing company.

... Chimei is Taiwan's largest producer of LCDs. The worker who died was born in 1992.

More @ http://hothardware.com/News/Contract-Worker-for-Foxconn-Affiliate-Falls-to-His-Death/ (http://hothardware.com/News/Contract-Worker-for-Foxconn-Affiliate-Falls-to-His-Death/)

[Fox McCloud]

http://www.engadget.com/2010/07/22/foxconn-discussing-the-possibility-of-price-hikes-to-offset-wage/

this only further bolsters my point that raising the wages was stupid, under this scenario.

Those higher prices will mean scaled back production (and thus cutting costs, mos likely by laying people off) or less investment in some other industry.

[BenIsForRon]

http://www.engadget.com/2010/07/22/foxconn-discussing-the-possibility-of-price-hikes-to-offset-wage/

this only further bolsters my point that raising the wages was stupid, under this scenario.

Those higher prices will mean scaled back production (and thus cutting costs, mos likely by laying people off) or less investment in some other industry.

Production won't be scaled back. Most of Foxconn's products are apple products, which are already overpriced. People won't even notice if they have to pay a little more, they just want the iPhone. There are no other options as far as they are concerned.

Those workers who are making more money will be spending more in their community, thus boosting the economy around the factory!

[Fox McCloud]

Production won't be scaled back. Most of Foxconn's products are apple products, which are already overpriced. People won't even notice if they have to pay a little more, they just want the iPhone. There are no other options as far as they are concerned.

Those workers who are making more money will be spending more in their community, thus boosting the economy around the factory!

you're silly logic is the basis behind the minimum wage; if that was truly the case, then we should set a $20..no, wait, $40 minimum wage. After all, it'll give those people more money to spend in the local economy! Heck! To hell with it all, a $100 minimum wage is the real answer we need!

Foxconn also does work for a plethora of other companies--Dell, Nintendo, Microsoft, Motorola, Nokia, Amazon, Cisco, Sony, HP--and various other hardware vendors...not to mention they produce motherboards themselves, so it's not just "mostly Apple". Also, the assertion that Apple's profit margins are high (as that's what you're really getting at with the "overpriced" comment) is false--let's compare it to their biggest competitor; Microsoft. Apple has a 22% profit margin...Microsoft? 29%.

It's silly to assert that Apple's products in and of themselves are overpriced as well--what government agency is fixing their price so high? None of them; they're charging the maximum price that the market will bear; they're doing exactly what every other company in the world does---it just so happens that some of Apple's products are a bit more inelastic than others.

That said, if the price of Apple's products go up (or they eat it in the form of less profit), it still has the same effect for the Foxconn employees--if the price of the Apple products goes up, then it's a price higher than the normal market rate which will mean less Apple products will be purchased....which means, naturally... scaled back production at Foxconn.

As for Apple eating the price? This means less investment for Apple because it's now a bit less profitable; an investor might jump ship for Microsoft or some other tech company or at the very least, invest less in Apple. Less funds means they'll cut back somewhere; production is very likely to be affected.

Again, either way, it gets back to the Foxconn employees...who will likely get layed off, eventually.


It's a private action (AFAIK) so I'm ok with them doing this, but that doesn't make it any less stupid from a business perspective (ie: as a business owner I can charge $100 for an ice cream cone...it's not price fixing by the government, but everyone here would agree that it's amongst the dumbest business ideas ever).

[BenIsForRon]

Apple has seen increased sales in most of its products over the past year. As long as that continues they're not going to lose too many investors. And their sales will continue to soar, even if an iBook or iPhone are 5 bucks more expensive. Most apple consumers aren't going to consider a windows laptop or a droid phone because of that five dollars.

It's entertaining how much you care about this argument. You are really bothered by any business move that doesn't happen from a strict market necessity.

Fox McCloud: "If workers could possibly be paid less, then they need to be paid less, dammit! Empathy from customers or management should have no place in the free market!"