Foxconn to shift some Apple production to contain costs after drastic wage hikes

MacBook Pro“Foxconn is preparing to shift part of its production of Apple gadgets from Shenzhen to north and central China, amid a greater willingness from the US company to work with factories away from its long-time Chinese hub,” Kathrin Hille reports for The Financial Times.

“The move, aimed at containing costs, follows drastic wage rises for large parts of the workforce of the Taiwanese-owned company, after a string of worker suicides and widening labour unrest,” Hille reports.

“Apple is Foxconn’s biggest customer,” Hille reports. “Any move by Foxconn will add to momentum to the gradual diversification of global technology production away from a handful of locations in southern China and around Shanghai.”

“Executives close to the annual negotiations between the two companies over next year’s orders said Foxconn’s demands to pass on some higher labour costs had not been met favourably by Apple,” Hille reports. “‘But Apple is more ready now to use some of the new locations,’ one executive said.”

Read more in the full article here.

26 Comments

  1. Looks like good old capitalism is working well in China. If local workers can’t work for less, there’s others who can.

    The whole ‘string of suicides’ situation is more than meets the eye. From what I gather (and someone, correct me if I’m wrong), Foxconn’s factory jobs are sought after by locals because of the package of benefits they contain, one among them being a beefy life insurance policy. Looks like these insurance policies have been the single most significant driving factor in those suicides (where family collects and lives happily ever after, honouring yearly their kin who gave the ultimate sacrifice). Driving up wages helps a little (poor families are somewhat less poor), but as long as that fat life insurance policy is in the package, suicides will likely continue to exist (until someone removes suicide as an allowable cause of death for the collection on that policy).

    Cheaper labour elsewhere in China might eventually also catch on with respect to this life insurance perk. Something will have to be eventually done, though, in order to prevent these suicides, and it doesn’t seem to be all that complicated.

    One thing is obvious; doubling the wages wasn’t all that smart of a move. It may have reduced the frequency of those suicides, but ultimately, it drove the jobs away to other places.

  2. Don’t care about his positive or negative effects on the economy but can someone please edit out those mind numbingly annoying pregnant pauses in almost every sentence he puts together. There really is only so much slobbering on his every word that even the easily impressed can accommodate without becoming brain dead.

  3. If they added 50 cents to the cost of each iPad, it would cover every raise in the company for those workers for 20 years. They really need to shift? I cry bullshit.

  4. You know what I’d like to see? I’d like to see Apple bring device manufacturing back to the US. Probably and sadly impossible given the economics of it all, but wouldn’t it be awesome if iPhones intended for US customers were made in, oh I don’t know…how about West Virginia? That state could use a little pick-me-up.

  5. @ hairdo,

    “Bring device manufacturing back to the USA for iPhones sold in the USA”

    Would you Americans actually pay between 5 to 10 times more than everyone else in the world just to have a Made in USA sticker on your iPhone?

  6. @Tom Strong…stop looking inward. America and Canada are hurting because of countries like Greece. I do not like my own head of state BUT there are world forces at work here.

  7. @singidunum

    The suicide rate for Foxconn was less than 10 per 100,000 which is significantly less that than China’s national average of 14 per 100,000 or the US’s 18 per 100,000.

    or the 10.7 per 100,000 US female college students who attempted to commit suicide.

  8. @artist. Why do ‘Artists’ believe they should be socialists? I’m an artist and I’m a old-time conservative, having once lived in a socialist country. That’s where this loon in power is taking the US.

    @Buster. Lower taxes and stop spending what you don’t have – easy!

    The world forces have been living high on the hog with their early retirements and short work weeks, etc, etc, etc.

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