China’s factories changing as world watches

Since a report early this year highlighting working conditions at Apple’s key contractor in China, Foxconn has committed to and implemented reforms

By Keith Bradsher and Charles Duhigg  /  NY Times News Service, CHENGDU, China

Sun, Dec 30, 2012 - Page 14

One day last summer, Pu Xiaolan was halfway through a shift inspecting iPad cases when she received a beige wooden chair with white stripes and a high, sturdy back.

At first, Pu wondered if someone had made a mistake, but when her bosses walked by, they nodded curtly. So Pu gently sat down and leaned back. Her body relaxed.

The rumors were true.

When Pu was hired at the Foxconn Technology Group (富士康科技集團) plant in Chengdu, China, a year earlier, she received a short, green plastic stool that left her unsupported back so sore that she could barely sleep at night. Eventually, she was promoted to a wooden chair, but the backrest was too small to lean against. The managers of the 164,000-employee factory must believe that comfort encouraged sloth, she thought.

However, in March, unbeknown to Pu, a critical meeting had occurred between Foxconn’s top executives and a high-ranking Apple Inc official. The companies had committed themselves to a series of wide-ranging reforms. Foxconn, China’s largest private employer, pledged to sharply curtail workers’ hours and significantly increase wages — reforms that, if fully carried out next year as planned, could create a ripple effect that benefits tens of millions of workers across the electronics industry, employment experts say.

The changes also extend to California, where Apple is based. Apple, the electronics industry’s behemoth, in the past year has tripled its corporate social responsibility staff, has re-evaluated how it works with manufacturers, asked competitors to help curb excessive overtime in China and reached out to advocacy groups it once rebuffed.

Executives at companies like Hewlett-Packard and Intel say those shifts have convinced many electronics companies that they must also overhaul how they interact with foreign plants and workers — often at a cost to their bottom lines, though probably not so much as to affect consumer prices, analysts say.

Even with these reforms, chronic problems remain at overseas factories. Many employees still work illegal overtime and some employees’ safety remains at risk, according to interviews and reports published by advocacy organizations.

AN INSPECTOR’S PUSH

“This is a disgrace,” Foxconn founder and chairman Terry Gou (郭台銘) shouted at a meeting in March.

Gou, seen by activists as a longtime obstacle to improving conditions inside his factories, was meeting with his top deputies in Shenzhen, China. Last year, the New York Times had begun sending Apple and Foxconn extensive questions about working conditions in factories manufacturing Apple products. The resulting articles in late January detailed problems ranging from excessive overtime and underage workers to sometimes deadly hazards. An explosion in Pu’s Foxconn plant killed four workers.

In January, Apple publicly released the names of many of its suppliers for the first time. Additionally, the company made the unusual move of joining the Fair Labor Association, one of the largest workplace monitoring groups. Auditors from that association were soon inspecting Apple’s partners in China, starting with Foxconn.

Now, Gou was learning the results of those examinations. Foxconn was still failing to stop illegal overtime, the association’s lead inspector, Auret van Heerden, told Gou and his lieutenants, according to multiple people with knowledge of the meeting. The company was failing to keep student interns off night shifts. Foxconn had not put sufficient safety policies into practice and had exposed potentially hundreds of thousands of workers to at least 43 violations of Chinese laws and regulations.

However, the inspector was not done.

He turned to the only Apple executive in the room, the senior vice president for operations, Jeff Williams.

Apple needed to change as well, Van Heerden said. Apple, to its credit, had been working for years to improve conditions in overseas factories, but the company was treating such problems too much like engineering puzzles, he said.

“Long-term solutions require a messier, more human approach,” he told Williams.

Instead of concentrating on writing more policies, Apple needed to listen better to workers’ complaints and advocacy groups’ recommendations.

Some of those suggestions surprised Williams, people who worked with him said. Since 2007, Apple had built one of the most extensive auditing programs in the electronics industry, inspecting more than 800 facilities. It was a point of pride for both Williams and the company’s top leadership.

When Williams, who declined to comment for this article, returned from that March meeting to California, changes began. Among them, people with firsthand knowledge said, was the hiring of about 30 professionals into Apple’s social responsibility unit in the past year, which tripled the size of that division and brought high-profile corporate activists into the company. Two widely respected former Apple executives — Jacky Haynes and Bob Bainbridge — were recruited back to help lead the unit, reporting ultimately to Williams and the chief executive, Timothy Cook.

“Everyone knows Bob and Jacky,” a former Apple executive said. “It sends a message that Jeff and Tim expect everyone to get on board.”

“They know now if they don’t participate, it is the same as saying nothing,” the former executive said.

Foxconn has also shifted. After the meeting with the Fair Labor Association, Foxconn announced that by July next year, no employee would be allowed to work more than an average of 49 hours a week — the limit set by Chinese law. Previously, some Foxconn employees worked schedules that approached 100 hours a week. No other major manufacturer has pledged to abide by China’s work-hour laws in such a public manner. Foxconn, which is based in Taiwan, also promised to increase wages, so employees’ total pay would not decline despite fewer hours — the equivalent of a 50 percent raise for many workers, analysts say.

QUANTA

About 300km southeast of the factory where Pu received her new chair is another plant that is experimenting with improving workers’ quality of life — and shows the trade-offs of such gains.

The factory in Chongqing makes computers for Hewlett-Packard. It is operated by Quanta Computer (廣達), another Taiwanese manufacturer.

Inside the plant, amid thousands of workers in bright white uniforms, are occasional flashes of pink worn by people like Zhang Xuemei, a bubbly 19-year-old with glinting earrings whose sole job is to chat with co-workers.

For eight hours a day, Zhang collects complaints about the factory’s free meals and dorms. She listens to workers who are divorcing, homesick or arguing with managers. When she finds someone suffering, she refers them to the company’s full-time doctor or professional counselors.

Quanta’s 10-story dormitories feel like a college campus. There is a free movie theater, television rooms, a large martial arts gym, two spacious karaoke bars, a huge cafeteria and an aerobics hall playing a Chinese remix of Gangnam Style.

Neither Quanta nor Hewlett-Packard claims it has solved every labor woe. And the amenities are partly selfish: One of the biggest problems for Chinese factories is that workers are constantly leaving. Hewlett-Packard hopes that by improving living conditions, turnover and training costs will fall.

Hewlett-Packard also makes products at Foxconn factories, as does almost every major electronics firm. Foxconn, more than any other company, has proved that Chinese plants can deliver obsessive attention to quality. The company has helped make China into a manufacturing juggernaut through strict discipline that is visible everywhere, from the salutes employees give visiting executives to morning calisthenics for workers.

CHANGE IS HARD

That discipline is one reason every iPhone is put together so well, former Apple executives said.

It is also one reason the reforms enjoyed by employees like Pu — who received the new chair — have not spread quickly. Though Foxconn has trained managers to treat employees more gently, foremen still use profanity and intimidation, workers say.

“The managers speak in a manner that often feels like a threat,” said Mou Kezhang, who works in iPad quality assurance at the Foxconn factory in Chengdu.

Foxconn said it had “always been among the fastest to adopt change and reform.” Its policy is “to treat employees with respect and if we find any transgressions, they are immediately investigated and addressed,” its statement said.

Additional reporting by Yadan Ouyang