Written by Technology

Apple and its Suppliers

Four Apples
Apple has just announced some staggering profits. $13bn in the last three months alone. Once again, it’s close to being the most valuable company on the planet.
Earlier this week, the New York Times published this devastating report on Apple’s suppliers, including Foxconn, and the pressures it puts to bear on its employees.
Then there’s the report from The Daily Show (not viewable in the UK), based in part on reports from CNN.
And there’s the superb recent edition of This American Life on he same subject, based on the experiences and subsequent stage monologue performed by Mike Daisey who visited factories in China in 2010.
This morning, these pieces were followed up by CBS with a further report.
You do have to ask, at what price are we getting our iPhones and iPads?
Now these factories in China build products for lots of other companies, including many major computer and mobile phone manufacturers. So while everyone’s concentrating on Apple products at the moment, the same is probably true for many of the technology you and I are using.
But the fact is that Apple is seeing perhaps the biggest profits of any company in the sector, and seems to fight harder to reduce supplier profit margins, means that the guns are inevitably trained on it. If you’re the market leader, then you have to accept a greater responsibility – and culpability – than your competitors.
Were it not for the fact that Apple seems to work harder to drive prices from its suppliers down, then they perhaps wouldn’t need to be finding themselves with so much to answer.
In the western world (whatever that may mean, as Hans Rosling noted in an excellent piece on China in Newsnight on Tuesday), we have long become used to pressuring companies that make cheap clothing or footwear into ensuring that there are ethical production techniques. But over the years, the Nikes and Gaps of this world have sought to improve standards. Is the world perfect? Are there not child labour issues in places like India, China and Indonesia? Certainly. But things are improving.
So it’s time to place more emphasis on the same for our electronic products. The reason that companies like Foxconn employ 1.2m employees who live in virtual factory townships is that China has become the world’s manufacturer. What’s more, we’re sometimes putting unsustainable pressure on those supply chains. I’ve talked before about our desire for instant gratification. The whole world wants the new tablet the day after it’s announced. We can’t wait. We want it now!
But think about what that means down the supply chain. It means that lots of workers are being forced to work some extraordinary hours assembling these highly technical, and often very small devices, mostly by hand. That beautifully milled aluminium case? Done by hand.
Yet we expect availability, globally, tomorrow.
Recently I was pointed to a terrific website that published some online scans of an old 1976 Argos catalogue. It was entertaining reading for a number of reasons. But I couldn’t help notice that Argos sold the cine camera my dad owned (and that I now occassionally use), but got a couple of years prior to that. It was actually manuafactured for a number of years. There wasn’t an annual replacement cycle. Similarly, a camera that I was given perhaps two or three years later than that catalogue’s date was also still in production. Compare and contrast with today, where by the time we come to the end of our phone’s two year contract, we feel that we’re using a prehistoric device so fast has technology moved on.
We expect updated new devices at least annually, and preferablly more frequently than that. We get frustrated when a games company only releases its new consoles – manufactured in China – on a territory by territory basis and we have to wait to get our hands on one.
And its China that’s making “our crap” as Mike Daisey puts it in his piece.
Apple obviously does do a lot of good things. For starters, lots of people in developing countries are being pulled out of poverty and into a new middle class as they begin to earn money. Apple’s put in place lots of programmes and reports to ensure that it’s suppliers adhere to its practices and standards.
But it’s clear that it’s not doing enough. As a “leader” it has to do more.
With the colossal profits its earning on just about every device it sells, it’s not the poor China factory worked who should be feeling the pinch.
Yes, in some respects, China is going through a similar set of labour practices that the Western world went through when the industrial revolution hit. We made our workers in mills and colliaries work long hours with lots of overtime in conditions that were tantamount to slavery. Slowly we improved things, we allowed unions to develop and in the 21st century we have more of a conscience about these things. We expect our chickens to be free range, and our vegetables to be organic.
We also need to demand that our phones and laptops are being assembled in humane conditions.
Things will improve. One of the most shocking things I learnt from the edition of This American Life is that some of these factories turnover upwards of 10% of their staff every month. That’s unsustainable. These businesses need to improve working conditions and levels of pay. The CEO of these companies should not be liken his employees to animals at a zoo.
The challenge also rests with the one party system in China. There’s a great piece in this week’s Economist discussing some of these issues. Without change, the explosive growth we’ve seen the country manage can’t continue. Factories are closing. China needs to be in a place where it’s not just exporting its goods. They need to be selling to a domestic market. One of the most shocking things I learnt was that few workers even ever see a finished device that they’re working on.
In the meantime, Apple deserves the pressure it’s getting. It’s the biggest electronics manufacturer in the world by market capitalisation, and with that comes enormous responsibility. It can’t play the cool outsider anymore.
And as consumers we all need to take a long hard look at our devices, and their manufacturers. We need to care about how they were assembled and in what conditions. And we need to make sure that those manufacturers are prepared to answer those tough questions.
[Disclaimer: I typed this piece on an Asus laptop, and own many other products, several of which were probably assembled in China, and quite possibly at a Foxconn plant.] UPDATE: A really interesting take on how Apple does – or rather doesn’t communicate – and how this might have to change, from Rory Cellan-Jones at the BBC News site.
UPDATE 2: And on a related note, an interesting point here made about how it’s cheaper to have devices manufactured abroad from a tax perspective rather than importing the pieces and assembling them in the UK!