Bloomberg News

Hon Hai Declines in Taipei Amid Labor Inspections: Taipei Mover

February 20, 2012

Feb. 20 (Bloomberg) -- Hon Hai Precision Industry Co., the world’s largest contract manufacturer of electronics, declined in Taipei trading amid inspections by a labor group that said the company has “tons of issues” to be addressed.

The Taipei-listed flagship of Foxconn Technology Group fell as much as 2 percent to NT$99.50, headed for the biggest drop in two weeks, before trading at NT$99.60 as of 1:15 p.m. local time. The benchmark Taiex index added 0.7 percent.

The Fair Labor Association is conducting inspections at Foxconn’s facilities that will probably result in “very significant announcements,” the group’s chief executive officer, Auret van Heerden, said in a Feb. 17 interview. Foxconn raised wages 16 percent to 25 percent from Feb. 1, a move that will be offset by clients such as Apple Inc. paying higher prices, said Fubon Securities analyst Arthur Liao.

“These wage rises will have little long-term effect as Apple will minimize the impact by paying more to them,” Liao, who has an “add” rating on Hon Hai, said by phone today. “There’s concern revenue momentum is weakening at Hon Hai in the short term as they await new products from Apple.”

Foxconn raised wages for the third time since 2010, including a doubling of salaries in Shenzhen, the southern China city which hosts its largest facilities, the Taipei-based company said in a Feb. 17 statement.

China’s western province of Sichuan, where Foxconn makes iPads for Apple and notebooks for Hewlett-Packard Co., raised minimum wages 23 percent from Jan. 1, according to the state-run China Daily. The minimum wage rose an average 22 percent last year, the newspaper wrote in a separate report, citing Yin Weimin, minister of human resources and social security.

FLA inspections commenced Feb. 13 at the request of Apple, the Cupertino, California-based company said in a statement the same day. The FLA plans to interview 35,000 Foxconn employees, van Heerden said.

--Editor: Frank Longid

-0- Feb/20/2012 05:20 GMT

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net.


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