Bloomberg News

Foxconn Workers Return to IPhone Production After Stoppage

October 06, 2012

Foxconn Workers on IPhone 5 Lines Strike, China Labor Watch Says

Workers on Foxconn Technology Group ’s iPhone 5 production lines at the company’s plant in Zhengzhou, China, went on strike yesterday, advocacy group China Labor Watch said in a press release. Source: AFP via Getty Images

Foxconn Technology Group workers returned to the assembly line in Zhengzhou, China, that makes Apple Inc. (AAPL:US)’s iPhone 5 after walking off their jobs yesterday, advocacy group China Labor Watch said.

A dispute occurred between the production and quality teams at the factory and that was resolved by yesterday afternoon, Simon Hsing, a spokesman for Hon Hai Precision Industry Co., Foxconn’s flagship unit, said in a phone interview.

“Three to four thousand” production employees walked off the job at the plant yesterday, and they returned to work today after the management said they’d be fired for a failure to turn up, Executive Director Li Qiang said.

The workers action happened after they were being made to work through a holiday week and being subject to “overly strict” product-quality demands without adequate training, the group said in a press release dated Oct. 5. The walkout was the result of demands placed by Apple on its manufacturer to improve the quality of the iPhone 5 after customers complained that the company’s latest handset had scratches, China Labor Watch said.

“What’s important is the implication,” said Daniel Chang, an analyst with Macquarie Securities Ltd. in Taipei. “At a time when China’s wage level is rising it’s creating big challenges for assembly plants like Foxconn.”

Louis Woo, a spokesman for Foxconn, denied there had been 4,000 workers involved in a strike or work stoppage, speaking in a phone interview.

Quality Control

The issue adds to the labor woes Taiwan-based Foxconn has faced in the past two years, after a fight among 2,000 workers at another plant in China resulted in a production stoppage last month.

Foxconn raised overly strict demands on product quality without providing worker training for the corresponding skills, China Labor Watch wrote. This led to products that did not meet standards and ultimately put a tremendous amount of pressure on workers, it said.

Steve Dowling, a spokesman for Apple, declined to comment.

Most participants in the strike worked on the onsite quality control line, according to China Labor Watch. There had been conflicts between quality control inspectors and line workers over phones that didn’t meet standards, it said. The employees were out at 11 p.m. local time yesterday, China Labor Watch Executive Director Li said earlier.

An audit of Foxconn facilities this year turned up cases of excessive working hours and hazardous conditions, the Fair Labor Association said in August.

Foxconn has pledged to bring hours in line with legal limits by July 2013 and compensate its more than 1.2 million employees, the FLA said in March.

Built Overseas

Apple, which designs products at its Cupertino, California, headquarters and has them assembled in China, is trying to keep up with demand for the iPhone 5, which went on sale last month. The company said it sold 5 million during its debut weekend, a total that could have been higher if it weren’t for supply constraints that have delayed delivery for many handsets.

China Labor Watch said multiple lines from “various factory buildings were in a state of paralysis for the entire day.”

The strikes came after Apple and factory management raised quality demands related to scratches on the frames and back covers of the iPhone 5, according to China Labor Watch.

“With such demands, employees could not even turn out iPhones that met the standard,” China Labor Watch said in the statement. “This led to a tremendous amount of pressure on workers.”

Those higher quality standards and lack of vacation during the holiday led to the strike, China Labor Watch said.

Apple fell 2.1 percent to $652.59 at the close in New York yesterday. The shares have risen 61 percent this year.

Taiyuan Fight

Last month, a fight among 2,000 Foxconn workers at a factory in China left more than 40 hospitalized and halted production. The melee brought security teams wearing riot helmets and wielding plastic shields into the Taiyuan plant, which employees 79,000 people.

The scene of the conflict is one of about a dozen factories that Foxconn operates in China for customers including Hewlett- Packard Co., Nintendo Co. and Sony Corp. Foxconn resumed production at the factory on Sept. 25, saying impact on production would be limited.

In January 2011, clashes between rival groups left two people injured in Chengdu, central China, Foxconn said at the time. The company has linked such incidents to regional rivalries and not the work itself.

Foxconn employs more than 1.2 million workers in at least 18 countries, including China, Brazil, Taiwan, Vietnam and Mexico. It is the primary supplier of Apple’s iPad and iPhone.

The company said last month it will invest 1 billion reais ($494 million) to build as many as five manufacturing plants in Itu city near Sao Paulo and create 10,000 jobs. The new factories, where production will begin in 2014 and reach full capacity in two years, will enable most aspects of iPad and iPhone assembly.

To contact the reporters on this story: Andrea Wong in Taipei at awong268@bloomberg.net; Tim Culpan in Taipei at tculpan1@bloomberg.net


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