back to article Foxconn warns phones prices will rise

Mobile phone prices are set to rise, warns the owner of the Foxconn factories. The Hon Hai Precision Industry Co has suggested customers of Apple, Nokia and others should expect a hike given the amount Foxconn has been spending on improving conditions for workers, and the fact that it has employed a PR agency for the first time …

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Dead Vulture

WHAT?

"Hon Hai will have to take care not to improve workers' conditions to the point where the brands take their business elsewhere"

I'd be ashamed to write anything like that. Is that how much you care about other people?

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Anonymous Coward

alternative...

Is they spend so much on their workers that they lose all their business and the workers lose their jobs. It might not be nice, but that's life.

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Unhappy

It's not how much...

...El Reg do or do not care, it's how much we as consumers care. We want low prices, and someone has to pay for that. Why do you think our t-shirts, trainers etc are so cheap? We're not paying the true price, some of the cost is absorbed by human misery.

If the price of a phone from company X rises dues to this and the equivalent from company Y stays the same because they go to a different manufacturer, then consumers will switch to Y and company X goes down the toilet. Consumer demand will force companies to move to the cheapest manufacturer, regardless of working conditions.

Even for consumers who do care, there is no way for them to be sure if it's company X or Y actually who have decent working conditions. For all they know, company X could be taking the piss or company Y may simply Actiobe more efficient. One can't exactly buy "FairTrade" mobile phones.

One could say that company X should take a small hit on profits to ensure decent conditions, but then dividends and share price drop, investors leave and one bitches about one's pension.

The only thing that can really be done is to keep exposing the exploitation until it becomes too risky for companies to even consider dealing with such manufacturers.

Did you, or anyone else reading this, avoid purchasing anything made by Foxconn because of worker conditions (e.g. Apple products, Nokia phones)? Did anyone write to the relevant CEOs and say why they were boycotting their products? Nope, me neither.

It's a sick, sad world; but it is so easy to ignore what goes on when it is "over there".

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Title is required

Surely if business goes elsewhere, Foxconn workers will lose their jobs and will have to go back to their previous lives in the rice paddies.

A more likely scenario would be that they will go to the next factory. The only thing achieved would be delay in production with workers having had to relocate with no improvement in conditions.

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Anonymous Coward

You're not American are you?

Way to miss the humour/sarcasm.

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Unhappy

The real question is

How much of that additional capital would actually go to improving workers' conditions.

Call me a skeptic if you must, but i dunno.

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Anonymous Coward

I agree. That's why all countries ...

need to have established, verifiable safety standards and working conditions to export goods internationally. That might even bring some jobs back to the developed economies. You know, if countries were all put on the same playing field, as uneven as it would still be at least it would be the same field.

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Alien

Laboral conditions certification for goods at the border

Exposing the exploitation is not the only thing to be done.

We have to demand from our governments that they impose conditions for imports, so that nothing can make it through the border, or will be heavily levied, if it has not been produced by workers in certified good working conditions.

Of course, prices would rise as near slave labor is abolished, but our own industrial workers pretending to benefit from decent social conditions might benefit as the working conditions grew more uniform worldwide.

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Sortof

If a price of a T-Shirt costs $0.99 to make and the company charges $19.99, it's tough to put the blame on the consumer. I'd bet that if the cost went up to $1.50, the retail price would be $21.49 (or probably $21.99.) Besides, there aren't many American non-slave labor textiles available these days to choose from. But yea, it's sad.

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Anagram of whaT

Are you sure you're not ashamed of something else?

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Anonymous Coward

no protection

With no worker's rights, there will always be a new company willing to under-cut them - until that new company becomes big and gets bad PR for abusing workers...

India has strong unions - hence, it can't compete with the lower cost neighbour China in manufacturing because the workers will go on strike (or even riot !)... hence, not much is made in India compared to China.

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no rights???

China actually has some pretty tough laws on worker rights. They're technically stricter than ours. Pay rate is lower, but so is cost of living by a larger difference. The "sucky conditions" apply to a limited number of manufacturing floors, none of them apple, but overall considering 300,000 people LIVE inside the factory (literally in dorms), and that is looks nicer and better built than many of the malls and airports here in the USA, it really isn't that bad. Cultural differences taken into account, those people actually fight over each other to get a job there. It's a huge step up from the alternative.

India was worse than china 25 years ago. Once money flowed through their economy, cost of living and access to things went up, and then did wages, and then services, and then wages, and now they live on par with some 1st and 2nd world major cities and have internet at home, and more, and can thus no longer compete, and companies are moving out in droves coming back to the US and the economy there is tumbling. China is trying hard to avoid that rapid inflation, as it killed tens of thousands of Indian citizens who could not move with the times and starved.

The pay scale is low, as is the quality of home living, but the pay they get pays the bills and food and then some. A person in china can actually live on $150 per month. Keep in mind, culturally, whole families live together, with some households having 5, 6, or more workers. That's their culture.

Apple and others place greater than required restrictions on employees working in their areas of the factory. Some companies only hold Foxconn to state required laws. Most don't audit to ensure that's happening. Apple does, and published that information openly. In a population of 300,000 people, and another 150,000 or so employees in addition to that, yes, if you look for abuse you will find it. Same is true here in the USA (where our own worker suicide rate is near TRIPLE that of Foxconn btw).

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Apple?

"The "sucky conditions" apply to a limited number of manufacturing floors, none of them apple"...

Since when does the worker have the choice of choosing what factory "floor" to work on? Humane working conditions should apple for all, not just a lucky few. Apple and others profit from human misery.

Apple is the orchestra on the stern playing Mozart as the ship goes down. Caviar anyone?

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Jebus

"China is trying hard to avoid that rapid inflation, as it killed tens of thousands of Indian citizens who could not move with the times and starved."

Wow Inflation actually kills people, that's what you think and write. Everything is OK in China because the US has a higher suicide rate. You do understand that the working conditions and terms in the US are third world and is the modern definition of barbarism.

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Anonymous Coward

We need global standards

The movement of companies to whatever country can offer the worst standards to employees needs to be stopped. It's a form of exploitation that is little better than slavery. Only a world-wide accord can put an end to it.

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Pint

Easy Solution, Require...

...the US minimum wage and witholding tax be paid to all workers producing a product for American Corporations.

Sidebar: There has been NO INFLATION in the USA, according to Social Security. Apparently they don't include food or beer in that computation.

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Jobs Horns

Profit margins

And I'm sure Apple will pass on the price increase to consumers, after all it's not like they have a huge profit margin on each device already >.>

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Go

Seeing as HTC manufacture in Taiwan...

Can I be a bit smug? I realise not ALL the pieces of the phone are probably made there, but is HTC now an ethical choice for handsets?

Please, any info to the contrary would be appreciated so we can make informed choices.

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Unhappy

HTC

@ Grumpy Joe:

HTC manufacture in Shenzhen as well as Taipei. Foxconn were a major parts supplier for them back in the glory days of the iPaq / early XDA's, and before the rise of fleabay any service parts came from Foxconn eg: dock port connectors, volume switch assemblies, replacement mainboards, casings etc etc.

Haven't had direct contact with Foxconn for parts for about 5 years but unlikely to have changed much.

Check your htc device seriel. HTXXXXXXX = Taiwan. SZXXXXXXXXX = China

From experience of the a high number of the same model handset over it's lifetime (500+ units) newer models start off being made in Taiwan and are of decent quality then as the model ages the production moves to China and quality drops eg poorer quality plastic and a higher failure / DOA rate on the chinese units.

So don't think HTC aren't intersted in cutting corners if they can get away with it. You don't even get a spare stylus from them now!..................

AC 'cos I still have to deal with HTC....

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A bit rum!

"and Hon Hai will have to take care not to improve workers' conditions to the point where the brands take their business elsewhere."

Maybe take their business to another company with bad worker conditions? If that's the case, maybe the customers should stop buying those brands' products.

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"WHAT?" seconded

if Apple and the like move operations to an even worse sweat shop then they should be publicly named and shamed, and if Foxconn can't compete without killing it's workers then they deserve to lose out.

Sadly what we're probably going to be paying for is the PR agency and general damage control :(

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Stop

misinformed

1: apple encouraged those wage increases, and is the single strongest proponent of worker conditions there, and the only company that has more than 1 audit of working conditions per year.

2: Apple understands the cost increases, expected them, and will not be passing them to consumers (we're talking a few dollars tops per finished device, not tens of dollars). Some other companies will feel the bite, especially on lower end products, or where dozens of different models are manufactured at much slimmer profit margins.

3: The number of suicides per capita and per the same demographic slice of population at foxconn is 3 times LOWER than the same group of people here in the USA. Also, per 400,000 workers, there are more murders, more cases of sexual abuse, and more physical confrontations per capita here in the USA. Simple googling can find you these numbers. When you hear 10 people killed themselves in a year at a factory, that sounds crazy big, because in your mind you're thinking 5-10K people work there. You;re wrong on this count. 10 people is a small number. (yes, it should be fewer, and with some money they could shave 1 or 2 off that, and with a lot more another 1 or 2, but eliminating it is not possible, some people are just gonna give up no matter how close you watch).

4: Any other option is worse, and the cost of relocating manufacturing to save a few bucks will be outweighed by the costs of actually doing so, and put added strains on already tested product manufacturing capacity, and cause product quality issues.

5: other than some awesome health benefits, and some unusual pay scales, factory workers in the USA are more likely to work in a location of higher risk and greater chemical exposure than the general employee of FoxConn. Have you actually be in some American factories, especially textile or food manufacturing? I have... Its not pretty here either.

6: if it was so bad there, why would people get work visas and come half way across china just for the chance to work a 2-3 year contract and then go home? Their hiring lines are literally DAYS long.

7: Most of the emotional abuse heard about is our failure of understanding of general Chinese culture. If you saw what went on inside the walls of most Asian homes, you'd have child services there in a minute flat screaming child abuse, but no, that's their culture, and its actually encouraged. Its their tradition.

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hmmmm...

they hire a new PR company, then issue a press release that states product prices will be increasing... that doesnt sound like good PR to me!! maybe they need to have another meeting!!!

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It's like a lot of things..

It's like a lot of things you buy these days, you have a choice between something made in a Chinese sweatshop or something else made in a Chinese sweatshop.. or even worse.

Would I pay a little bit more if they were produced in an ethical, responsible manner that properly looked after the people who made them? Yes. Can you easily identify products like that in the shops? No!

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Joke

Yes you can

Of course you can easily identify products from sweatshops:

"Made in China"

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Silver badge

Buy Blackberry

My BlackBerry has a nice sticker saying "MADE IN MEXICO 1" ... so buying this handset actually helps my country's economy. However, I'm not really sure about accessories...

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Jobs Horns

Meh....

You think price increases will slow iPhone sales? The initial $499 and $599 prices of the first iPhone with no app store or apps, didn't stop idiots from standing in line to buy a POS smartphone that was hobbled, lacking features regular cell phones had, and ridiculously overpriced for what you got. It doesn't really matter what Apple charges for their gear. There will always be rich people with more money than sense who will buy anything with an Apple logo on it. Foxconn isn't going to lose any business over this. You sheep will pay whatever you're asked to pay. Koolaid is good. LOL!!!

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It's not compulsory

to buy the latest shiny phone.

If you're so concerned about the welfare of workers simply don't buy any products built in China, because there's a reason electronics companies have their stuff built there, and it's nothing to do with the local scenery...

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well....

The suicide rate in Foxconn employees is actually lower per 100,000 than the suicide rate in China as a whole. (Figures taken from WHO for suicide rate and wikipedia for foxconn employees & suicides).

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Anonymous Coward

Statistics

But are they comparable statistics - are we looking at similar ages, health and living standards and anything else that may impact the suicide rate between Foxconn employees and all of China's population?

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Unhappy

Intresting...

all these people saying that's terrible.

So are you guys making sure ALL your goods are Fairtrade / Ethically sourced?

That T-shirt? Jeans? Sugar? Bananas? Metal items? Chickens?

The only way to stop this is to only buy fairly traded and ethically sourced goods, but 99% of the poulation can't afford this. If we all did buy these, then chances are there be no cash left for little toys like iPhones.

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Happy

Elsewhere?

"Hon Hai will have to take care not to improve workers' conditions to the point where the brands take their business elsewhere"

What elsewhere?

There may be a plethora of 3rd world countries that would love to pimp their citizens as an alternative labour force to Foxconn, but how many of them have the production facilities of a scale and standard to present themselves as a real alternative?

@Ralph 4 (post 3)

I agree, but capital is more global than social legislation - and European integration is proving tricky enough at the moment, so global political integration, though necessary and hopefully inevitable, will take quite some time.

However, the credit crunch / recession does seem like it will stem the West's bogus wealth and encourage China to develop internal markets. And while other nations may get to be the bottom-of-the-barrel labour pool for other sectors at least, China's raising living standards (400m out of poverty in a decade) does mean there'll be more 'sludge' to service on a smaller barrel bottom - that is, they'll be in China's abdicated position and so should be able to pull the same growth and raising of standards in their turn.

In the end, all this free-trade, globalisation, movement of capital, inflation, devaluation, etc is moving us towards a less imbalanced world. They'll be richer, we'll be poorer - but we'll also be richer in the sense that our government's hope to be a 'knowledge based economy', whilst keeping an edge that notionally helps maintain our privileged status in the world pecking order, necessarily discriminates against those more genetically suited to less intellectual work.

When our less academic children can again work in factories/etc, instead of flunking by the metrics of the 'knowledge based economy' to be abandoned on the dole queue and excluded from first world privilege, we will know the imbalances of the world economy are largely resolved and that we can all enjoy having available a full range of the types of experiences that our diverse human natures may require for happy symbiosis within our communities.

That is, each nation would have a diverse economy with opportunities for all types of people.

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Pint

Easy Solution

We shouldn't import anything that is made by workers who are denied basic rights.

Problem solved. Any company that doesn't meet those standards doesn't get to ship goods to the west.

Unfortunately the powers that be don't really give a stuff about people so would never consider this idea. Instead they will waffle on about "free markets" etc etc while lining their own pockets and the pockets of their rich industry friends.

Con-Lab-Lib-Others : They often talk-the-talk but rarely walk-the-walk.

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rights granted

See Chinese labor laws, apple (and other) supplier policy guidelines, audit reports from apple visits to FoxCon facilities, and more. Foxconn workers are held to some of the regions toughest requirements, in fact, they have better labor protections than us currently (aside from some civil lawsuit benefits for "emotional abuse" we file that I honestly think are complete BS, shit like lawsuits over perfume!). Unions enforce some additional regulations on some businesses, but very little of that is actually law here.

My wife for example teaches 3rd grade. Starting pay for her position is only 22.6K a year. She works 6:50 AM to 3:15PM manditory. She has to watch the kids during lunch, and maybe if she's lucky 2 times a week actually gets to eat her own mean. In order to "further education" she no longer gets working hours during the day at all for breaks, paperwork processing, and more. It's been replaced with additional classroom time, manditory processes, or manditory meetings. So, 6:50 - 3:15 PM, no breaks, is an 8h40m day. Federal law requires he to get a minimum 30 minutes of "duty free" break time every day, but she does not get that.

Now, because she no longer gets the hour of desk time with no kids she used to, she has to bring her work home. Without access to in-school systems remotely, that means doing a lot of work at home one night, then staying late the next to key everything into the systems there. most days she does not leave the building until after 4PM, and works 1-2 hours each night at home in addition. (grading papers for 72 different children is a lot of work, there are no TAs anymore). so, 42.5 base hours, plus an additional average 2 per night is 52.5 hours a week just to do her job requirements.

1 night a week and 2 nights a month she has mandatory meetings for committees. Additional job duties some teachers are made to do by election (not an option, they can not turn down an election, and often the principal is the only one with a vote) yet they get no additional pay for it. This is her 6th year in a row on a team she's only supposed to be on once every 4 years. That's another 2.5 hours average per week onto her dole, so now she's at 55 hours.

Then she has office hours. ANY time a parent requests, with or without notice, she has to have a parent conference. This happens about 3 times a week, about 15-30 minutes time each. So lets call that an hour. There's also open houses 4 times a year, assemblies or some other after school function once a month, averaging about 2 extra hours per month. So, we're averaging 56.5 hours a week now.

And then there's state required education to maintain her teaching certificate, or district level trainings on new methods or teaching tools. She takes 3 credit hours of college level classes per year (none of which count towards a masters or doctorate) minimum, and receives no additional compensation for that time. Sometimes she has to pay out of pocket for the class and only gets reimbursed if the gets a 3.0 or higher, and reimbursement might take 2-3 months after she finishes the class. District trainings that involve weekend days get a per-diem of $125 per day, but classroom training towards certification gets nothing.

During the summer, there's typically a slew of scheduled district training days (average 8-10 a year over the 8 week break). This essentially prevents her from working any reasonable job during this time period, not to mention no one wants a part time worker for only 8 weeks.

On top, she's furlowed 2 days this year, and for 3 years in a row there's not only been no raise, but they did not increase the step salary scale either, so she's actually making less now than the was 3 years ago, and she's taxed more for it, and pays higher insurance costs, and has higher deductibles and less coverage.

9 years teaching and she still has near 20K in college debt too. All incentive programs offered to her to enter college were terminated before she graduated, so she never got a penny in education assistance, and 5 years ago the state stopped paying for national teacher certification status as well.

at 57 hours per week, starting teacher pay in this state is (considering she works 44 weeks, not 52.5) is still only $8.90 per hour. If overtime had to be factored in by law (as it should) a starting teacher could technically be below minimum wage. I have not included the time she often spends on weekends and all summer designing lesson plans and classroom material. This is just her "required" input of labor. She actually works much more, because shes dedicated to these kids. Would you manage a classroom of 20+ kids for 9 hours and additional work totaling near 60 hours a week for $9 per hour???

And you think we have labor rights?

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Bronze badge
WTF?

Have you ...

... ever heard of a Professional Economist mention the word "slack" in relation to working hours ?

Evidently, it's just something they just don't ever mention, probably because at American latitudes there is no slack in an 8 hour day. Hourly workers are machines regularly run for extended periods well past their rating. Any responsible engineer would have long since resigned.

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Ya

Salaried employees are typically excluded from labor rights (that's why they are called exempt heh). It's the hourly folks that get most of them. Salaried employees do get benefits. Both my parents were teachers and yes, it's a tough career that I almost went into (thank God I didn't). Many states do have great retirement benefits for teachers though. I'm not saying that makes up for everything else, but it's something hourly factory folks usually don't get.

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Or.....

Given, the price markups on 'smart phones' the Wireless Network companies could just absorb the price increase.

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Localization

Perhaps we could all then just buy stuff closer to home, and not so much stuff at that.

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Alert

Prices up on iphones/androids? So what

Globalization, what a wonderful concept.

With a globalized market, of course, business enjoys the increased profits that come from labor arbitrage, and there's a constant re-evaluation of material and labor costs to keep that cost down. This allows consumers to experience artificially low pricing, which means more sales for the business. Unfortunately, the business leaders apparently don't understand that people without jobs can't buy their products, and with the reduction in sales, they see diminished revenues. That in turn drives them to look for further ways to cut the costs. It's a vicious race to the bottom that can't be ignored.

A side effect, though, is that the labor costs rise as demand for their services increases. As those costs rise, there is a breakover point where the business has to decide whether to raise prices, or move the cost to a lower cost region. The good thing is that eventually ( in theory anyway), once the business has run out of lower cost regions to turn to, the labor costs will have approached a global median. As these costs normalize, they will drive consumption and costs of living towards a balance versus income.

The real bottom-line issue is that people generally have unrealistic expectations. If you're a first level help desk call center type person, you can't realistically expect to be able to buy a 3000(insert local currency here ) laptop. Yet people do exactly that. On the other hand, you do expect to eat and maintain at least a minimalist existence, which in some areas isn't possible for the wages offered. The other unrealistic expectation is that you can maintain a 48% profit margin on an item. Business leaders must constantly bring new product, or lower their expectations, which is something they don't do naturally, the consumer has to drive that change.

If you aren't familiar with the 'Big Mac Index', it's an easy to understand interpretation of different local economies, and gives a good indication into what one might expect life to be in the same.

there's a nice piece on wikipedia about it http://en.wikipedia.org/wiki/Big_Mac_Index

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Jobs Horns

Not a problem, Foxconn, workers health and safety first

With the profits Foxconn's customers are making from the fruits of the labour of these Chinese workers they can afford to swallow the increased production costs.

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Paris Hilton

Regarding:

Re: "and Hon Hai will have to take care not to improve workers' conditions to the point where the brands take their business elsewhere."

Not strictly true.

Hon Hai can turn round and say "We did what you asked and we lost your business. Please do not interfere with how we run things.

And to top it all, as soon as we met your demands you sent your business to other plants that have less beneficial standards"

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Silver badge
WTF?

"petur" needs to get a clue.

"I'd be ashamed to write anything like that. Is that how much you care about other people?"

Not true, and in fact I'll bet you have no shame at all.

You're the type of person who would show up front row centre at an anti-globalisation rally to yell the loudest, and during your lunch hour (yes, protesters have rights too) you'd be seen with a McDonalds burger in one hand and an a mobile phone in the other.

If you REALLY wanted to do something about this, would have gotten your fat whiny arse the fuck over there and actually done something about it, or, you can vote with your wallet and never purchase anything, and I mean ANYTHING from China or Taiwan. And while you're on that theme, you can throw out and replace EVERYTHING you currently own that has been made in China or Taiwan.

Good luck with that, you're going to need it.

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anyway to tell....

which phones/devices are made by Foxconn? I will njot buy anything that I know is made by them. I am (hopefully) about to buy a new Dell Lightning/Venue Pro but I will not do so if I find out its made by Foxconn - I have heard Dell have used them before?

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Jobs Horns

No title required

I bet apple will pass the full cost of the price rise onto their customers rather than use a different supplier or take a hit themselves.

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Unhappy

We're all...

involved in this human misery everytime we buy a new shiny gadget.

Soon or later karma will get to us all.

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Unhappy

What happened to automation?

Don't get me wrong, I KNOW how complex it is to develop small scale robotics. But frankly, there is a clear difference between designing a single purpose robot and a configurable one.

Circuit boards are manufactured nearly automatically these days. There are still fabs which moves boards during their different phases of processing using humans instead of machines because it's less expensive, but it should be possible for a single person to operate the machinery for the production of tens of thousands of sheets of PCB material these days.

On top of that, an SMT line with BGA capability, two sided support, etc... should be able to be kept running by one person. With a multiple placement units, there are 86400 seconds in a day. These machines if configured properly should be able to fully assemble and solder an iPhone per second.

With automated testing rigs, it's possible to verify every single board as it comes off the line.

The real problem is automating assembly of the parts themselves. I have disassembled and rebuilt and iPhone 3Gs by hand and it took me a full hour to do. That was a long time compared to for example, a Nintendo DS.

I can however see clearly nearly every step of the process required to assemble an iPhone 4. I don't believe it would be overly complicated for quality mechanical engineers to make an automated assembly line to do this.

Of course, if someone DID do it... then you could manufacture anywhere in the world and it would only matter what the electricity cost was.

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Gold badge

Cost increases?

@petur, it's a joke. It doesn't cost anything extra to not beat and abuse your employees. And, regrading excessive overtime, if they really pay 1.5x to 2x pay for overtime, it'd actually cost them less to just hire more employees and not overwork the ones they have. Foxconn is just angling to get extra money for changes that don't cost them anything.

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