Foxconn Technology Group or its parent Hon Hai Precision are very familiar names to any supply chain professional who has any knowledge of contract manufacturing, especially within high tech and consumer electronics.  This global leader of contract manufacturing, and a major supplier to likes of Apple, Dell, Hewlett Packard, Sony and others has been in crisis mode as continuing reports of worker suicides permeate media and blog outlets.  Major media such as The Financial Times, The New York Times, The Wall Street Journal and others have been featuring continuous stories. Nine workers have died after falling off buildings, the latest being this week.  Foxconn chairmen Terry Gou has rushed to Shenzhen, the site of its largest manufacturing complex to take personal charge of the crisis that is reverberating across the globe. 

In an unprecedented move, Gou has allowed certain media access to the Shenzhen complex, and you are welcomed to view this Financial Times video link to note more to this story.

Our last Supply Chain Matters commentary concerning contract manufacturing labor practices and social responsibility took a bit of a counter view. At the time, certain bloggers and media were taking Foxconn to task for allegedly roughing up a reporter who stood on a public road taking pictures of the Longhua manufacturing facility. Much was written on the highly secretive practices of Apple, which carried over to its prime contract manufacturer. There were accusations in the use of underage labor, excessive work hours and other intolerable conditions, mostly attributable to Apple.  Many took Apple to task when it released its Supplier Responsibility 2010 Report but seemed to miss the point that audits were on the increase and that Apple was publically willing to share that it had found core violations.

My counter-argument at that time was twofold.  I denounced underage labor and excessive work hour policies, and continue to do so.  These latest incidents of suicides are further evidence that more remedial actions need to take place, and at a far speedier pace.

We also need to acknowledge supply chain and business realities. Foxconn offers its OEM customers low-cost labor and high volume efficiencies, witness the fact that it has enough business to employ over 800,00 people. The Shenzhen plant complex itself has in excess of 300,000 people, and as you can view in the video, takes on its own municipal presence in housing, recreation, and other services.  There are military installations that do not take on such a scope of people that are all housed in the same area.  That alone is cause for concern.  Workers, whether young or old, need to have tolerable working conditions, reasonable working hours and recreational outlets.  They must also be paid a fair wage for the work they accomplish, which should not include the need to work 12 hours daily, six days per week. They must also have some path to personal and career success

I applauded Apple and other high tech manufacturers for taking a more open and visible effort in auditing labor and other social responsibility practices within their supply chain.  Today’s Financial Times notes that Apple, Dell and HP have all stated that they will further investigate conditions at Foxconn.  The fact that Mr. Gou has now opened his facilities to visible scrutiny, and has established new counseling and early warning processes is a positive step in the right direction.

In my view, the ultimate barometer of progress will come from the influence of Foxconn’s major customers in their social responsibility practices, and the management teams of  Foxconn itself, proving to the world that efficient contract manufacturing can be accomplished in a responsible and responsive work environment.

Bob Ferrari