Foxconn Technology Group, the Apple Inc. (Nasdaq: AAPL) supplier targeted by human-rights activists after suicides at its China factories, cut working hours and improved safety at a faster pace than scheduled by a labor-monitoring group.
The changes are among 284 made by Foxconn this year after Fair Labor Association audits at three plants of the Taiwan- based company logged more than 50 breaches of Chinese regulations, the group said in a report released today. Foxconn is ahead of its 15-month schedule for upgrading conditions and meeting FLA mandates, with 76 more items due for completion by July 1, the group said.
Apple Chief Executive Officer Tim Cook brought the company into the FLA in January, leading to the inspections, after suicides by at least 10 Foxconn employees in 2010 highlighted conditions at the supplier. Cook has pledged not to turn a “blind eye” to problems in a supply chain that includes competitor Samsung Electronics Co.
“A lot of companies are looking at Foxconn’s progress with considerable interest and concern because they know how ambitious a target Foxconn has set,” Auret van Heerden, president and chief executive officer of the labor group, said in an interview. “It’s not beyond the realm of possibility that a Samsung facility will come up” for future inspection.
Foxconn, which has about 178,000 workers making Apple devices in China, completed each of the 195 items required of it by the end of June and more than half the tasks due by next July, the Washington-based FLA said. The company reduced the number of working hours per week to 60, including overtime; redesigned equipment to protect employees; and is working with local authorities to get migrant workers access to unemployment insurance.
“Foxconn has met every short-term goal including better ergonomics and more health and safety training, and they are well ahead of schedule on many more action items,” Steve Dowling, a spokesman for Cupertino, California-based Apple, said in an interview. “We’ve been making steady progress in reducing excessive work hours throughout our supply chain.”
According to Apple, the company has achieved 97 percent compliance with its mandate of a 60-hour maximum work week for more than 700,000 people who work on its products.
Foxconn has more than 1.3 million workers making devices for Sony Corp., Hewlett-Packard Co. and Cisco Systems Inc. The company, founded by Chairman Terry Gou, is giving workers a greater say in health and safety issues, in line with government rules.
“We’re getting tremendous cooperation from the union,” Van Heerden said. “They’re aware of the improvements they need to make to their election process.”
At least 50 violations of Chinese regulations were found when the FLA inspected Foxconn campuses at Chengdu, Guanlan and Longhua in February and March. The world’s biggest electronics contract manufacturer more than doubled wages after protests from worker groups including China Labor Watch and Students & Scholars Against Corporate Misbehavior.
“We will continue to support initiatives that allow us to play our role in helping Apple ensure that its supply chain partners are in compliance with the FLA’s Workplace Code of Conduct,” Louis Woo, a spokesman for Foxconn, said in a statement. “Our hope is that our efforts will not only benefit Foxconn, but that they will also serve as a model for other companies.”
The FLA said today that Foxconn employees continue working excessive overtime, with a reduction of hours likely to be the biggest stumbling block to reform in the coming year. Foxconn has committed to meeting the Chinese legal limit of 40 working hours a week plus an average nine hours of overtime, while still “protecting worker pay,” the group said.
Foxconn also vowed to reform its internship program by making sure participants don’t work overtime, are employed in a capacity related to their studies and understand they can leave whenever they want.
“Continuing to cut overtime has been a key challenge, and we’ve made improvements there,” Woo said by phone yesterday. “There’s an accepted practice and expectation across China, not just at Foxconn, that getting overtime is not an obligation but a privilege workers would actually like to have.”
The verification inspection at Foxconn means audits may begin at other Apple suppliers, including Samsung, Quanta Computer Inc. and Pegatron Technology Corp., Van Heerden said.
Labor groups have turned their attention to Apple supplier and rival Samsung, the Suwon, South Korea-based maker of Galaxy handsets and Smart TVs. China Labor Watch, a New York-based group headed by activist Li Qiang, earlier this month accused a Samsung assembler in China of hiring child workers and having working conditions “well below” those at Apple suppliers.
Samsung, which sent a team to HEG Electronics (Huizhou) Co. to examine the conditions, is still investigating, spokesman James Chung said by phone Aug. 20.
“Attention is inevitably going to shift to the competitors,” Van Heerden said. “People are going to be saying: If Foxconn’s doing it, why can’t you and why aren’t you?”