Foxconn May Close Factories In China

ChiefMonkeyGrinder writes "Foxconn, the manufacturer whose clients include Apple, Dell, and HP, is on the verge of pulling out of China after a spate of suicides. The CEO has accused workers of killing themselves for financial compensation, and the company has stopped suicide payments to suicide victims' families. Foxconn's CEO also told investors that it is considering moving its production operations to Taiwan, and automating many parts of its business, a move which could see 800,000 workers lose their jobs."

Comments

Instead of actually addressing the problem...

[sethstorm]

All this will do is just move the problem. Unless they thought having to actually give a damn about those workers was a problem.

Re:Instead of actually addressing the problem...

[Anonymous Coward]

Give a damn about those workers...in China? Since when has any company who manufactures their products in China ever really cared about the workers? That's why they manufacture in China, cheap labor they can look the other way at.

Poor Planning

[Nerdfest]

Killing yourself for financial compensation is a poor long-term business plan.

Re:Poor Planning

[couchslug]

"Killing yourself for financial compensation is a poor long-term business plan."

Depends on your cultural POV.

In China, families and groups matter while life is historically very cheap. Consider the custom of "human wave" military attacks during the Korean War. Chinese soldiers quite bravely flung themselves at their objectives, sometimes winning, sometimes not, but often being shot down in droves.

We are used to a future with hope, which we consider perfectly normal. The rest of the world is by and large a hellhole where dying to benefit ones family may be a good call.

Re:Poor Planning

[Wildclaw]

Some companies do offer 'profit-sharing', but that definitely not the norm.

Of course not.

Rule number one in any Aristocratic system is that you need to suppress the worker class, since otherwise they may start to get strange expectations, like actually getting a greater part of the wealth production that they are actually responsible for.

And if there is one thing you don't want in an Aristocratic system, it is to have those who actual produce the wealth, starting to question those at the top leeching.

What happens when China goes Democratic?

[linzeal]

No jokes about that horrible Guns n Roses album, shudder.

    The first world for the past 40 years has been using China as a source of cheap industrial labor that relied heavily upon absolute totalitarianism finds itself dealing with nascent labor unions, human rights organization and popular dissent and outrage during times of strife and disaster. As this increasingly puts strain on the kleptocratic communist party and the equally corrupt Chinese state military a rumbling/robust market economy is emerging that stands to give a significant financial foothold to an emerging Chinese middle class to the world's 3rd largest economy. Once you have a middle class anything goes, once you lose one, well...

No army in the world can stop an idea whose time has come. - Victor Hugo

Maths don't matter to reality!

[spleen_blender]

These suicides are well within the statistical expectations for a worker population that large. But People don't care about facts, just emotions.

Re:Maths don't matter to reality!

[dachshund]

These suicides are well within the statistical expectations for a worker population that large. But People don't care about facts, just emotions.

Really? Is it statistically common for groups of people from the same workplace to throw themselves off the same rooftops in large numbers? I mean, keep in mind that these aren't unrelated people slitting their wrists or taking pills.

I'm hardly the first person to make this point, but consider the last time you heard of a rooftop-suicide epidemic at a major corporation. Can't? That's because even given the huge number of people employed by corporations it's an unbelievably rare event. In fact there have been one or two such examples over the past few decades and they were treated as exactly the unusual and horrifying event that they are.

Suicide Rates

[Cassini2]

The suicide rate in Canada is about 3600 deaths per year for 1992 in a population of 28.4 million. If Foxconn employs 800,000 workers, one would expect 101 suicides, assuming the same suicide rate. This is far higher than the number actually experienced at FoxConn, where only 9 people have died as of May.

Based on this, working for Foxconn in China is better than living in Canada, at least as far as suicide risk is concerned.

This puts the numbers in perspective. Down with the oppressive Canadian Imperialist Overlords!

Re:Suicide Rates

[mooingyak]

First, you'd need Chinese rates rather than Canadian ones, as there are non-trivial cultural differences in play.

Second, you'd need rates for the specific demographics that are employed at the factory, and not just ones for the population as a whole. In the US, the elderly have a higher rate than the population as a whole, but the elderly are less likely to be employed in a factory.

Last, as I understand it, they've had 9 suicides at the factory, not just 9 suicides by people employed by the factory. The article isn't clear on whether Foxconn paid benefits for any suicide by an employee or just ones that happen on Foxconn property, but if it's the latter it's certainly a motivator.

Re:Suicide Rates

[stephanruby]

If you want to compare rates of suicides at the workplace, compare rates of suicides at the ***workplace***. Jumping is a very gruesome way to die. Also, jumping from your own office building, when done willingly, is a very public statement.

And by the way, all those nine workers (including the one who signed the no-suicide contract) have chosen to jump to their deaths on premises in the exact same way in a span of five months, not twelve. Furthermore, suicide rates per country include young teenagers killing themselves and old people killing themselves (as in euthanasia). Whatever makes those stats look bigger, that's why they're included, even if one could argue that euthanasia should not be included, because the bigger those suicide stats are, the higher the government funding ends up being. And you take away these two populations, you have a much-much lower rate of suicides overall.

In any case, if you really want to compare suicide rates on premises between companies, see these examples of much much larger companies with zero rates of suicides. And yes, I understand the problem of estimating randomness and simulating the flip of a coin, but nevertheless, even if you don't completely believe me, I'm suggesting that you not mindlessly repeat the FoxConn/Apple PR report that's being parroted over the news.

Re:Can't run forever

[sakdoctor]

Big bugs have little bugs
Upon their backs to bite them.
Little bugs have littler bugs.
And so, ad infinitum.

China already has operations in Africa, where locals are treated worse than slaves.

Parallels to the Union movement last century

[goombah99]

Although there were "guilds" in europe for ages, the modern trade union emerged in the US as the train union. At the time train workers were like foxxcon workers. There was no assurance a route would ever return you home. You lived in company towns along the way. And the main fixture there was the bar where you wasted your pay check. Accident rates where high and efficiency or scheduling was low. Since you lost your wages and never saw your family, what were you living for?

The train unions first emerged not to demand better wages but better living conditions. They sold themselves to the train owners as a plan to increase professionalism and public respect. It worked. accident rates did go down. Barrier's to entry and standards increased training, retention of experience, and professional conduct. Workers took pride in their work. Many bars were closed People returned home on time and with money in their pockets.

Today we often see unions as protecting lazy workers form being fired or demanding higher wages via collective bargaining. What we don't see is that these are small perturbations about a dynamic equilibrium between labor and management. That is we no longer have the deprevating working conditions of the 19th century to see what could be the case if management got the upper hand when labor markets were not tight. The excesses of unions we see to day are tracebable to fact that in some markets it's possible for manufacturer's to push along price increases as long as they can gaurenttee the competion pays the same costs. E.g. car manufatuter's would agree to a wage increase at GM as long as there was also one at ford. IN any given port, the same principle allows port owners to pass along long shoremen wage increases.

What we have here in foxconn is a throwback to the same early situation. Workers living in company dorms, shitty pay, long hours and dangerous working conditions. That is to say, no union.

The real problem with this is not the sad plight of those poor workers. But actually because it undermines the status of workers who work in countries with state or union mandated good working conditions. Those jobs get shipped out. There is a push to relax those costly standards to get the jobs back.

The solution to both these problems is not for the FOX conn to unionize. It would be good if they did but until that becomes universal in asia it won't fix the problem, it will just move it. INstead the solution is to put a tarrif on all imports from countries that makes the playing field level.

if your workers have below-OSHA woking conditions then imported goods get a tarrif that is equal to the cost to US companies for maintaining OSHA standards.

this then makes it cost neutral for foxcon to have better condtions because it can outcompete companies that don't do that.

Re:Parallels to the Union movement last century

[TheLink]

I think the OP is talking about import tariffs. If the import tariffs are in the USA, moving from France to Germany wouldn't help Foxconn sell to the USA.

Re:Parallels to the Union movement last century

[ShooterNeo]

Import Tariffs. The United States would charge a tariff on Chinese goods made in factories that were not up to OSHA standards. The inspectors for these standards would be INDEPENDENT people probably chosen from an international pool.

Re:Parallels to the Union movement last century

[burnin1965]

The train unions first emerged not to demand better wages but better living conditions. They sold themselves to the train owners as a plan to increase professionalism and public respect. It worked. accident rates did go down. Barrier's to entry and standards increased training, retention of experience, and professional conduct. Workers took pride in their work. Many bars were closed People returned home on time and with money in their pockets.

Followed with...

What we have here in foxconn is a throwback to the same early situation. Workers living in company dorms, shitty pay, long hours and dangerous working conditions. That is to say, no union.

The solution to both these problems is not for the FOX conn to unionize.

HUH?!?

Unions solved many of the outrageously dehumanizing conditions created by United States corporations in the past but unions are not the solution to the same dehumanizing conditions in Chinese factories?

I think you were headed in the right direction but then your logic fell off a cliff.

And isolating the United States economy through tariffs? Wrong answer. The majority of the economic growth is taking place outside of the United States, if you isolate us economically thinking it will increase global worker wages and improve conditions you are dead wrong, it will just further destroy the economy in the United States while places like China continue to grow.

Now if you suggested holding United States corporate board members liable for foreign actions that would be considered illegal in the States much like a paedophile trying to continue their illicit practices overseas and then coming home to the States then you might have been on to something. I'm sure Jobs and other CEOs would take much more interest in foreign workers if they faced the possibility of jail time.

Time and again it has been proven that when groups of people stand together against oppression by a few they often succeed in overcoming the tyranny. I find it astounding that in a nation where the people stood up against tyranny by creating a union (The United States of America) it is today considered evil, anti-american, socialist, communist, etc. for the people to stand together in a union against poor wages and working conditions.

I think you are correct that unions were instrumental in improving the plight of the U.S. worker in the past but I would say that today in some cases the U.S. is returning to those conditions before there were unions, and it is not because of China it is because unions are broken by corporations through political attacks, media attacks, and out right illegal activity.

Re:Parallels to the Union movement last century

[MrNaz]

China is as communist as America is capitalist.

Re:Parallels to the Union movement last century

[ScrewMaster]

I hope you are trolling and, if so, good job. If not, then I don't think you realize that your "proposal" is more extreme than even the most fanatical left wing crazies would dare make these days. Imposing tariffs so that the products make in third world countries which are imported in the USA match the price of those produced in the USA? You do realize that such tariffs would bring instant death to the economies of dozens of developing countries, and that the only reason for the incredible rise in standard of living of ordinary workers in China in the last three decades was due to the fact that they are able to produce and export goods more cheaply than those in the countries who import them? Why else would developed countries import third world goods if by law they cost the same as those locally produced?

Good point. The real question is: why would developed countries deliberately strip themselves of manufacturing capability in order to transfer their wealth to developing countries for the dubious benefit of poorly-made products and the loss of domestic jobs? What you are really saying is that those developing economies are totally dependent upon the United States, and that we have some obligation to maintain what is, effectively, a very costly form of foreign aid. A form that is rapidly destroying our own economy, standard of living, and way of life. We've already borrowed and given away trillions of dollars in aid to other nations, forgiven untold amounts of war debt, and now you believe that it is wrong for us to raise a few trade barriers to protect what little we have left?

Seriously.

Re:Parallels to the Union movement last century

[ultranova]

No, I was only addressing one half of the point which I thought might appeal more to the bleeding heart liberals. Tariffs are bad for us too. They might for a short time protect some of the union jobs in a specific industry but they are harmful for the wider economy because they deprive our industry and consumers of cheaper products.

Chinese products are cheaper because the workforce is abused. That's another way of saying that they aren't cheaper at all, Foxxconn has simply managed to succesfully externalize part of the cost to be paid by said Chinese workers rather than buyers. This is bad from the economic standpoint, since it encourages behavior where the total costs are actually greater.

An import tariff for such products is good because it forces the end user to pay for all the costs of the product, thus allowing free market to optimize resource usage. This is also the idea behind carbon credits and other such devices often derided by, ironically enough, free-market fundamentalists.

As an exercise, think about what would have happened to the USA computer industry if from the start we had laws that ensured that all computer components had to be made by unionized factories in Michigan.

All computer components should have all of their costs included in their final price, including but not limited to pollution, injuries etc. caused by the operation of the manufacturing plants. If necessary, if for example a factory operates outside US jurisdiction and gains a price advantage by polluting with abandon, tariffs should be used to enforce this.

Failure to do so will result in market failure. You cannot have a free market if everyone can simply steal from others - which is what externalizing costs is really doing. Free markets can only work if you are forced to pay for all the costs of whatever choice you make, and that requires tariff in a world with different jurisdictions.

There are, of course, ethical reasons to stop multinational corporations from killing Chinese workers in the name of profit, but I'm addressing the half of the point which I think might appeal more to the stone-hearted conservatists.

Re:Parallels to the Union movement last century

[clarkkent09]

Chinese products are cheaper because the workforce is abused....[the rest of your post follows from that assumption]

Bleeding heart liberal answer: No it is not

In fact the recent boom in manufacturing has created the greatest improvement in the living standards of Chinese people since...well, since ever. Why on earth do you think they leave the countryside by tens of millions to come and work in factories in the cities? Because they are worse off or better off by doing so? It follows the same pattern as the industrial revolution in Britain which improved the lives of average people more than anything since the invention of agriculture. You can't compare the living standard of Chinese worker to the US worker. You can't jump from a third world nation to a first world nation overnight. You have to compare the living standard of Chinese worker 10, 20, 30 years ago etc to today. Google some charts to see, per capita GDP, average wage growth etc.

Stone hearted conservative answer: So what if it is?

We as a nation benefit from having access to goods for a lot lower price than the price at which we can produce them ourselves. What do we care how they do it, by abusing their workers, polluting their cities or subsidizing their industries. It would all amounts to the same thing, benefit to us at their expense (see youtube video in the previous post). Sure we lose some of the jobs in a specific industry but we gain more jobs and more wealth overall.

Re:Parallels to the Union movement last century

[ultranova]

In fact the recent boom in manufacturing has created the greatest improvement in the living standards of Chinese people since...well, since ever. Why on earth do you think they leave the countryside by tens of millions to come and work in factories in the cities?

Because being abused in a factory is still better than living in a farm, the same reason why Europeans left farms during the Industrial Revolution to work in factories. The conditions in those factories were still horrible enough that it gave birth to communism.

It follows the same pattern as the industrial revolution in Britain which improved the lives of average people more than anything since the invention of agriculture.

Of course it did, as technical development always does, but only after the worst abuses had been stopped.

Stone hearted conservative answer: So what if it is?

I just explained it to you: it twists the markets and causes them to misoptimize.

We as a nation benefit from having access to goods for a lot lower price than the price at which we can produce them ourselves.

No, we don't. The importers of cheap goods benefit in the short term by being able to undercut domestic manufacturers, causing those domestic manufacturers to either go bankrupt or lower their standards of pay and treatment of workforce to match China. This, in turn, causes said workforce to have lower income, which lowers their standard of living unless they take debt, which of course can't happen endlessly. It also makes them dependent on cheap Chinese imports while eating the initial benefits. The end result is economic ruin, which is what has been happening lately.

What do we care how they do it, by abusing their workers, polluting their cities or subsidizing their industries. It would all amounts to the same thing, benefit to us at their expense (see youtube video in the previous post)

They build their industries up, we lose them. Also, please understand that pollution doesn't stay in place, it spreads from China to the whole globe, including where we live.

. Sure we lose some of the jobs in a specific industry but we gain more jobs and more wealth overall.

Where do these new jobs come from? Where does this new wealth come from? If our production is done in China, we are paying Chinese to do it, which means that wealth is leaving out economy. We are losing wealth, not gaining it, and lowering wages eat away any benefits from cheaper price of imports. And as people keep getting poorer, it gets harder and harder to start new companies or keep old ones going, since people can't afford your products.

The only ones who benefit from this situation are the heads of multinational corporations. Our economy is very near the point of no return, we have to do something about this problem while we still can.

Re:They all must take their own lives now

[WrongSizeGlass]

Foxconn Exec: It's iPhone, not iP0wne!
Foxconn Employee: Yes, there's a difference?
Foxconn Exec: Yes, yes there is. You know what you have to do ...
Foxconn Employee: No ... really? For that?
Foxconn Exec: Yes, for that. We can't exactly sell them like this, can we?
Foxconn Employee: Um, I would buy one like that.
Foxconn Exec: Really? Hmmm ... that's a great idea! Very good.
Foxconn Employee: Thank you.
Foxconn Exec: Oh, not good for you, good for me. It's my idea now.
Foxconn Employee: No ... really?
Foxconn Exec: Yes, yes it is. You know what you have to do ...
Foxconn Employee: This just isn't my day.
Foxconn Exec: No, no it isn't.

Robot suicide

[John Sokol]

It was like 20 years ago when I was working at the Stanford medical center, they had a mail delivery robot that committed suicide.
For about a year it was zipping around delivering mail, and xrays. It even knew how to take the elevators.

But every now and again it would just hang out by the ATM machine and act weird.

One day it just drove down a flight of stairs and crashed to the bottom shaking the whole building and crushing it's plastic casing.
I had a great photo of it lying in a pool of brown lubricant and battery acid, surrounded by doctors in white and blue coats.

There were rumors that the ATM machine rejected it.

Re:Robot suicide

[sjames]

Maybe she thought he was just after her for her money...

Re:So.. factories are *moving* within china

[Runaway1956]

"but if it can be automated, why wasn't it before now?"

Two words. "cost effectiveness"

In the United States, investing in a fleet of robots can be cheaper than supporting a hundred workers. In China, you can employ an ARMY of workers, for the investment required for a single robot.

This is the reason so many corporations are moving to China - not to help the Chinese who need jobs, but to make as much profit as possible, for as little investment as possible.

Re:So.. factories are *moving* within china

[Anonymous Coward]

Taiwan = RoC: Republic of China
Mainland China = PRC: People's Republic of China...

And that doesn't even consider the eventual reunification that *both* sides desire. (although the desired terms are wildly different...)

You really open a can of worms with that one. You're right that a significant minority want unification if differences could be resolved, but this is not a common goal. For instance, my wife is Taiwanese, and she and her family do NOT want unification. The previously elected president Chen Shui-Bian was the first president in the current government not from the Kuomintang party but from the DPP, a party that is pro-independence. Even the current president from the KMT, Ma Ying-Jeou, likely does not want unification, but rather stronger economic ties. Most Taiwanese favor the status quo-- de facto political sovereignty without severing ties with China by formally announcing independence (source).

So, no, the factories are not moving within China.

Automating spin

[psnyder]

automating many parts of its business, a move which could see 800,000 workers lose their jobs.

Why is there always a focus on the negative side of automation? It really means less work, same productivity. Humans no longer need to work as hard to produce the same quality of life.

The difficulty with these stories lies in the fact that it's a redistribution of wealth from the workers to the owners of the company, until those owners redistribute the wealth again by investing the savings. So it's difficult for the people who lose their jobs, as they now have to fight to get new ones. It's sad. But for humanity as a whole, extra efficiency means greater wealth, since we are now creating the same product with less work invested.

It raises everybody up in the long run. Compare medieval kings to lower middle class people of today and we find the kings did not have the amount of entertainment to choose from, the durable clothes, the variety of food available, the health care quality, perks like temperature control of their rooms, etc.

That's the overall and long term effect, the greater positive side, and something that is too often ignored.

Re:Rewarding suicide is unwise

[timeOday]

Some are better than others, but all incentive systems have perverse incentives. Even something as simple as paying a real estate agent:

Pay them a fixed price: their incentive is for you to buy / sell ASAP, good deal or bad.
Pay by the hour: they could milk you forever.
Pay a percentage: buy / sell ASAP, since holding out for a better deal could easily double their work and still only increase their haul by a few percent.

Even in the simple case - a company paying salesman a percentage of what they sell - can easily turn bad for the company through infighting salesmen, lying to customers, and customers with buyer's remorse who won't come back.

Re:So.. factories are *moving* within china

[timeOday]

I think the world is overpopulated.

Well, it's hard to accuse China of not taking action on that front.

Bogus Slashdot story

[Animats]

Read the original article. Gou, the CEO of Foxconn, talked at their annual meeting about moving some production to Taiwan, Vietnam, and India. It's not clear that they even intend to reduce their head count in China; that's a speculation by Oriental Daily. Foxconn has been growing rapidly, and they have too many people at one location. (Managing really huge plants is historically a headache. The maximum optimal plant size seems to be around 3,000, from modern US experience. All the economies of scale have been achieved by then. China is at an earlier stage of automation, though. The US at one time had single steel plants that employed 8,000 people with shovels. )