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Foxconn's Founder Opens Up About Making iPhones
eldavojohn writes "Bloomberg Businessweek has an article of interest resulting from a three-hour interview with Foxconn founder Terry Gou (single page), whose company manufactures 137,000 iPhones a day. The article profiles Gou's rise to Foxconn but also offers some interesting tidbits you might not know. On why he is not opening factories in the United States, Gou frankly states, 'If I can automate in the US and ship to China, cost-wise it can still be competitive. But I worry America has too many lawyers. I don't want to spend time having people sue me every day.' If you're interested in how a modern day Henry Ford thinks, you can read the rest about the man steering the ship of the world's largest producer of electronics components and China's largest exporter. This unprecedented transparency was part of an agreement Gou made with his customers during his delayed response to an increasing number of Foxconn suicides."
He's basically worried that if he tried to pull the same shit he gets away with in China, he would be shut down. This is undoubtedly a valid concern, but it does cast a depressing light on outsourcing. Basically the US is losing manufacturing jobs because we don't let business completely stomp all over the rights of the workers anymore.
I read the internet for the articles.
More likely tat he wants to exploit the worker
not to do business in the U.S. we have all those pesky organizations like OSHA, and those weird fair labor standards laws and anti child labor laws that get in the way of a really stellar profit margin. (Yes there was some sarcasm in there)
I'm still waiting for an iPhone manufacturer that pays its workers a decent wage and respects meaningful safety standards. I'm willing to pay an extra $100+ for my iPhone to not have a guilty conscience. C'mon invisible hand, supply my demand already.
"Anonymous Coward" is for whistleblowers, not unpopular opinions.
Ford wanted his workers to have a living wage, to be able to afford the products they made.
Foxconn doesn't even employ workers long-term, they hire on a week-by-week basis.
I actually don't even dislike Foxconn, but it's not the same as the middle-class building that Ford did.
http://lkml.org/lkml/2005/8/20/95
or....
Perhaps the US does have too many laws and lawyers. Perhaps it is more competitive to produce products somewhere else. Perhaps US workers think they are more valuable than they really are (so they erect laws to "enforce" that value). Did you ever consider that maybe it's not exploitation he is after but a better sense of balance? The world is not black and white. This is not a "workers of the world unite" vs "the evil business owners". You do recognize there is a middle ground, don't you?
This guy is telling you exactly what his risk/reward calculation is and you only look at one side of the equation.
Instead of responding with cries of exploitation, as yourself this: could he be right?
Gou has a very good point about why manufacturing in the US is not feasible.
The moment a company becomes successful, there are lawyers lined up to look for any way they can sue to get a piece of the pie without working for it. If the lawyers fail, the government is next in line to punish the success of the company in the name of "economic justice."
America used to be the land of opportunity, but now there are so many barriers to success, one almost has to go to another country to have any chance.
In one part of the article it talks about him involved in a libel suit over the suicide reports and then he talks about being scared of lawsuits. Hmmm.
Atlas stands on the earth and carries the celestial sphere on his shoulders.
"Finally, Gou's company hired the New York firm Burson-Marsteller to help devise a formal public-relations strategy, its first in more than 35 years of existence."
The concept of a company with almost 1M people without a PR strategy is refreshing, but reflecting a little bit more, what that also means is: now anything that we say about the employee suicides, even this, is being carefully managed.
I worry America has too many lawyers. I don't want to spend time having people sue me every day.
99% of what goes on in those lawsuits is righteous protection of workers and customers from the bad or evil decisions of managers.
The other 1% is still covered by your insurance, Terry.
Your problem isn't too many lawyers (you just get your own lawyers and then it doesn't take up your time), your problem is there are laws that will keep you from doing things in ways that you deserve to be sued for.
But I'm sure your deployment of nets to catch suicidal employees is a tacit expression of your understanding that your company is somehow culpable for its own behavior and the culture it engenders in the people it aggregates to perform work that makes you an impressively rich man, hyper-impressively considering China's supposed to be a communist country... So you know that you're either doing something very right, or many things very wrong.
the US isn't a corrupt 3rd world country that you can bribe epople to get your way.
True...we're a first world country where you can have lobbyists bribe people for you to get your way instead.
In fact, you almost have to bribe someone to get a job interview!
There isn't really multi-week training, you are put on easier lines first and work up to your aptitude.
But just because there's a line to get in doesn't mean there's any job security. When things slow down, you simply aren't brought back next week.
When you get too old for the dextrous work or your fingers grow to be too large to do some work (because their lines are virtually all 16-20 year old women) or merely when someone else will do the job cheaper because they are younger, you are out on your ear.
Like I said, I don't hate Foxconn. But it's not the same as Ford where he employed workers long term and invested in their development.
http://lkml.org/lkml/2005/8/20/95
"If some stupid old lady spills lukewarm coffee into her lap, she should NOT get a billion dollars in damages."
Third degree burns on 6% of her body, lesser burns on a further 16% of her body (that is almost a quarter of her body burned), 8 days in hospital, a skin graft and 2 years of further medical care is far from frivolous. I'd argue that any beverage that has the potential to cause injuries serious enough to require a skin graft is slightly beyond "lukewarm".
http://en.wikipedia.org/wiki/Liebeck_v._McDonald's_Restaurant
You'll notice that even though by western standards Foxconn has a terrible work environment, they're actually the best option for Chinese workers, who queue to work there.
Even though the salaries seem low by western standards, Foxconn pays the higher salaries in China. The article mentions several people who are there only to earn some money for a while and then go to work on a lower-paying less-stressful business.
The man himself started his huge empire with a $7500 loan. Hell, I live in Brazil and you can't even begin an auto repairshop with this money here, let alone a small manufacturing plant.
By Chinese standards, Foxconn is great and they actually seem to care about their employees more than the other Chinese companies do. None of the workers are afraid to complain and lose their jobs or anything like that and even strikes happen (and people continue employed).
Honestly, you should just enjoy your cheap electronics while you can because this isn't going to last forever as a newer generation of Chinese people is growing up (also mentioned in the article) and they will want better standards of living - no one needs to take care of them, there's more than a billion of them and they can take care of themselves.
Actually Terry Gou must have read Made in Japan" written by the founder of Sony Akio Morita. There is a section were Akio Morita talks about Sony setting up manufacturing facilities in the USA and how Sony was sued by competing (and in some cases companies Sony had a close business relationship with ie suing their own customer) for the most insane reasons. The view that Akio left me was when dealing with the USA have a large legal dept because everyone will try to sue you to stop you competing in the market. Akio also compares the the US legal system with Japans and explains how most of the cases being bought forward in the US would never have got of the ground as the lawyers would lose to much money if they lost. So I can see were Terry Gou from Foxcon gets the view that the USA is not a good place to manufacture, not good news for the US manufacturing industry now that unemployment is heading past the 10% mark. On another note, for those who think this is all about wages and conditions, explain to me why South Korea has a huge ship building industry that leaves the US in their dust but the workers actually have higher wages!! Simple, South Korean workers are dedicated to their job and the bosses dont get multi million dollar kick backs and unlike US CEO's dont just see the stock price but also the products they are making today and in the future. This is why the USA is failing, to many directors looking at the stock ticker and ignoring the "product" that is being made now and what they will be producing in 10 years. Go to Toyota and they will happily show you products they have slated to be made in the next 2, 5 ,10 and 20 years.
over seas the work place does not need to pay for worker health-care. That what the USA needs no more Health care tied to the work place.
Oracle sues Google.
Netapp sues Sun,
Apple sues Nokia.
Nokia sues Apple.
SCO sues IBM, Novell, my aunt and your granny.
And lets not forget Amazon's "one click"....
and that is only IT for starters.
Almost daily we have news about frivolous lawsuits related to patents (software patents!) and copyright.
You may want to say whatever you want about this guy, but please don't tell me he does not have a point to make .....
IANAL but write like a drunk one.
The fact is that Foxconn has HALF the suicide rate of Italy, which has the LOWEST rate in Europe.
Hmmm, according to Wikipedia, Greece has about half the rate of Italy... but your comparison is void anyway because:
a) An entire nation has a much more diverse population. Alcoholics, mentally ill, elderly etc. ("about 90 percent of persons who completed suicides in all age groups had [have] a diagnosable mental or substance abuse disorder" link). A young workforce that has been selectively recruited should have much lower levels of mental and substance abuse than the general population, and hence, much lower levels of suicide.
b) Foxconn apparently has a predominantly young, female workforce. Looking at the figures from Wikipedia, the female suicide ratio is about 1/5th that of the male. Until you know the exact gender and age makeup of Foxconn's workforce you can't compare stats accurately, but we would expect a predominantly female workforce to have a much lower suicide rate than the "average" (50/50ish gender mix).
c) All the articles from May-June that mention "14 suicides per 400,000 workers this year" are cunningly refering to "this year" as the period January-May.That is not 12 months, that is 5 months, so the calculated suicide rate from those articles is incorrect.
The correct comparison would be: what is the expected suicide rate given the age/gender of Foxconn employees, either compared to a similar population in manufacturing jobs in the West or China (depending on what point you want to debate). This comparison has not been done by any of the sites on the net that discussed this topic, and the ones that have compared the suicide rate to the general population are being blatantly dishonest due to point a) above.
There's also the fact that she was a moron and didn't think about the fact that "coffee" and "hot" are best buddies.
His comment about the uselessness of business degrees is spot on. I'm convinced that American corporate over-reliance on business degrees, and marketing, are amongst the biggest problems facing American corporations.
American corporations are saddled with a bunch of business majors who, for whatever reason, have been deemed to be the best suited to manage despite the fact that they barely understand the details of what their company actually does. They haven't worked in the trenches, they haven't actually been directly involved in the product or service but they're first in line to run things. This is a far cry from Asia where engineers and designers routinely are the ones who get promoted to management positions. It ensures they can make informed decisions and employees can't get away with BS. Managers in Asia can be just as self-centered, just as concerned about the next Mercedes they're going to buy. But they're also more likely to make the best choices for the company.
The second disaster is marketing. American companies seem to have adopted the attitude that you don't actually need a good product, you simply need to convince consumers you offer one. By the time the consumer realizes they've been had you have their money. And they've risen to have such power because of stupid suits who don't have enough confidence in the strength of their product. And marketing is entirely self-serving. It doesn't matter how wasteful a marketing campaign is a marketing department/agency will find a way to skew the data to claim it was actually a success. It's rather shocking how much money companies dump into marketing especially considering how low the response rate actually is.
This is not to say there aren't other issues. The cost of labor in the US is exceedingly high, and work ethic is crap. Couple that with entitlement culture and you've got real problems. And topping it all off we've got a government that mismanages and misdirects regulation. Instead of making decisions that are best for the well-being of the nation their policies almost always seem intended to pander to special interests or push certain agendas.