Live

Watch CBSN Live

High-Tech Sweat Shops: Is Apple the Next Nike?

Remember all the bad press that Nike received over employing sweatshop factories in Asia? The drama even reached the U.S. Supreme Court, all over the conditions in factories that made its products. Well, Apple (AAPL) is now on track to show that high-tech companies are not immune to similar controversy.

It's not as though Steve Jobs signed off on under aged workers putting in long hours at little pay. But the stories about the electronics firms it works with in Asia make for pretty bad PR. A recent Reuters story on how Apple treats its suppliers had details of guards at a Foxconn plant hitting and threatening a reporter for daring to take photos of a factory's exterior from a public road. Last year, a Foxconn employee working on an iPhone prototype committed suicide when the device went missing. Apparently the company's security guards used "unbearable interrogation techniques" when questioning the worker about the missing unit.

Back in 2006, Foxconn and Apple admitted to breaking Chinese labor laws that are supposed to protect workers:

Chinese workers can be forced to work up to 36 hours extra a month without Inspector Knacker of the Peking Yard raising an eyebrow, but Foxconn's 80 hours is well over this maximum.
Apparently an Apple inspection team from its corporate headquarters saw nothing wrong at the plant.

Reporting in 2008 on Foxconn working conditions in general, not specific to Apple contracts, suggested that Foxconn employees were required to work 11 to 12 hours a day, with one day off every two weeks. Other than a half hour for lunch, they get two ten-minute breaks a day to drink water or use a bathroom. The one plus of doing work for Apple? They get to sit down while on the job. But fail to meet a daily quota, and you stay extra time without pay until you fulfill it. Meanwhole, pay is said to be so low that workers must take overtime to get anything close to a living wage. Workers live in on-campus dormitories, which are crowded, with "a public shower and restroom shared among about 300 workers."

The Reuters account mentioned Hon Hai, which actually owns the Foxconn trade name, and its attempts to silence reporting on its labor conditions by suing a pair of Chinese journalists for $4.4 million:

The amount was later reduced to a symbolic 1 yuan, after stinging public criticism was directed at Apple. Various groups including Reporters Without Borders wrote to Apple chief Jobs asking him to intercede in the case. Apple's audit of Hon Hai's facilities after the case found that it was in compliance with a majority of its requirements under its supplier's code of conduct. But the company did find a number of violations that it was working to address, though it declined to disclose the specifics.
At times, Apple shows itself capable of playing media like a board game. There are also times when it seems as inept as any other large corporation. Apple has faced criticism over product quality, overheating devices, and even exploding iPods. But this is different, because factory news could taint the company as greedy and exploitative -- not the sort of image you want after you made a name with a 1984-themed commercial. What is Apple going to do? Claim that with tens of billions in the bank and enviable profitability it can't afford better conditions for workers?

Although I've focused on Apple here, the larger point is that so many companies have moved manufacturing to Asia that this could be almost any high tech corporation. Foxconn's clients also include Dell (DELL), Cisco (CSCO), and Motorola (MOT). How does all this play at a time many of American customers are already unhappy about jobs going overseas? It would be wise for high tech firms to address labor issues in their outsourced factories -- before consumers, the press, and even government force them to do it.

Image via The Library of Congress, public domain image.