What Apple isn't telling us: Working conditions in Apple's "robust, flexible supply chain"

by Elizabeth Grossman

The morning after President Obama's State of the Union speech that featured plans for reinvigorating U.S. manufacturing, Marketplace Morning Report asked former Obama Administration economic advisor Jared Bernstein why a company like Apple doesn't create more jobs in the U.S. "Well," replied Bernstein, "because the infrastructure for consumer electronics - particularly the assembly for consumer electronics - for many decades has been building up in Asia. And they just have a robust, flexible supply chain there that we simply don't have when it comes to consumer electronics."

Thanks to the release of Apple's 2012 Supplier Responsibility report, we now know the names of 156 companies that account for more thank 97 percent of what Apple pays to its suppliers. But this report only scratches the surface when it comes to what makes this consumer electronics infrastructure and supply chain so "flexible" and "robust" from the perspective of a company like Apple.

What the report does tell us is that this supply chain involves an enormous workforce putting in long hours. At nearly half the audited suppliers, Apple reported that a majority of their workers have been working weekly hours that exceed 60 hours per week at least one week out of 12 - and working more than 6 consecutive days at least once a month. It also tells us that about half of the suppliers audited did not pay proper overtime "as required by laws and regulations," while about a third failed to provide legally required benefits and a third deducted wages as a disciplinary measure.

The report also tells us that half the facilities audited had inadequate safety exit procedures, including narrow corridors and poorly marked or inaccurate evacuation routes. Close to half also had noncompliance in some aspect of fire prevention, preparedness and response, including unmarked fire extinguishers and insufficient fire drills. About a third lacked first-aid supply procedures or had inadequate procedures to ensure compliance with first-aid measures. In 2011, there were explosions at Apple supplier facilities in Chengdu (Foxconn) and in Shanghai (Ri-Teng/Pegatron). Four people were killed and 18 injured in Chengdu and 59 injured in Shanghai.

While the report provides some important information about working conditions in the facilities making Apple products, there are many other factors that affect the health of the workers who assemble computers, smart-phones and other consumer electronics.

Applying a code of conduct to a complex supply chain
Apple has just announced that it will be implementing the Fair Labor Association's code of conduct. One of the code's provisions ties compensation standards to local minimum and prevailing wage standards.

While lower wages are sometimes assumed to be appropriate given the lower cost of living in Asia, low wages have prompted numerous protests and strikes over the past year in China and elsewhere in Asia, including protests involving thousands of workers in Shenzhen, Dongguan, and Chengdu where Apple suppliers are located. In January 2012, the minimum wage in Shenzhen, where Apple supplier Foxconn (among other such manufacturers) has facilities, was raised to 1500 yuan/month ($236) from 1320 yuan/month ($208). In Chengdu, in Sichuan province, where the explosion and fire caused by combustible dust occurred in May 2011, wages have been raised to rates that range from 800 ($126) to 1050 ($166) yuan/month. Malaysia and Singapore have no nationally established minimum wage.

Apple's 2012 Supplier Responsibility report mentions only China, Malaysia, and Singapore as supplier locations, but a search through the suppliers' lists of global manufacturing facilities shows that Apple suppliers may also be located in India, Indonesia, South Korea, Taiwan, Romania, Poland, Ukraine, Russia, Turkey, Slovakia, Thailand, the Philippines, among many other countries. The number of possible countries where suppliers may be located means many different sets of wage standards and many different standards and practices regarding labor unions and other worker organizations and how worker organizing is regarded. It also means many different expectations and practices regarding how and where workers live - whether they're expected to live in company dormitories or not and what that means for wages, benefits, and other working conditions.

Tracking compliance with a code of conduct is also complicated because many of the 156 companies listed on the Apple supplier list have suppliers of their own. Of the 229 facilities Apple audited for the 2012 report, 112 (or nearly half) lacked adequate procedure for auditing their supplier and do not perform adequate supplier audits. Only 55% of the audited facilities had adequate corrective action systems in place and only 56% had what Apple calls management accountability and responsibility either in place or in compliance with existing standards.

Industry-wide problems
Apple has made news with its supplier disclosure and adoption of the Fair Labor Association code of conduct, but the labor problems highlighted by its supplier responsibility report are not unique to Apple. These issues, particularly when it comes to overtime and wages, are chronic in Chinese and other Asian electronics manufacturing plants that work as suppliers to other major electronics firms, including Dell, HP, and IBM. Not detailed by Apple, but called out by the China Labor Watch in its July 2011 report on electronics work in China, is the lack of proper employment agreements that resulted in workers not being fully informed about their rights, benefits or training - a problem I have heard about first-hand from electronics workers in the Philippines.

When it comes to chemical exposure, Apple has documented the use of n-hexane, ID, in its supplier Wintek's facility in Suzhou where the chemical sickened 137 workers in 2010. In its 2011 Supplier Responsibility report Apple also reported that another unnamed supplier and its subcontractor had been using n-hexane. But no other details of chemical exposure are provided in either the 2011 or 2012 reports. Yet among the suppliers listed by Apple, in addition to those at Wintek facilities, among the other companies where chemical exposure and related worker safety issues have been documented are Foxconn, Samsung, Catcher Technology Co., and Quanta. And there are longstanding and/or historical chemical exposure issues involving US electronics manufacturing facilities in the U.S., among them Fairchild Semiconductor, IBM, and Intel that have effected both individual and communities. In addition, I have heard anecdotally first-hand about chemical exposure issues in electronics manufacturing facilities in Taiwan, Indonesia, South Korea, and the Philippines.

It's also worth noting, that Foxconn, whose facilities in China have been highlighted in recent reporting by the New York Times, in addition to producing for Apple, has also been acting as a supplier for other companies, among them Amazon, Dell, HP, Lenovo Microsoft, Nokia Panasonic, Samsung, and Sony. By now it's painfully clear that the "robust" Asian electronics infrastructure to which analysts like Jared Bernstein refer depends on the region's enormous, low-wage, risky-condition workforce.

What will it take to change this, I asked Ted Smith of the International Campaign for Responsible Technology. "These situations will continue until there is an informed and empowered workforce and workforce organizations of a serious kind to watch over what's going on," said Smith. "As long as there's no counterforce, this is what will continue to happen."

Elizabeth Grossman is the author of Chasing Molecules: Poisonous Products, Human Health, and the Promise of Green Chemistry, High Tech Trash: Digital Devices, Hidden Toxics, and Human Health, and other books. Her work has appeared in a variety of publications including Scientific American, Salon, The Washington Post, The Nation, Mother Jones, Grist, and the Huffington Post. Chasing Molecules was chosen by Booklist as one of the Top 10 Science & Technology Books of 2009 and won a 2010 Gold Nautilus Award for investigative journalism.