24 May 2011
By James Pomfret
A deadly explosion at a Chinese factory making iPads for Apple has focused attention on lax industrial safety standards that continue to plague many Chinese workers, while raising supply chain risks in the high-end electronics sector.
Production in parts of the plant in the southwestern city of Chengdu were suspended by Foxconn Technology Group , Apple's biggest manufacturing partner, after three workers died and 15 were injured in a blast in a polishing workshop where Apple's signature products undergo finishing.
This isn't the first time that Foxconn, a unit of Taiwan's Hon Hai Precision and China's largest contract manufacturer, has been hit by controversy.
A string of worker suicides at its plants shone a harsh spotlight on what critics dubbed a militaristic culture pushing its workers to the brink to meet a flood of unceasing global orders for Apple's slick new generations of products.
Since then, Foxconn -- which many experts say is the only viable partner for Apple given the vast economies of scale stemming from its string of gargantuan factories employing well over a million workers -- has raised pay, cut working hours and promised a better work-life balance for its employees.
But some experts say the changes have been superficial.
"The old tricks that they've been using there have simply been replicated in the new factories that they're setting up in Chengdu, Chongqing and Zhengzhou," said Geoffrey Crothall, with the workers' rights group China Labour Bulletin, referring to three massive new Foxconn plants built in inland China to tap lower wages and vast numbers of new workers closer to home.
While Foxconn stressed worker safety remained its "highest priority", critics say the blast in Chengdu was caused by a repeated failure to protect workers from hazardous materials including chemicals and ultra-fine aluminium dust permeating a poorly ventilated factory space.
"The worker safety in the factory is really alarming," said Debby Chan, a project officer with SACOM who released a video of Foxconn workers in Chengdu with their faces, hands and clothes coated in a fine metallic dust after a shift there.
"We don't know how many incidents are happening at Foxconn, because there's no transparency."
China, whose vast export sector now churns out a torrent of consumer goods, has had a dire industrial safety record despite longstanding efforts by the country's stability-obsessed Communist Party leaders to improve workplace conditions for the army of more than 150 million migrant workers.
In 2010, there were around 360,000 industrial incidents that led to the deaths of nearly 80,000 people, with tens of thousands more stricken by occupational diseases.
A confluence of factors including rising wage and material costs and a slowly appreciating yuan have eroded margins and pressured many factory owners to skimp on workplace safety.
"Safety is done very badly in Chinese factories," said Yi Yeping, a former worker for CIMC , the world's largest cargo container maker, who has leukaemia which he says was caused by breathing in poisonous Benzene fumes there.
"Factories think it will just increase costs, so many firms are very reluctant (to invest in safety). They just care about the business and neglect the workers," added Yi, 29, whose protracted legal bid to sue CIMC has come to nothing. The company has not been found guilty of any wrongdoing.
Recent signs suggest a younger, more wired generation of migrant workers may be less tolerant of poor conditions and low pay than their parents' generation, choosing to quit factories altogether and potentially exacerbating labour shortages.
A rash of wildcat strikes in plants supplying major firms like Japanese carmaker Honda last year succeeded in crippling production for many multinationals, raising the risks of supply chain vulnerabilities from ignoring workers' needs.
Besides a potential tainting of Apple's brand image, market research firm IHS iSuppli forecasts production of half a million iPads could be at risk if the shutdown in Chengdu continues until the end of June, though the impact could be mitigated by shifting production to Foxconn's other factories.
Calls have grown for high-margin tech firms like Apple -- the world's largest technology company -- to take the lead and plough more of its lucrative profits into raising workplace standards amongst its China suppliers.
"What Apple can do is clearly pay Foxconn more for their contracts and make that payment contingent on better pay and conditions for workers," said Crothall. "Apple can take a loss on that or reduce profits or pass those costs on to consumers." (Reporting by James Pomfret; Editing by Nick Macfie)