Workers making Apple products see hours reduced
Chinese workers who often spend more than 60 hours per week assembling iPhones and iPads for Apple will have their overtime curbed and their pay increased following an audit.
The Fair Labor Association (FLA) said Hon Hai Precision Industry, the Taiwanese company that runs the factories in China, is committing to a reduction of weekly work time to 49 hours, the legal Chinese maximum.
That limit is routinely ignored in factories throughout China. Auret van Heerden, the CEO of the FLA, said Hon Hai, also known as Foxconn, is the first company to commit to following the legal standard.
Apple's and the FLA's own guidelines call for working weeks of 60 hours or less.
Foxconn's moves are likely to have an impact across the global technology industry. The company employs 1.2 million workers in China to assemble products not just for Apple, but for Microsoft, Hewlett-Packard and other pillars of US technology.
Foxconn's factories are the last step in the process of manufacturing iPhones and other Apple devices, most of which have hundreds of components.
Research firm IHS iSuppli estimates that Apple pays $8 (€6) for the assembly of a 16-gigabyte iPhone 4S and $188 (€141.33) for its components.
It sells the phone wholesale for about $600 (€451) to phone companies, which then subsidise it to be able to sell it for $200 (€150.35) with a two-year service contract.
Ricardo Ernst, a professor at Georgetown University's McDonough School of Business, said companies play a risky game when they raise their manufacturing costs. US consumers have shown little inclination to pay more for products that are made in the US as opposed to China.
But iSuppli's figures suggest that if Apple were to absorb a Foxconn wage increase that keeps salaries level while cutting average working hours from 60 to 49 per week, it would pay less than two dollars extra to have an iPhone made.
Other electronics companies, particularly PC makers such as Dell and HP, earn less profit on what they sell and could see a deeper impact.
The FLA auditors visited three Foxconn complexes in February and March: Guanlan and Longhua near the coastal manufacturing hub of Shenzhen, and Chengdu in the inland province of Sichuan. They employ a total of 178,000 workers, with an average age of 23.
Average monthly salaries at the factories ranged from $360 (€270.63) to $455 (€342.04). Foxconn recently raised salaries by up to 25% in the second major salary hike in less than two years.
Apple's enormous profits - $13bn (€6.12) in October-to-December quarter - have made it the world's most valuable company, worth more than $570bn (€428.5). It has also put the spotlight on the way its products are made.