ModernityBlog

“Nearly all men can stand adversity, but if you want to test a man’s character, give him power.” Abraham Lincoln

Foxconn And The Least Expensive Part.

with 3 comments

Capitalism depends on the manufacture of goods at comparatively low prices, but often sold at a premium.

For evidence of that we need look no further than the modern Western accoutrement, the mobile phone.

This has been brought into focus by the activities of Foxconn, whose naked exploitation of its workers has led to many suicides and growing concerns over its activities.

Foxconn is effectively a subcontractor to Western companies, Apple, Nokia, etc. They put together electronic goods and mobile phones that are so ubiquitous in the West.

But that labour comes at a cost, small cost for Foxconn and a large one for its workers as the strike in India shows:

“Foxconn India management’s defiance to recognise the demands of the Foxconn India Thozhilalar Sangam (FITS) union affiliated to the Centre of India Trade Unions (CITU), on wages and reinstatement of 23 workers, caused workers to commence an industrial struggle on September 22, 2010, according to information provided by the International Metalworkers’ Federation (IMF) and India labour rights group Cividep.

On September 8, FITS, claiming membership of around 1,500 workers out of the 1,800 total of regular workers, gave notice to strike to Foxconn India management demanding wage negotiations. However, the management entered in to an agreement with Foxconn India Thozhilalar Munnetra Sangam (FITMS), a union affiliated to LPF workers wing of ruling DMK party.

From the early hours of September 22, 2010, FITS commenced its “sit-in” strike, around 1,500 workers participated and half of them are women workers. Around 6,000 contract workers and trainees were also not allowed to work by the strikers. In the evening of the same day workers called off the strike as the Foxconn India management promised to discuss with the FITS union in the presence of District Labour Commissioner on September 27, 2010.

However, on September 23, Foxconn India informed the workers that it already entered in to a memorandum of understanding with the FITMS union, hence no negotiations with FITS and announced the imposition of eight days wage cut for workers who participated in the strike.

Protesting against the management action, FITS resumed the sit-in strike on September 24. The management used police to arrest 1,500 workers and suspended 23 activists.”

The workers’ frustration and anger is all the more understandable as they are paid a pittance, if the activities of Foxconn China is anything to go by.

The new iPhone is manufactured in China by Foxconn for Apple. It is a most agreeable arrangement for the companies as profits roll in, off of the backs and labour of the poorly paid workers.

The approximate cost of a new iPhone is about $600.

Yet the labour costs in building that iPhone are only about $6.54, according to the Wall Street Journal:

“The least expensive part of the process is manufacturing and assembly. And that often takes place here in southern China, where workers are paid less than a dollar an hour to solder, assemble and package products for the world’s best-known brands.”

The parts for the iPhone come to just under $188, according to iSuppli Corp.’s Teardown Analysis service:

“With the iPhone maintaining its existing pricing, Apple will be able to maintain the prodigious margins that have allowed it to build up a colossal cash reserve—one whose size is exceeded only by Microsoft Corp.”

Such is the alarm and bad publicity at Foxconn and its parent company, Hon Hai, that they are even considering increasing wages, finally.

It is the poor workers in India and China that pay the price for Apple’s massive profit margins, as the Wall Street Journal relates:

“At the end of June, a manager at Foxconn Technology — one of Apple’s major contract manufacturers — said the company planned to reduce costs by moving hundreds of thousands of workers to other parts of China, including the impoverished Henan Province.

While the labor involved in the final assembly of an iPhone accounts for a small part of the overall cost — about 7 percent by some estimates — analysts say most companies in Apple’s supply chain — the chip makers and battery suppliers and those making plastic moldings and printed circuit boards — depend on Chinese factories to hold down prices. And those factories now seem likely to pass along their cost increases.

“Electronics companies are trying to figure out how to deal with the higher costs,” says Jenny Lai, a technology analyst at CLSA, an investment bank based in Hong Kong. “They’re already squeezed, so squeezing more costs out of the system won’t be easy.”

Apple can cope better than most companies because it has fat profit margins of as much as 60 percent and pricing power to absorb some of those costs.”

The International Metalworkers’ Federation has more on how Foxconn’s workers in India have been treated:

“More than 1,200 permanent workers belonging to the Foxconn India Thozhilalar Sangam (FITS) union, which is affiliated to Center For Indian Trade Unions (CITU), at the plant have been involved in weeks of struggle to have their union recognized by management so as to negotiate wage rises and other demands.

On October 9 police arrested hundreds of workers who had been picketing and striking the plant for several days. Around 319 workers including the trade union leaders were remanded into judicial custody and transferred to Vellore central jail. Remaining workers were let off and around 200 women workers were taken to a bus stop and asked to leave. When the women refused and demanded to be arrested also, they were abused and forced off the police vehicle.

On October 13, the court granted bail to 307 workers. The remaining 12 workers and union leaders remain in jail, including A. Soundhirarajan, CITU State General Secretary and E. Muthu Kumar, CITU District Secretary, Kanchipuram and FITS President.

Workers at the plant with four years experience earn INR 4,800 (US$ 106) per month. FITS is demanding a basic pay of INR 10,000 (US$221), other additional bonuses and health checks and medical insurance.

In addition to the latest rounds of arrests, the company has retaliated by deducting eight days of wages from striking workers’ pay, suspending 23 union activists and leaders, and refusing to negotiate with the union on the grounds that it has entered an agreement with an alternative union the Foxconn India Thozhilalar Munnetra Sangam (FITMS).”

So a skilled worker, with four years of experience, is only earning about $106 per month, that’s about £68 or some €77, that’s the price of a cheap mobile phone.

See China Labour Bulletin for more background to the issues.

Written by modernityblog

19/10/2010 at 17:46

3 Responses

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  1. What do you think about this article :
    http://en.secretchina.com/opinion/3805.html

    Dunn

    01/11/2010 at 09:34

  2. […] That’s the price of cheap phones, poor conditions and low wages, how similar to Foxconn. […]


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