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There has been a lot of buzz over last Sunday’s New York Times article “How the U.S. Lost Out on iPhone Work.” It’s good to see issues of manufacturing competitiveness talked about in the media and among my Facebook friends who usually aren’t talking about factories. So why aren’t iPhones assembled here in the U.S.? Apple used to build Macs in California. I used to work for Dell when they built PCs in Texas. Now,  Apple products are made by Foxconn in China and the Dell factory in Texas is now closed. My iMac, my Kindle Fire, and my iPhone – all made in China – in some conditions we would never tolerate here.

As I blogged about recently, Steve Jobs blamed the lack of U.S. production on a lack of skilled technical workers and supervisors and he said to President Obama, “those jobs aren’t coming back.” I questioned whether that is true, considering the U.S. has lost millions of manufacturing jobs due to the China trade deficit and there have got to be plenty of experienced people looking for work.

The NY Times article points out that producing in China isn’t just about low wages. It seems to me that it’s about the unfair advantages of a country where workers aren’t free. I’m all for companies making profits, but I wish those profits didn’t have to be made on the back of people suffering under the tyranny of a repressive, totalitarian, “Communist” government.

Yeah China can move fast, but at what human cost?

From the NY Times article, one part that still has me a bit angry (which kept me from blogging about this, since I try to avoid blogging when angry):

One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

What the Apple executive gushes over makes me cringe and hurt inside. I believe people deserve freedom. Being forced awake and marched en masse into a factory to make iPhones seems pretty close to prison labor conditions to me. The counter argument is “well, these people wouldn’t have jobs otherwise” rings hollow to me. We have to hope that people can have better than the minimally tolerable conditions, regardless of where they live. As the argument goes:

Without Foxconn and other assembly plants, Chinese workers might still be working in rice paddies, making $50 a month instead of $250 a month (Kristof’s estimates. In 2010, Reuters says, Foxconn workers were given a raise to $298 per month, or $10 a day, or less than $1 an hour). With this money, they’re doing considerably better than they once were. Especially women, who had few other alternatives.

Read more: http://www.businessinsider.com/apple-child-labor-2012-1#ixzz1kT3wIQ1i

Of course “no American plant can match that,” as the Apple exec says.  It’s not that American workers are lazy. We just enjoy living in our own home instead of being packed like sardines into a company dormitory and we enjoy a luxury called work/life balance (so says the guy here who gets picked on for working so many jobs and blogging all the time, but I love that I do).

Unsafe and bad conditions

According to Mike Daisey, who traveled to China and the Foxconn factory in Shenzhen,  conditions at Foxconn (in 2010 when he visited) allegedly included (and most of this checked out when This American Life fact checked it):

• Living within dormitories inside the factory walls, employees are packed into 144 square foot (12-by-12) cement rooms with 15 beds stacked up like bunk-beds. Employees are often placed into rooms where they do not know anyone as well.
• Any attempt at forming a union is met with arrest and a prison sentence as unions are illegal within China.
• Workers cleaning iPhone screens used a chemical called hexane, specifically because the chemical solution evaporates faster and allows the production line to speed up. However, hexane is a neuro-toxin. Inhalation of hexane causes mild euphoria, followed by nausea and headaches. Repeated exposure causes extensive peripheral nervous system failure, a result that Daisey spotted as the hands of the workers on the line shook involuntarily.
• Five percent of the workers Daisey spoke to were underage, some as young as twelve. The children working at the factory mentioned that Foxconn doesn’t check ages and shifts older employees to the front line when inspections occur.
• The standard working shift at the plant lasts 12 hours, but that’s pushed up to 16 hours when Apple is getting ready to launch a new gadget like the upcoming iPad 3. However, a worker on a 34 hour shift dies while Daisey tours the facility.
• On the factory floor, there’s no talking allowed among the 20,000 to 30,000 workers. There’s also little machinery on the floor since labor costs are far lower than machines. However, Gau has stated publicly that investing in advanced automation is a high priority.
• Workers that have developed severe carpal-tunnel issues from repeating the same process over and over are simply fired. Foxconn could eliminate this issue by rotating jobs between employees, but they do not.
• Workers that get severely injured on the job are fired without any severance and workers that complain about working conditions are fired as well as black-listed with all companies that operate within Shenzhen.

America can’t match any of that.

There’s a lot to absorb from the above bullet points. Looking at the n-hexane issue… the factory was choosing to use a more dangerous chemical because it was FASTER than the readily available alternative.

Faster or safer? Easy choice, right?

Read that again and think about that. Faster trumps safer.

They could have used rubbing alcohol, but they chose faster over safer. They’ve now supposedly switched away from n-hexane (thanks, Apple!), but who knows if that’s true. It might be true when inspectors are present (more on that later). To be fair to Foxconn, it was a separate company, Wintek, that was using n-hexane and hurting workers. Apple forced some of the changes, but how many other problems go undiscovered and unfixed? Apple is doing something and they argue they are doing more than others — but is it enough?

Daisey’s report says independent unions (or “secret unions”) are illegal in China. I’m not the biggest fan of unions, but you should have the right to form one in a free country (and companies should be free to move to right-to-work states). If you can’t form a union in a supposed socialist worker’s paradise, the world is upside down. For all of their current-day problems, it’s undeniable that American labor unions have led to safer and better working conditions for all in this country. So, I guess the ultimate revenge from factory owners came in moving so many of these jobs to a country with, shall we say, less demanding standards.

No wonder American can’t compete when safety and ergonomics are lower priorities than production line speed and fast ramp ups. Now, Mike Daisey could be full of crap, but he claims to have “gone to the gemba” at Foxconn, something I have not (and the experts cited in This American Life couldn’t dispute much other than Daisey maybe overstated the number of underaged workers).

And the CEO of Foxconn, Terry Gao, indelicately referred to the one million “animals” who work for him (which was blamed on a translation and context issue).

Other unfair advantages

Beyond the safety issues, Apple and Foxconn receive other advantages from the Chinese government, including subsidized factories that are built for companies that haven’t yet decided to build products in China.

Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.

In China, it took 15 days.

America can’t match that.

I’d have to check with the Institute of Industrial Engineers (of which I’m a member) to see how many unemployed IEs there are in the U.S.  Apple could find that many engineers in the U.S., but it might take too long (or those engineers might be too expensive). Another advantage in China is that they could basically force 100,000 technical college students to move to another city to work in a factory. Nope, the U.S. can’t match that. As I discussed this NY Times piece on Twitter, one person replied “These workers choose to work there.” Do they? Do they?

Chinese newspaper China Daily reports 100,000 pupils visiting vocational schools in the province of Henan are being forced to work at Foxconn’s Shenzhen plant.

Pupils were informed on the 17th of June that they had to pack their bags to head up north in nine days, by command of the provincial government. Should they not follow orders, they would be kicked out of school – so kids training to be locksmiths are being forced to work for Foxconn…. On top of it all, a civil servant added the provincial disgovernment gave “internal orders” stating towns had to send off 100 people aged 18 to 45 to Foxconn… A further source said 300,000 people are supposed to travel from Henan province to Foxconn’s plant in Shenzen.

Read more: http://news.techeye.net/business/chinese-students-forced-into-working-for-foxconn#ixzz1kTCeytHF

America can’t match that.

From a recent This American Life story (read or listen):

Because 31 years ago, when Deng Xiaoping carved this area off from the rest of China with a big red pen, he said, this will be the special economic zone. And he made a deal with the corporations. He said listen, use our people. Do whatever you want to our people. Just give us a modern China. And the corporations took that deal, and they squeezed and they squeezed. And what they got was the Shenzhen we find today.

America can’t match that.

I believe in free trade. But, I’m starting to turn to the side that thinks we need “fair trade” where my devices and gadgets aren’t leading to child labor and people being harmed or killed due to 19th-century (by our standards) working conditions. Things seem pretty disgusting at Foxconn. Thank goodness nobody referred to them as “lean” because that would be the furthest thing from the truth. China doesn’t need Lean, although there are rumors that Lean Manufacturing has a future in China.

But Apple has a policy and audits…

Apple puts on a good face that they have supplier standards and that audits are performed to try to ensure that things are done properly. New CEO Tim Cook says:

No one in our industry is driving improvements for workers the way Apple is today.

OK, but maybe they still aren’t doing as much as they could.

He adds:

We insist that our manufacturing partners follow Apple’s strict code of conduct, and to make sure they do, the Supplier Responsibility team led more than 200 audits at facilities throughout our supply chain last year. These audits make sure that working conditions are safe and just, and if a manufacturer won’t live up to our standards, we stop working with them.

It seems unlikely Apple, and other electronics companies, will stop doing business with Foxconn, even if they have stopped working with some who break the rules. They can’t break with Foxconn. No other manufacturer has the scale and size to make products that sell at such high volumes. No country with freedom and good working conditions can match Foxconn’s “breathtaking” capabilities.

Using audits to ensure good working conditions is like the failed approach of “inspecting in quality” when manufacturing something. As this article points out:

Han praised Apple for agreeing to random inspections. “Oftentimes, the company knows when an inspection is coming and they plan for it by constructing a new plan to circumvent the inspection or reducing the number of employees,” she says.

Yes, truly random inspections would be good, but companies often participate in what some call a form of “control fraud” (or cheating on audits) but as Mike Daisey claims in a recent This American Life piece:

The outside companies do have inspections, but workers told me Foxconn always knows when there’s going to be an inspection. So what they do then, they don’t even check ages then. They just pull everyone from the affected line, and then they put the oldest workers they have on that line.

… in my first two hours of my first day at that gate, I met workers who were 14 years old, 13 years old, 12.

Do you really think Apple doesn’t know? In a company obsessed with the details, with the aluminum being milled just so, with the glass being fitted perfectly into the case, do you really think it’s credible that they don’t know? Or are they just doing what we are all doing? Do they just see what they want to see?

America can’t match that.

(Update and comments on the increased audits and decreased findings of child labor — which could mean they’re better at hiding the practice).

Could Apple do more? I think this quote is telling (source):

“We’ve known about labor abuses in some factories for four years, and they’re still going on,” said one former Apple executive who, like others, spoke on the condition of anonymity because of confidentiality agreements. “Why? Because the system works for us. Suppliers would change everything tomorrow if Apple told them they didn’t have another choice.”

Final thoughts

I guess I’m a big awful hypocrite for typing this on my MacBook Air – a product a love, produced in working conditions that I hate. I’m all for corporations – but it’s sad when companies that exist due to freedoms provided by some governments make money on the backs (and twisted carpel tunnel-y hands) of those who do not have such freedoms. Maybe it’s true that capitalist companies are truly Soviet in nature.

This is such a complication situation that leaves me and many others I’ve chatted with this week very conflicted. You feel bad for the workers, but you love your gadgets. You want to shake your fist at Apple, but they’re not the only ones involved. You’d like to think you could do something, but maybe this is just the way works. There are no easy answers. Just an uneasy feeling.

Footnote: Interestingly, some say Apple is a weird secretive place to work domestically, with spies who hang out in local Cupertino bars (Henry Ford would have been proud).

I tried interviewing Siri about this and she wasn’t very helpful…. “that’s classified” was the response when I asked her where she was built (hat tip to Ira Glass for the idea).

 photo credit: .thana✌

About LeanBlog.org: Mark Graban is a consultant, author, and speaker in the “lean healthcare” methodology, focused on improving quality and patient safety, improving access, reducing costs, and fully engaging healthcare professionals. He is also the Chief Improvement Officer for KaiNexus.

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