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Apple

Apple Is Making Life Terrible In Its Factories (theregister.co.uk) 297

An anonymous reader writes: Pressure from Apple to lower costs is driving worsening conditions for workers at the company's manufacturing partners.
This according to watchdog group China Labor Watch, which says that under CEO Tim Cook, the Cupertino giant has asked the companies that assemble its products to cut their own costs, and those demands have led them to cut back on worker pay and factory conditions. Specifically, the group reports that Pegatron has been passing on financial pressures from Apple by committing multiple violations of Chinese labor laws on fair pay and workplace safety.
"Working conditions are terrible, and workers are subject to terrible treatment," China Labor Watch writes. "Currently, Apple's profits are declining, and the effects of this decline have been passed on to suppliers. To mitigate the impact, Pegatron has taken some covert measures to exploit workers."

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Apple Is Making Life Terrible In Its Factories

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  • see what the Union free work place get's you!

  • Greed, greed, human greed. Aren't Apple the company that has 150+B in the bank. Why do they need them all. Instead of working on 20% markup they are working on 400% markup. This should be outlawed. Limiting markup to 20% is the only thing communism got right.
    • by perpenso ( 1613749 ) on Monday August 29, 2016 @01:03PM (#52790225)
      I am not supporting any worker abuse but lets at least get the facts right. Apple's profit margin is around 40%, not 400%. Many people around here make the mistake of looking at manufacturing costs but not factoring in the years of R&D that went into something, the overhead of a company, etc.
      • by x0ra ( 1249540 )
        An iPhone 6 manufacturing cost is estimated at $200, even if you add 50% for R&D, that's still a 100% profit margin over the entry level model.
        • Even if you add 50% for R&D you still need to do another 50% for marketing retail and other.

        • I know this may come as a shock, but your numbers appear to have little basis in reality. Instead, let's work with Apple's latest financial statements [shareholder.com] and draw our conclusions from there.

          Focusing on page 3, here's what we can quickly glean using some simple arithmetic with their numbers from last quarter:
          - They have a 38% margin after you deduct the cost of sales
          - They have a 24% margin after you deduct operating expenses
          - They have an 18.4% margin after you deduct taxes

          According to page 28, operating expen

      • Apple still has an ongoing operating cost on each of these iDevices after they are made and sold.

        This is for the back-end Big Data needed to make these devices perform their magic throughout the service life of the device and Apple has invested substantially in several large data centers to make that happen.

        (I am going to stop here as there are additional R&D efforts that are not yet public knowledge.)

    • Greed, greed, human greed. Aren't Apple the company that has 150+B in the bank. Why do they need them all. Instead of working on 20% markup they are working on 400% markup. This should be outlawed. Limiting markup to 20% is the only thing communism got right.

      China is theoretically communist, it is doing a bad job of protecting its employees.

      • Chinese government officials are corrupt (just like their US counterparts) and are not not doing their jobs to protect chinese workers, to keep themselves fat and rich...

        • Shh you can't say that out loud, better to blame the foreign businesses for exploitation, China's mantra for almost 100 years. As every toddler learns, it's always easiest to blame someone else for your problems.

    • Re:WTF Profits (Score:5, Insightful)

      by bluefoxlucid ( 723572 ) on Monday August 29, 2016 @02:07PM (#52790693) Homepage Journal

      People say "profits" a lot. They try to ignore that prices don't follow inflation [amazonaws.com], and that costs are real.

      The long and short of it is, somewhere behind the opaque shroud, Apple goes from selling the last-model iPhone at a 10% profit to selling it at a 10% loss. What's probably actually happening is people just aren't interested in spending on a new phone now, and will take a low-cost phone at a bargain. Apple can't cut the current-model back to that cost, and can't even get the old-model down that low, and so is trying to hit prices that the consumer will pay by cutting costs back.

      In other words: the "cutting into profits" is more like "losing business, and facing extinction." Apple isn't going to die out today; they know that if they can't keep their phones in the consumer market, they're going to die out in a decade, maybe. Strategic executives actually look way ahead and try to minimize the likelihood of such an outcome.

      You're talking about a 20% mark-up, and you've managed to ignore that Apple will take a 10% mark-up but the consumer won't pay $600 for a $550 phone. If Apple wants to sell a phone like that in a market of $350 full-featured phones, it needs its Chinese manufacturers to deliver a $350 phone that it can *maybe* mark up to $400 as a premium option.

      At the base, this happens when competitors are offering top-of-the-line technology at the break-out price point. 10% more for 10% more feature, until you're suddenly paying 50% more for 10% more feature; you stop just at that point, and now your next competitor can only offer a better product at 1.5 times the price. Yours might cost $400, but their barely-any-better gadget now costs $600. Even if most of your market is in mid-tier $250-$300 phones, your major competitor can't distinguish themselves as a better product without a distinguished price point: to stand apart in features, you must stand apart in price.

      This is a common strategy for other reasons. You release a low, mid-tier, and high-end flagship product; then the customer sees that the mid-tier product is much cheaper than the top-tier product but almost as good, and buys the mid-tier product due to its excellent value. Without the top-tier product, they make a more price-conscious decision, determining their need rather than bare purchasing efficiency. What I've described is an extension: you ensure that the high-end flagship product of distinction is someone else's, and that it's *very* expensive by way of making the most-expensive *reasonable* product on the market yourself. Maybe nobody buys your Galaxy S7; but they're sure as hell not going to spend twice as much on a fucking iPhone.

      Apple has the extra disadvantage of not selling a mid-tier product; they sell the iPhone 5 currently, which broadcasts loudly that it's an out-of-date product because it was the premier product four years ago. If it was called the iPhone 7n (new budget offering), people would perceive it as a modern, budget-friendly phone without all the bells and whistles.

      • Apple have, in a way, shot themselves in the foot: They made some really good phones. So good that customers don't want to buy new ones now. There are no new must-have features in the latest model. Much like Microsoft's desperate attempt to kill off Windows XP and then Seven, they struggle to compete with their own past self.

    • by Afty0r ( 263037 )

      Aren't Apple the company that has 150+B in the bank.

      How much do you have in the bank? The fact you're accessing Slashdot probably puts you in the top 10% globally, very possibly the top 1 or 2%

      So, given that you're probably already incredibly wealthy compared with most other humans, why do *you* want more money? Why do you go to work? Why do you make the salary or hourly rate that you do - why not do it for 10% less - is it because you're greedy?

  • Oh no! (Score:3, Insightful)

    by K. S. Kyosuke ( 729550 ) on Monday August 29, 2016 @12:55PM (#52790153)
    But at least the workers hearts will be warmed by the thought of Apple's profit margins, if not by their empty stoves.
  • Scrutiny (Score:5, Interesting)

    by Cloud K ( 125581 ) on Monday August 29, 2016 @12:59PM (#52790181)

    I'm no Apple fanboy (just actually switched most my stuff away) but it's worth noting that the Register are well known for having an anti-Apple bias in their reporting.

    Other companies use the same manufacturers - I would argue that consumers in general wanting lower priced tech is causing this, not specifically Apple - they just get a lot more scrutiny with being such a huge tech company.

    • Re: Scrutiny (Score:2, Insightful)

      by Anonymous Coward

      Apple just isn't being as innovative as they were several years ago. For quite awhile, the iPhone was the best phone out there. Apple includes features that their competitors didn't. Their products were also rock solid, and I could count on not having any problems with OS X and iOS. Their products have always been more expensive, but you could make a strong case that you got what you paid for. Perhaps there's only so much innovation that can be done with smartphones, at least for awhile. I get it that there

      • by Cloud K ( 125581 )

        Yeah that's pretty much why I moved away. It used to be that you paid a bit more to be ahead of the technology curve (software as well as hardware). Now you pay more for something prettier and with a privacy and security focus, which is good, but that's it. Dell make a nicer Ultrabook (XPS 13) and Google tends to be a year ahead with mobile stuff (intelligent photo search being one example). A classic thing that winds me up with iOS is still not having weekend hours for its Do Not Disturb mode. It'll b

    • I think they get more scrutiny (and in some ways deserve it) because they're one of the companies that always talk about doing progressive things and being good for the environment, diversity, etc. You could also argue (probably rightly) that they get additional scrutiny just because they're the top company as well, but they were also one of the companies that made a big deal about all of their efforts and want to talk about their social responsibility.

      If they want to do all of that for marketing or as p
    • Apple - they just get a lot more scrutiny with being such a huge tech company

      And they deserve it. The company with the biggest market and the biggest volume gets to set the policies and standards the other ones simply follow. That's how business to business works and it transcends industries. e.g. only recently I was told we won't ever be seeing a certain feature in a product from a supplier unless Shell want it because they only retool their line for Shell or someone who can match them in purchasing power.

      You say jump, they say we'll consult with Apple's specs on how high.

      • by Cloud K ( 125581 )

        Yeah fair point that. I'm also thinking back to when I originally switched TO Apple, and one of the justifications I made at the time was that I was paying more so they could afford to actually be better. Better policies with manufacturing, better quality control, better customer service, etc. This has proved repeatedly not to be the case.

  • by Tablizer ( 95088 ) on Monday August 29, 2016 @01:00PM (#52790201) Journal

    China Labor Watch writes...

    Is it possible this is gov't propaganda to benefit Chinese companies at the expense of Apple?

    I'm sure a lot of factories don't follow written guidelines: it's still a 3rd world country with a lot of bribery and cruft. (Then again, I've seen abuse in USA cubicle-land also.)

    There have been complaints from other co's that Chinese gov't inspectors inspect and/or publicize with double standard on foreign firms.

    • by dysmal ( 3361085 )

      China Labor Watch writes...

      Is it possible this is gov't propaganda to benefit Chinese companies at the expense of Apple?

      (+1) Excellent point! I'm not denying that the conditions there are probably pretty bad. This could also be someone using LESS whitewash on the propaganda than normal. Not necessarily an Anti-Apple piece but a less Apple friendly piece.

    • China aren't really third world any more - they have a capable space program now. But they have industrialised at such a rapid pace, it's created sharp differences in level of development. They've got modern mega-cities, high-tech factories and some very well-respected research done at universities - but elsewhere they've got farming villages where life has barely changed in a thousand years. The modernisation process is continuing fast.

  • Makes sense (Score:5, Insightful)

    by Ecuador ( 740021 ) on Monday August 29, 2016 @01:02PM (#52790217) Homepage

    It makes sense, Apple is known to have the largest profit margin by far in the tech industry (close to 40% gross, 20% net), so there is no "room" for them, they have to pass on any drop in revenue to their suppliers. Well, I mean, there is no room if they are adamant at maintaining the largest, by far, profit margin...

    • by gtall ( 79522 )

      The nerve of them. They should operate like Dell, or HP, or any other company just scraping by.

    • by AmiMoJo ( 196126 )

      I wonder, if Tim Cook decided to double all their wages, limit them to 8 hours work a day and improved conditions all round, how much would it affect the bottom line?

  • Apple only? (Score:5, Insightful)

    by OzPeter ( 195038 ) on Monday August 29, 2016 @01:06PM (#52790241)

    From what I understand these types of factories manufacture products for multiple customers. If that is the case then this is a non-Apple story and amounts to Apple bashing. So can anyone list manufactures other than Apple that Pegatron services?

    • by Cloud K ( 125581 )

      It's 3 years ago, but Dell and Sony were mentioned here http://www.bloomberg.com/news/... [bloomberg.com]
      as well as them being a spinoff from Asus.

    • Pegatron is arguably "worse" than Foxconn, but Foxconn mistreats workers too (by Western standards), and they produce all non-branded Nvidia cards. So all those 1080 Founders Edition boards are Foxconn. And probably a lot of the third party AIB ones are Foxconn or Pegatron, too. Also, motherboards.

    • by Zocalo ( 252965 )
      They generally do support multiple lines for multiple customers, but that doesn't automatically let Apple of the hook. I'd imagine that each customer has a specific and confidential contract negotiated based on guaranteed volumes, excess volumes, complexity of assembly, and so on, which would make a direct comparison problematic even if the numbers were in the public domain, so it's going to be far from clear cut. However, if it can be shown that only Apple is insisting that Pegatron (and presumably other
    • If that is the case then this is a non-Apple story and amounts to Apple bashing

      That's only the case if other customers can match the business to business buying power of Apple. You see in this world the company with the biggest wallet will dictate the policies that other companies may be able to take part in. The sheer size of Apple doesn't make this Apple bashing at all unless you can find someone the same size with the same brand recognition that's using this supplier.

  • Growing Profits (Score:2, Interesting)

    Don't you remember the good old days when companies would grow profits by innovating? Even Apple used to be there not too long ago. It seems the the whole world has run out of ideas and so there's one last idea to run into the ground: squeeze suppliers.

    • Re: (Score:2, Insightful)

      by omnichad ( 1198475 )

      Apple: now selling commodity products at luxury prices.

    • Don't you remember the good old days when companies would grow profits by innovating? Even Apple used to be there not too long ago. It seems the the whole world has run out of ideas and so there's one last idea to run into the ground: squeeze suppliers.

      To clear things up for you, the world is actually full of ideas.

      Unfortunately, this world is also full of patent hoarders who have legally secured the rights to 99.999% of whatever might be invented in the future, and are also armed with dozens of lawyers just dying to prove that you merely thinking about inventing something would somehow constitute a patent violation worthy of quashing just for the fun of it, resulting in a financial ass-raping that usually torments the average victim for several years.

      Bu

  • Comment removed (Score:3, Interesting)

    by account_deleted ( 4530225 ) on Monday August 29, 2016 @01:27PM (#52790383)
    Comment removed based on user account deletion
    • We, in the west, can not and should not change China to what we feel is the "right" way.

      We don't have to "change China" to affect change. We could just not buy from companies which behave unethically. Apple would cease to strong-arm its supplies if it became obvious that doing so led to a decrease in sales and a tarnishing of its brand name.

    • If life in an Apple contracted factory is bad, it must be even worse working for lower margin companies

      Why do you think other companies have a lower margin?

      But you're right about one thing, this isn't only Apple. Multiple companies will use this manufacturer. The thing is when someone like Apple comes in and says jump, you say how high, and then kiss the feet of the person who gave you the privilege of jumping for Apple. When someone else comes in and says jump, you say "let me consult Apple's specs and get back to you on how high I can do it for you".

    • by AmiMoJo ( 196126 )

      The old "look, this is even worse!" fallacy.

      Apple is a good target to pressure for better conditions. They have the money and the margin, they can afford to do it and could eat the relatively small cost. They also pride themselves on taking a moral stance on issues, like not unlocking phones for the FBI or a dead kid's parents, so working conditions should in theory matter to them. Of course, in practice, they care more when it doesn't cost anything to care.

      The West has a big part to play in this. Sure, the

  • its not just apple — i think samsung and all the other manufacturers are always being driven by the american consumer credo 'the lowest price is the law' — forcing manufacturers to pay its people the least.

    so long as 'the lowest price is the law' — this trend will continue for all manufacturers.

    2cents

  • Man you've got to be pretty bad to violate Chinese labor laws.

    • They are not so bad as they used to be. If you want to see a country with a real lack of labor laws, check out Vietnam. It's the place companies move their manufacturing to when China is too expensive.

  • by MitchDev ( 2526834 ) on Monday August 29, 2016 @01:57PM (#52790633)

    "Pressure from Apple to lower costs is driving worsening conditions for workers at the company's manufacturing partners."

    Funny, because I don't see their prices coming down as a result of the savings....

  • by Texmaize ( 2823935 ) on Monday August 29, 2016 @02:07PM (#52790695)
    Its funny how when it comes down to it, Apple is not very good at things like the environment, gender equality, and social responsibility when it comes to THEIR business. But, my God they sure are not shy about smugly commenting to others about how they handle issues like environment, gender equality, and social responsibility.

    The main problem with our times is that so many people are willing to give a pass to those who say the "right" things instead of judging if they do them. But hey, does it really matter if they move manufacturing offshore to avoid environmental responsibility as longs they make an emoji about your favorite, pet cause?
  • Did they change their name to one of the evil Transformers before or after starting to mis-treat their staff?

  • This report is based on too little data to mean anything, nor draw any conclusions. On page 1 of the pdf, "http://www.chinalaborwatch.org/upfile/2016_08_23/Pegatron-report%20FlAug.pdf", the report says "Pegatron is one of Apple’s major suppliers, employing almost one hundred thousand workers in Mainland China". Most of the numbers in the report are based on paystub data. However, on page 5, there is a table showing how many paystubs they analysed. Over 10 months, they collected 2015 paystubs. One month, Jun 2015, they got only 4 paystubs. The peak was 1064 in Oct 2015. The average number of paystubs they got per month was 202. That is only 0.20 % of the workforce. That is not enough data to be a worthwhile statistical universe.

    I have no doubt Apple is pressuring them to reduce costs. Conditions there might well be awful. However, I can't tell one way or the other from this study, because it's statistics are insufficient.

  • by khz6955 ( 4502517 ) on Monday August 29, 2016 @06:05PM (#52792441)
    Apple doesn't have factories in China. Apple does subcontract manufacturing to Pegatron, the same company that make the Microsoft Surface. The same Pegatron that Microsoft is extorting the Android tax from. 'China Labor Watch' most probably a front for the Microsoft organization. ref [theregister.co.uk] ref [microsoft.com] ref [zdnet.com]

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