Yesterday the New York Times had a really good hard-hitting piece on Apple's businesses practices. Apple manufactures all those gadgets we love to buy through Chinese companies it contracts with. And though Apple has a supplier code of conduct regarding work and safety standards, its suppliers don't do a very good job meeting it:
[A]udits have found consistent violations of Apple’s code of conduct, according to summaries published by the company. In 2007, for instance, Apple conducted over three dozen audits, two-thirds of which indicated that employees regularly worked more than 60 hours a week. In addition, there were six “core violations,” the most serious kind, including hiring 15-year-olds as well as falsifying records.
Over the next three years, Apple conducted 312 audits, and every year, about half or more showed evidence of large numbers of employees laboring more than six days a week as well as working extended overtime. Some workers received less than minimum wage or had pay withheld as punishment. Apple found 70 core violations over that period, including cases of involuntary labor, under-age workers, record falsifications, improper disposal of hazardous waste and over a hundred workers injured by toxic chemical exposures.
Most notoriously, there were a bunch of suicides in recent years at Apple's biggest supplier, Foxtron. In theory, Apple terminates relationships with such companies. In practice, they rarely do. Meanwhile, they push their suppliers to the breaking point to save costs:
Every month, officials at companies from around the world trek to Cupertino or invite Apple executives to visit their foreign factories, all in pursuit of a goal: becoming a supplier.
When news arrives that Apple is interested in a particular product or service, small celebrations often erupt. Whiskey is drunk. Karaoke is sung.
Then, Apple’s requests start.
Apple typically asks suppliers to specify how much every part costs, how many workers are needed and the size of their salaries. Executives want to know every financial detail. Afterward, Apple calculates how much it will pay for a part. Most suppliers are allowed only the slimmest of profits.
So suppliers often try to cut corners, replace expensive chemicals with less costly alternatives, or push their employees to work faster and longer, according to people at those companies.
“The only way you make money working for Apple is figuring out how to do things more efficiently or cheaper,” said an executive at one company that helped bring the iPad to market. “And then they’ll come back the next year, and force a 10 percent price cut.”
So you have a situation where Apple's profit incentive is opposed to its code of conduct. They have a little division dedicated to enforcing that code, but it doesn't take much imagination to know that such priorities will continue to get steamrolled by the larger business interests of the company.
“You can set all the rules you want, but they’re meaningless if you don’t give suppliers enough profit to treat workers well,” said one former Apple executive with firsthand knowledge of the supplier responsibility group. “If you squeeze margins, you’re forcing them to cut safety.”
The picture that emerges is not pretty:
“We’ve spent years telling Apple there are serious problems and recommending changes,” said a consultant at BSR — also known as Business for Social Responsibility — which has been twice retained by Apple to provide advice on labor issues. “They don’t want to pre-empt problems, they just want to avoid embarrassments.”
The article notes that many other technology companies do a much better job on these issues. Perhaps not coincidentally, Apple recently released its quarterly numbers, showing that it earned a record profit of 13 billion dollars. Its profit margin on the latest iphone is something like 44%. It seems fairly obvious that Apple could enforce its safety and responsibility code with relative ease if it merely accepted profit margins of say, 40% instead of 44%.
This is a good example of why I have never had any interest in a career in the corporate world. Even a company like Apple that provides wonderful goods to millions of people does so by cutting ethical corners and behaving in an immoral manner. At a certain point, it is up to us, the consumers, to demand more social responsibility of our businesses.
Yesterday the New York Times had a really good hard-hitting piece on Apple's businesses practices. Apple manufactures all those gadgets we love to buy through Chinese companies it contracts with. And though Apple has a supplier code of conduct regarding work and safety standards, its suppliers don't do a very good job meeting it:
[A]udits have found consistent violations of Apple’s code of conduct, according to summaries published by the company. In 2007, for instance, Apple conducted over three dozen audits, two-thirds of which indicated that employees regularly worked more than 60 hours a week. In addition, there were six “core violations,” the most serious kind, including hiring 15-year-olds as well as falsifying records.
Over the next three years, Apple conducted 312 audits, and every year, about half or more showed evidence of large numbers of employees laboring more than six days a week as well as working extended overtime. Some workers received less than minimum wage or had pay withheld as punishment. Apple found 70 core violations over that period, including cases of involuntary labor, under-age workers, record falsifications, improper disposal of hazardous waste and over a hundred workers injured by toxic chemical exposures.
Most notoriously, there were a bunch of suicides in recent years at Apple's biggest supplier, Foxtron. In theory, Apple terminates relationships with such companies. In practice, they rarely do. Meanwhile, they push their suppliers to the breaking point to save costs:
Every month, officials at companies from around the world trek to Cupertino or invite Apple executives to visit their foreign factories, all in pursuit of a goal: becoming a supplier.
When news arrives that Apple is interested in a particular product or service, small celebrations often erupt. Whiskey is drunk. Karaoke is sung.
Then, Apple’s requests start.
Apple typically asks suppliers to specify how much every part costs, how many workers are needed and the size of their salaries. Executives want to know every financial detail. Afterward, Apple calculates how much it will pay for a part. Most suppliers are allowed only the slimmest of profits.
So suppliers often try to cut corners, replace expensive chemicals with less costly alternatives, or push their employees to work faster and longer, according to people at those companies.
“The only way you make money working for Apple is figuring out how to do things more efficiently or cheaper,” said an executive at one company that helped bring the iPad to market. “And then they’ll come back the next year, and force a 10 percent price cut.”
So you have a situation where Apple's profit incentive is opposed to its code of conduct. They have a little division dedicated to enforcing that code, but it doesn't take much imagination to know that such priorities will continue to get steamrolled by the larger business interests of the company.
“You can set all the rules you want, but they’re meaningless if you don’t give suppliers enough profit to treat workers well,” said one former Apple executive with firsthand knowledge of the supplier responsibility group. “If you squeeze margins, you’re forcing them to cut safety.”
The picture that emerges is not pretty:
“We’ve spent years telling Apple there are serious problems and recommending changes,” said a consultant at BSR — also known as Business for Social Responsibility — which has been twice retained by Apple to provide advice on labor issues. “They don’t want to pre-empt problems, they just want to avoid embarrassments.”
The article notes that many other technology companies do a much better job on these issues. Perhaps not coincidentally, Apple recently released its quarterly numbers, showing that it earned a record profit of 13 billion dollars. Its profit margin on the latest iphone is something like 44%. It seems fairly obvious that Apple could enforce its safety and responsibility code with relative ease if it merely accepted profit margins of say, 40% instead of 44%.
This is a good example of why I have never had any interest in a career in the corporate world. Even a company like Apple that provides wonderful goods to millions of people does so by cutting ethical corners and behaving in an immoral manner. At a certain point, it is up to us, the consumers, to demand more social responsibility of our businesses.
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