Apple Economy

The people behind your iPad: The bosses

Rob Schmitz Apr 12, 2012

Kai Ryssdal: Yesterday our Shanghai correspondent Rob Schmitz introduced us to some of the people who make iPad and iPods. He took us inside Apple’s Chinese supply chain — the carefully guarded and usually completely secret Apple supply chain. He got inside because the company wanted him to. After his story last month exposing the fabrications of high-profile critic Mike Daisey, Apple invited Rob to see its production line at the Foxconn factory in Shenzhen.

Today, part two of his story, which does comes with a caveat — that what you’re about to hear was a tour arranged by Apple and Foxconn. Still, we thought the access was worth it.

Here’s Rob.

Rob Schmitz: At Foxconn, Monday morning begins with roll call. Workers on the iPad assembly line listen to instructions from their supervisors. Then they suit up into white jackets and hats, pass through a metal detector, and within minutes, they’re on the line.

Each working group is in charge of one tiny part of the iPad — the chip, the motherboard, the battery, the touch screen — there are dozens of workstations, and thousands of people doing the same repetitive motion, over and over. Their synchronization is hypnotic, and their movements are engineered to be efficient as possible.

At the end of each line, workers box up iPads as fast as they can. After timing several lines, I arrived at a very rough estimate: one new iPad every two seconds. It’s believed that Apple makes between $200 and $300 off each iPad. If that’s true, the people in this room help Apple make more than $10 million in pure profit, each day.

The workers don’t say much about this or about anything else. They’ve been working quietly since the start of their shift. The scanners at their stations, though, are talking. They say “OK” each time a step in building the iPad is completed.

Everything here seems “OK.” But is it OK for the workers? I ask Louis Woo this. He’s the special assistant to Foxconn CEO Terry Gou. He shows me a new machine that has replaced 28 workers — it assembles the iPad’s motherboard with tiny, quick, precise movements.

Louis Woo: That’s the direction we’re going to try and take the boring jobs that require a lot of repetition basically away from the hands of the employees so that they can do something a little bit more interesting.

Woo says that means more workers will soon start operating machinery from computer consoles. He says Foxconn plans to make this transition without layoffs. Foxconn’s been in growth mode for years — it’s started moving its factories to where China’s massive labor force comes from, the country’s poorer inland provinces. The wages are lower there, and workers can be closer to their families.

But that hasn’t stopped hundreds of migrant workers from turning up every morning at Foxconn’s doorstep in the coastal city of Shenzhen. On this day, 500 people line up to apply for jobs. Ma Yunhe came here from Henan Province, more than a thousand miles away.

Ma Yunhe: Until now, I worked in a state-owned factory. And it withheld my overtime pay. Workers here tell me that Foxconn follows the law and pays you on time.

I ask Louis Woo what Foxconn’s looking for in these applicants.

Woo: To make sure that they can articulate themselves and they can understand instructions

OK. That doesn’t seem too hard. Still, Foxconn’s HR manager tells me that 200 of these 500 people won’t make it through the application process. Louis cuts in and gives some context on the labor pool they’re dealing with here.

Woo: I was told that there are young kids coming over here that have never flushed a toilet before. They’ve never taken an elevator. So if you don’t tell them what to do, they would just wait there until the next elevator comes along. Even going inside, they don’t know which floor to go up to.

To help with the transition, Foxconn set up a program that pairs new employees with more experience ones in order to help them adjust to their new environment.

Foxconn also provides amenities to its quarter of a million employees that are uncommon at other factories in China: basketball courts, tennis courts, Olympic-sized swimming pools, and a gym. Despite all these perks, Woo says Foxconn has always gotten a bad rap from the media. But he says he understands — targeting Foxconn makes people pay attention.

Woo: Whom should I target? Right? It has to be Foxconn. Because you are No. 1. So from that perspective, I can understand that. Of course I would say it’s not fair. But again, who said the world is fair?

But I tell Louis: it’s not like these criticisms came out of thin air.

Foxconn has consistently violated Chinese labor law in the overtime it asks employees to work. Workers did complain to me about supervisors who forced them to work when they’re sick and treated them unfairly. And a recent audit by the Fair Labor Association revealed a host of problems Foxconn was asked to address to help make the factory safer.

Woo doesn’t deny this. He just gives context. For instance, the overtime problem — when a company like Apple or Dell needs to ramp up production by 20 percent for a new product launch, Foxconn has two choices: hire more workers or give the workers you already have more hours.

Woo: When demand is very high, it’s very difficult to suddenly hire 20 percent more people.

Especially when you have a million workers — that would mean hiring 200,000 people at once.

Management problems? He says the average age at Foxconn is between 18 and 25, most of them high school dropouts from the countryside. When you have 22-year-olds managing 18-year-olds, problems will arise.

The audit? Woo agrees with the recommendations.

Woo: We are not very good at communicating to the people who are working for us; especially for us. I think that’s something we have to learn.

As a result of that recent audit, Louis says Foxconn is going to make big improvements. He quotes an old Chinese saying — pushing up the height of the water lifts all the boats. In other words, Foxconn can raise standards for all factories across China. But doing that will require more money — from Apple, from Foxconn, and if you buy Apple’s products, from you.

In Shenzhen, I’m Rob Schmitz for Marketplace.

Ryssdal: This is one of those radio stories where pictures help. Take a look at the video Rob shot inside Foxconn — click here.

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