Apple, HP, Dell Looking into Workers’ Suicides at Foxconn
apapenhagen on June 1st, 2010
Apple, (AAPL), Hewlett-Packard, (HPQ), and Dell (DELL) have announced that they are launching an investigation into the working conditions at Foxconn (HKG:2038). The Foxconn Technology Group, also known as Taiwan’s Hon Hai Group, is the world’s largest contract manufacturer. The probe was started after the companies learned about a mounting number of suicides at the group. According to a Hon Hai official, there were nine suicides and two attempts at the Chinese operations this year, and at least four of the deaths occurred in May.
Steve Dowling, a spokesman at the California-based maker of iPhones and iPads, said that Apple is “saddened and upset” by the suicides and has a team evaluating Hon Hai’s countermeasures. He stated: “we’re in direct contact with Foxconn senior management. Apple is deeply committed to ensuring that conditions throughout our supply chain are safe and workers are treated with respect and dignity.”
HP is also probing Hon Hai’s practices. HP stated that it is investigating “the Foxconn practices that may be associated with these tragic events.”
Dell announced that it is examining reports on Foxconn. Jess Blackburn, a spokesman for Dell stated: “any reports of poor working conditions in Dell’s supply chain are investigated. We expect our suppliers to employ the same high standards we do.”
These investigations put huge pressure on billionaire Chairman Terry Gou, who on May 26 opened Hon Hai’s biggest Chinese production site to the media in an effort to defend working conditions that some labor-rights groups describe as a “sweatshop.” The fallout threatens to disrupt a $40-billion-a-year operation that builds everything from iPhones to desktop computers and televisions.
“Hon Hai needs to resolve the issue because the situation is also negative for Apple and HP,” said Allen Pu, an analyst at Fubon Securities in Taipei who recommends investors “add” shares of Hon Hai Precision Industry, the group’s flagship. “Clients may reallocate some orders to other manufacturers, though I still see Hon Hai keeping its role as the main supplier because no one else has such sizeable operations.”
According to UBS AG analyst Arthur Hsieh, the fact that the chairman opened the manufacturing facilities to the media, shows the level of scrutiny the company is currently facing. Taipei-based Hsieh added: “this has never been seen before, it’s really unusual times. It’s crisis control.”
