Foxconn's Founder Opens Up About Making iPhones 384
eldavojohn writes "Bloomberg Businessweek has an article of interest resulting from a three-hour interview with Foxconn founder Terry Gou (single page), whose company manufactures 137,000 iPhones a day. The article profiles Gou's rise to Foxconn but also offers some interesting tidbits you might not know. On why he is not opening factories in the United States, Gou frankly states, 'If I can automate in the US and ship to China, cost-wise it can still be competitive. But I worry America has too many lawyers. I don't want to spend time having people sue me every day.' If you're interested in how a modern day Henry Ford thinks, you can read the rest about the man steering the ship of the world's largest producer of electronics components and China's largest exporter. This unprecedented transparency was part of an agreement Gou made with his customers during his delayed response to an increasing number of Foxconn suicides."
Join me in the BUY-cott (Score:1, Informative)
I am buying my new Dells for the express reason that they were built in a Foxconn plant.
The fact is that Foxconn has HALF the suicide rate of Italy, which has the LOWEST rate in Europe. Someone has decided to create a propaganda smear campaign against Foxconn. I am happily doing my part by buying Foxconn whenever I can.
PR (Score:5, Informative)
"Finally, Gou's company hired the New York firm Burson-Marsteller to help devise a formal public-relations strategy, its first in more than 35 years of existence."
The concept of a company with almost 1M people without a PR strategy is refreshing, but reflecting a little bit more, what that also means is: now anything that we say about the employee suicides, even this, is being carefully managed.
Re:Exploitation for the win! (Score:2, Informative)
>>>I read that line as a worry of a massive unexpected cost.
That's because you probably don't know about Foxconn's labor violations. Even China has rules saying workers must get a break every 2 hours, and they are not allowed to work more than 50 hours per week, but Foxconn routinely ignores those rules by making workers skip the 2-hour downtime and working 70-80 hours. In the US lawyers would step-up and represent the workers in a lawsuit, but over in China the lawyers are so few that Foxconn does not have to fear.
So basically his comment can be seen as, "I prefer to stay in China because there are no lawyers here to enforce the workers' rights and laws, as there are over in the US or EU."
Re:he's not a modern day Henry Ford (Score:5, Informative)
From http://cafehayek.com/2010/08/fording-the-gorge-between-fiction-and-fact.html [cafehayek.com]:
Re:he's not a modern day Henry Ford (Score:5, Informative)
Ford wanted his workers to have a living wage, to be able to afford the products they made.
That may be the public messaging/myth, but closer analysis shows that Ford simply wanted to reduce turnover [adamsmith.org], and also to increase productivity by linking the wage increase to learning English, as well as their steering clear of alcohol and gambling (monitored in workers homes, no less...)
Moreover, Ford did not employ enough workers for their wage hike to have a significant impact on his own sales.
That said, wages in China are rising, cutting Flextronics' [bloomberg.com] profits and forcing Foxconn to move more factories away from the high-cost coastal areas of China.
Foxconn doubled base-wages for employees in Shenzhen in June, where it has around half its 900,000 workers, but said it would cut the headcount there by about 170,000 over five years.
Please, read the fine article, it's worth it (Score:5, Informative)
You'll notice that even though by western standards Foxconn has a terrible work environment, they're actually the best option for Chinese workers, who queue to work there.
Even though the salaries seem low by western standards, Foxconn pays the higher salaries in China. The article mentions several people who are there only to earn some money for a while and then go to work on a lower-paying less-stressful business.
The man himself started his huge empire with a $7500 loan. Hell, I live in Brazil and you can't even begin an auto repairshop with this money here, let alone a small manufacturing plant.
By Chinese standards, Foxconn is great and they actually seem to care about their employees more than the other Chinese companies do. None of the workers are afraid to complain and lose their jobs or anything like that and even strikes happen (and people continue employed).
Honestly, you should just enjoy your cheap electronics while you can because this isn't going to last forever as a newer generation of Chinese people is growing up (also mentioned in the article) and they will want better standards of living - no one needs to take care of them, there's more than a billion of them and they can take care of themselves.
Re:Exploitation for the win! (Score:3, Informative)
This is due to reducing taxes on the rich, tax loopholes for the rich, wages not keeping up with inflation, decrease in benefits for American workers,
1) Despite marginal top tax rates of >90% until the Kennedy tax cut of 1964, the effective tax rate for the richest one 1% of households was 32.2% in 1952 going down to 24.6% in 1963. After the Kennedy tax cuts, effective tax rates for the richest 1% rose to 28.9% until Ronald Reagan took office and declining to 22.1% following the 1986 tax reductions.
The interpretation is massive tax avoidance and outright fraud by the richest 1% during the post-war years to avoid the 90%+ top marginal tax rates. The IRS did not have computers to track down the rich, nor was there much support in the executive branch to do so, nor in the judicial branch to effectively support the high tax rates.
2) Total employee compensation HAS kept up with inflation [econbrowser.com]. The issue is that compensation is being moved from taxable wages to tax-avoiding benefits. We have to blame WWII-era law that made employee-paid health care tax free. Over time as medical technology improved and became more and more utilized, this tax loophole has forced a linkage between health care and employers, which we don't see with auto insurance, for example. Over the past forty years US compensation per hour and productivity per hour have moved up almost in unison.
3) And benefits are not going down, they are going up, especially health care.
To put a number on it [bls.gov], US private industry employers spent an average of $27.64 per hour worked for employee compensation in June 2010. Wages and salaries averaged $19.53 per hour worked and accounted for 70.6% of these costs, while benefits averaged $8.11 and accounted for the remaining 29.4%.
Re:that's one way to see it, here's another (Score:5, Informative)
There were three suicides at my college in the four years I went there, and it was a small school with less than 2000 students. That means that we averaged 1 suicide per 2600 students per year. During the worst of Foxconn's suicide 'outbreak' there were 10 completed suicide attempts over a 5 month period out of 960,000 workers. That means 1 suicide for every 80,000 employees per year. So by that measurement, my college was apparently 30x more likely to drive someone to suicide.
Re:that's one way to see it, here's another (Score:5, Informative)
For the size of his work force you would expect about that number of suicides in the general population anyway.
Across the general population, yes. But the general population doesn't work in a factory. "General population" includes an awful lot of people who can't work in a factory, including children, babies, the elderly, the infirm, and even people who live too far away from any factory to work in one.
Add in the fact that teens have a disproportionate number of suicides, and that old people also kill themselves, and it's not difficult to realize that a small subset of the population having a suicide rate equal to that of the general population is an anomaly worth investigating.
Re:he's not a modern day Henry Ford (Score:3, Informative)
Please, Please. Please read about Henry Ford.
He did not invent the assembly line.
He did figure out that by paying a bit more and helping with education and health he ended up with a lower turnover which helped his bottom line.
Of course that made more profit for him too so no doubt that makes him evil in your eyes.
TANSTAAFL
overseas the workplace does not need to pay health (Score:3, Informative)
over seas the work place does not need to pay for worker health-care. That what the USA needs no more Health care tied to the work place.
Re:that's one way to see it, here's another (Score:4, Informative)
A subpopulation having the same rate as the whole population is not an anomaly. It is the very definition of "not an anomaly". What I think you're suggesting is that the subpopulation that works in the factory is not representative of the whole population, and is in fact skewed in a way that would be expected to lower their suicide rate, but that this has not occurred.For example, that working-age individuals in cities have lower suicide rates than average. That would require some elaboration and justification on your part. (Equivalently, that the subpopulation that works in the factory needs to be compared to a matched control group, and not just the population average.)