For Apple, Switching Suppliers Meant Chasing Cheaper Labor

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In an almost too predictable pattern, Apple's brand new supplier, Pegatron, is committing some very familiar labor violations because a plant that overworks and underpays is cheaper for Apple. A new report from non-profit and notable Apple-watcher China Labor Rights alleges that the iPad Mini and iPhone producer withholds worker pay, provides poor living conditions, and commits various other environmental and safety violations, reports The Wall Street Journal's Paul Mozor, Chao Deng, and Eva Dou. The whole thing sounds like some twisted Foxconn part deux. "Our investigations have shown that labor conditions at Pegatron factories are even worse than those at Foxconn factories," China Labor Watch said in a statement. But what makes it "even worse" than Foxconn is that Apple has decided it likes cheap labor.  

Back in May Apple shifted a chunk of its work from Foxconn to this new plant because it was cheaper to do so. But, Foxconn's financial demands had increased, in part, because of the improved labor conditions that Apple insisted it provide its workers. Foxconn, for example, raised worker pay three separate times and improved facilities because Apple didn't like the bad PR it got because of its association with the notorious factory. The press's outrage facilitated real change, or so it seemed.

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But, it turns out that safer plants are also more expensive plants. As Foxconn's costs rose, Pegatron said it was willing to accept thinner profit margins than Foxconn, as The Wall Street Journal had reported back in May. And so, after all that talk about caring, Apple shifted its work to a plant that already had a bad track record on worker's rights, revealing a nasty cycle of manufacturing that we've seen in all sorts of industries. As countries develop and corporations provide better working conditions, labor moves to a different, cheaper country or corporation with less strict labor rights — like Bangladesh or in this case, Pegatron.

If and when Pegatron turns into a PR disaster for Apple, the tech giant will do the same, very effective brand clean-up as it did with Foxconn, pointing to all its kosher U.S. manufacturing, as it improves conditions at Pegatron. But then what? As Pegatron inevitably gets more expensive it will quietly move to another, cheaper facility that does all the familiar dirty deeds as it makes our future iWatches and iGlasses. And, we'll tell ourselves it's okay because of how great things are at the Foxconns of the world and that, really, all of this means eventually jobs will come back to America. That's the optimists case, at least. 

Update: Apple has responded to the report, just as expected, with a lengthy statement to The Wall Street Journal on how hard it works to improve working conditions in all its plants. It begins: "Apple is committed to providing safe and fair working conditions throughout our supply chain." The rest of the statement, which you can read over at the Journal, details the various audits and other efforts it takes to ensure this doesn't happen. And yet, it does. 


This article is from the archive of our partner The Wire.