Last week came word that The Fair Labor Association (FLA) issued its final verification report regarding its ongoing audit activities of contract manufacturer Foxconn, one of the prime manufacturing arms of Apple. As we have noted in commentaries on the Supply Chain Matters blog, Apple’s efforts in actively supporting audits by the FLA will have far reaching effects on the broader industry, and on the high-tech and consumer electronics supplier community.
According to a Bloomberg published report, while Foxconn did not comply with Chinese labor laws regarding acceptable amounts of worker overtime, the assembler met nearly all conditions set out by the FLA outlined in its ongoing audits over the past 15 months. Bloomberg quotes the president of the FLA as indicating that the government set limit of 49 hours a week was an ambitious goal to begin with. Foxconn reached levels averaging of 52-53 hours per worker. The report further indicates that Foxconn complied with 356 of 360 audit action items which appears to present considerable progress. The FLA further acknowledged that workers in China continue to rely on overtime to meet their monetary compensation and basic living needs.
A statement by Foxconn management validated the progress that has been made and further committed to reducing excessive overtime even further. None the less, Foxconn is not currently in compliance with Chinese labor law related to worker hours, especially in certain facilities such as the Longhua plant in Schenzhen.
Bloomberg also called attention to ongoing incidents occurring at Apple’s other new volume contract manufacturer Pegatron, where four workers recently died because of illness. The article draws inferences that the audit and remedial measures accomplished thus far at Foxconn will be extended to other Apple volume suppliers. The implications of what is occurring at Foxconn will also spillover to other China based suppliers as well as to their high OEM customers. Thus Prediction Six of our 2014 predictions calls for more implications from customers and/or stockholders regarding supply chain social responsibility adherence.