iPhone factory workers in China sleep in warehouse and denounce forced quarantine

Managers at the world’s biggest iPhone factory breathed a sigh of relief when the Zhengzhou local government lifted a five-day lockdown of most of the Chinese city on Tuesday.

After more than a month of interruption caused by a Covid-19 outbreak at the factory, “this reminds us that one day we will return to normal”, said a human resources executive at Foxconn, which owns and manages the industrial city.

But the problems are far from over. The Taiwanese contract maker is still struggling to staff assembly lines at the peak of Apple’s holiday rush season, and delays in deliveries of the most expensive iPhone models, nearly all of which are made in Zhengzhou, are increasing.

The outage and Apple’s rare warning that supply restrictions will hurt its revenue growth highlight vulnerabilities created by the US tech giant’s reliance on a Chinese manufacturing model that has made it the world’s most valuable listed company. world.

“The Zhengzhou disaster is being talked about as a result of China’s Covid-zero policy, but what it really shows are the systemic weaknesses in the organization of production,” said a person who has conducted electronics supply chain audits in China for more than a decade. “The fault lines were between the company, subcontractors and local government, and this problem has existed for many years.”

When Zhengzhou began to report Covid-19 infections in mid-October, Foxconn placed its factory under “closed loop” management, preventing staff from leaving the site. But when infections began to spread within the industrial city, many workers fled the campus.

Those who stayed paint a picture of absolute chaos.

A logistics worker surnamed He, who has been with Foxconn for 10 years, used to live off-site but, fearing being barred from entering the factory in October, moved into the warehouse. “I’ve lived here for 15 days,” he said on November 2. “I use wood and fiber boards as a bed, and throw my duvet on top.”

Although the company notified workers that they had to be separated into two groups, with those who were working required to be quarantined for five days, He managed to stay. “I was only quarantined for one day in the end,” he said.

Others were less fortunate. Workers described colleagues and relatives at the factory being forced to quarantine in closed dormitories with half a dozen other workers not knowing whether they had the coronavirus or not. Others said they received “abnormal” Covid-19 test results and developed symptoms without ever being officially told they had tested positive.

As iPhone production was supposed to start at a fast pace, Foxconn was in dire need of new employees after the exodus in October. As is often the case in times of labor shortages, the company hired thousands of seasonal workers through the local government.

However, Foxconn booked temporary hires on conditions used for long-term staff, below the salary promised by the government. This triggered violent protests by seasonal workers, which were forcibly suppressed by the police.

To get rid of the disgruntled, the company offered 10,000 yuan (R$7,300) to those willing to leave – an offer accepted by more than 15,000 employees, according to two people at the factory. But now, as Foxconn struggles to hire staff for its production lines, it is promising bonuses for new hires and for workers who bring in more workers.

“They had an idea yesterday, they changed it today and maybe they’ll change it again tomorrow,” said He, the worker. “You never understand what Foxconn is trying to do.”

Foxconn executives said they were racing to respond to government demands, which are constantly changing. “The problem is that we keep running into issues where we don’t have jurisdiction,” said one.

The executive added that thousands of workers were transferred to quarantine facilities at the request of local authorities, who were later unable to feed these workers. According to the executive, Foxconn offered to take some employees back, but then struggled to provide food in time.

The lack of pay that triggered the riot also appears to have been caused by a miscommunication between the company and local authorities.

“Many civil servants like me are not familiar with Foxconn pay, so technically we couldn’t promise salaries or bonuses,” said an official in Pingdingshan who helped hire local workers for Foxconn. “However, some still made false promises.”

Such problems are deja-vu. Throughout Foxconn’s 20-year history manufacturing for Apple in China, activists have repeatedly accused the company of violating labor rights.

One of the most frequent problems has been the use of government recruited interns as regular workers. Complaints about underpaid workers have frequently come after employment agencies promised conditions that Foxconn failed to uphold. Some previous instances of worker unrest have occurred in dormitories on the factory campus but managed by third-party companies.

Foxconn’s heavy reliance on local government, brokers and subcontractors began in reaction to the company’s worst disaster: After a wave of suicides among workers at its then-largest factory in Shenzhen triggered global scrutiny in 2010, management tried to improve its model. of industrial city.

One conclusion was that she would no longer own and manage all the facilities. At the time, Foxconn founder Terry Gou also pledged to replace many workers with robots and demanded that customers shoulder a greater share of the financial burden needed to keep an increasingly demanding workforce happy.

However, the only major change made was the shift of production to the interior, where wages are even lower than in China’s more developed coastal provinces.

But Zhengzhou’s pandemonium indicates that even this configuration is unsustainable. Foxconn chairman Young Liu told investors this month that manufacturing expansion outside China was driven by geopolitics rather than Covid-zero policy. But industry experts said the turmoil at the factory should accelerate Apple’s efforts to diversify its supply chain.

While Foxconn and other smaller factories have opened factories in Vietnam, Indonesia and India, this capacity is small compared to China.

“We’re probably only at a 10% to 15% completion rate if we expect Southeast Asia and India’s capacity to match that of China,” said Patrick Chen, head of research at CLSA in Taiwan.

“It’s going to be very difficult to scale that up, but now Apple has a stronger incentive,” said a senior executive at a rival iPhone maker. “The lesson from this should be that outsourcing should be more widespread.”

Translated by Luiz Roberto M. Gonçalves