Sunday, September 12, 2010

Bloomberg: Everything is Made by Foxconn in Future

Bloomberg has a comprehensive story on one of the more news worthy global companies of 2010; one many of us had not heard of until a rash of suicides brought international attention: Foxconn.  The size and scope of this company is incredible... their hiring plans for 2011 alone would be equivalent to 1/20th of all the jobs lost in the U.S. during the Great Recession.  [Aug 18, 2010: Foxconn to Hire Up to 400,000 Workers in 2011]  This for a company which already has 900,000 employees.  To put this in perspective, the only private employer that exceeds that in the U.S. is Walmart.  Next largest - public or private - is the U.S. postal service at 600,000 employees.

This is a very long piece so if you are interested in the topic click here.  (You should be interested so you can cut through the dogma of "why is U.S. employment not bouncing back?")  I'd also encourage a read of working conditions in this piece by UK Independent writer Johann Hari - a very eye opening look on the human costs on the Chinese, so that Westerners can save 14% in price.

Some snippets from Bloomberg:
  • On a crushingly hot mid-August day at Foxconn Technology Group’s Longhua factory campus in Shenzhen -- where a dutiful army of 300,000 employees eats, sleeps, and churns out iPhones, Sony Corp. PlayStations, and Dell Inc. computers -- workers indulged in a rare moment of celebration.  First, there was a parade, an “Alice in Wonderland” spectacle of floats, blaring vuvuzelas, and workers dressed up as Victorian ladies, geishas, cheerleaders, and as Spider-Man. This was followed by a two-hour rally inside a vast sports stadium featuring acrobats, musical performances, fireworks, and life-affirming testimonials punctuated by chants of “treasure your life” and “care for each other to build a wonderful future.”
  • was a joint production of employee unions and management at Hon Hai Precision Industry Co., Foxconn’s flagship, as part of an effort to mend the collective psyche of a Chinese workforce that numbers more than 920,000 across more than 20 mainland factories.  The need to do so became apparent after 11 Foxconn employees committed suicide earlier this year, most of them by leaping from company-owned high-rise dormitories. The publicity- averse Taipei-based company and its 59-year-old founder and chairman, Terry Gou, were thrown into the spotlight, subjected to unfamiliar scrutiny by customers, labor activists, reporters, academics and the Chinese government.
  • The suicides introduced Foxconn to much of the world in the worst terms imaginable -- as an industrial monster that treats workers like machines, leveraging masses of cheap labor, mainly 18-to-25-year-olds from rural areas, to make products like the iPhone at seemingly impossible prices. For Western consumers, the lost lives were an invitation to consider the real cost of their electronic playthings.
  • For the image-conscious companies with which Foxconn does business, including International Business Machines Corp., Cisco Systems Inc., Microsoft Corp., Nokia Oyj, Sony, Hewlett-Packard Co. and Apple Inc., the suicides were a public-relations nightmare and a challenge to offshoring strategies essential to their bottom lines.
  • It wasn’t until late May, after the ninth Foxconn employee had leaped to his death, that Foxconn went into full crisis- management mode, stringing more than 3 million square meters of yellow-mesh netting around its buildings to catch jumpers and setting up a 24-hour counseling center staffed by 100 trained workers. Management increased wages for factory workers in Shenzhen by 30 percent, to 1,200 yuan ($176) per month, and promised a second raise in October.
  • Finally, Gou’s company hired WPP Plc’s Burson-Marsteller to help devise a formal public-relations strategy, its first in more than 35 years of existence.  Part of New York firm Burson-Marsteller’s plan was granting Bloomberg Businessweek’s request for unprecedented access to Foxconn’s factory floors, worker dorms, suicide-help-line operators and Gou himself, who in the course of a three-hour interview riffed on everything from Warren Buffett (“He’s too old”) to the uselessness of business degrees (“You can’t read a book to learn to swim”) and Steve Jobs (“I forced him to give me his business card”). Gou also mocked New York bankers who “see the Hudson River and say, ‘I’m a king of the world.’”
  • Although drab and utilitarian, the campus is a fully functioning city, with fast-food joints, automated- teller machines, Olympic-size swimming pools, huge LED screens that flash public-service announcements.
  • Foxconn is now the biggest exporter out of China, and its general is the richest man in Taiwan, estimated by Forbes to have a personal fortune of $5.9 billion.  The colossus that Gou (pronounced “Gwo”) runs today started with a $7,500 loan from his mother. His first world headquarters was a shed he rented in 1974 in a gritty Taipei suburb called Tucheng, which means Dirt City in Mandarin.

It is actually quite a compelling piece from there, much more in depth on the history, current, future, background of Gou and the company.

[Jun 2, 2010: Cheap Labor Fighting Back in China]

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