The Hippo


Apr 23, 2014








The price of gadgets, Part 2
Details retracted, but the larger story remains

By John Andrews

Back in January, there was quite the kerfuffle surrounding working conditions at Foxconn, an assembler of electronic products for Apple and other companies in China. As it turns out, one major source for those stories — Mike Daisey, who created a one-man show and This American Life episode on the subject — made a bunch of stuff up.

Which is a shame, because while many of his personal anecdotes were fabricated, the situations and conditions he described are quite real, and corroborated by other news sources.

When The New York Times did its own investigation, also in January, it told stories of a dust explosion that killed and injured workers on an iPad production line; “toxic chemical exposures” that left employees permanently sick; violations of Apple’s policies that had people working more than 70 hours per week; and riots and suicides in overcrowded factory dormitories.

None of these facts are in dispute. Daisey incorporated them into his monologue, but presented the incidents as if he met the people involved. In most cases, he did not. Some of them occurred at factories more than a thousand miles apart. He didn’t visit that many factories, and the workers certainly didn’t travel that far. So they happened, they just didn’t happen to him. They were dramatizations, not journalism.

Apple, for its part, has continued the factory audits it began several years ago. Things certainly aren’t perfect, but they’re improving, and it makes clear that the most objectionable conditions are, at least officially, not condoned by Apple. Regular reports are posted at

That doesn’t mean Chinese workers are treated just as well as American assemblers would be; if the labor weren’t cheaper, why outsource to China at all? Foxconn announced last month that it would be raising salaries by up to 25 percent, so that most workers would earn the equivalent of about $400 per month, based on 160 hours of work. Overtime would still be available, but not at the excessive levels that have sometimes been required. That probably translates to hiring more people; not having to pay overtime will help compensate for increased overhead costs like training.

Not that increased labor costs would affect the price of products that much. Market research company iSuppli estimates that all the components making up the base model iPad released March 16 cost $306.05. Manufacturing? A mere $10. Since the iPad sells for $499, there’s plenty of room left for profit (and software development, and design, and other overhead). The most tricked-out model only costs about $90 more to produce but sells for $829.

It’s not immediately clear what exactly that “manufacturing” entails. Presumably it’s just the final assembly step; the manufacturing costs of all the components are built into the price estimates of the components themselves. If the components are also made at Foxconn, a pay increase would raise those costs as well. And these are just estimates anyway.

Another thing that’s important to remember: Apple isn’t the only one having products assembled by Foxconn. HP, Dell, Samsung and others contract out to them, and they release their own Foxconn-branded computers and components as well. And Foxconn is not the only supplier in China and other countries. They all may feel pressure to lower costs, but skimping on worker pay and comfort is not the way to do it.

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