The Man Who Makes Your iPhone
Foxconn founder Terry Gou might be regarded as Henry Ford reincarnated if only a dozen of his workers hadn't killed themselves this year. An exclusive look inside a postmodern industrial empire — Tony Law — On a crushingly hot mid-August …
Context & Ripple Effects
Foxconn's worker-suicide crisis had already drawn attention beyond the factory floor: a 2009 report on a Foxconn suicide and counterfeiting showed how the company’s production system could become a wider public-interest story. By May 2010, public anger and concern over stressful conditions at the plants making iPod and iPhone devices had become an operational issue for Terry Gou’s company.
Foxconn answered the crisis with measures including psychologists and punch bags, while hefty wage increases in Shenzhen raised costs for hundreds of thousands of workers. Its plan to move part of the major Shenzhen plant out of the expensive southern city makes the labor model—not merely its manufacturing scale—the central business question.
First-order effects
- Foxconn must manage workforce welfare and public scrutiny alongside its assembly operations, after about a dozen employee deaths by suicide during 2010.
- Higher Shenzhen wages directly raise Foxconn’s labor costs and affect the large workforce attached to its major plant.
Second-order effects
- Moving part of the Shenzhen operation shifts the cost response from wages alone to factory geography, affecting workers whose jobs are tied to the existing plant.
- Companies relying on Foxconn for iPod and iPhone assembly face greater exposure to labor-practice scrutiny within their manufacturing supply chain.
Third-order effects
- If wage pressure and public scrutiny persist, electronics assemblers’ advantage will depend less solely on concentrating vast workforces in low-cost hubs and more on how they manage labor conditions and location costs.
- The episode points toward labor risk becoming a core constraint on the scale and reputation of contract electronics manufacturing.
The trend: Contract electronics manufacturing is being pushed to treat worker welfare, wage costs, and production location as interdependent parts of its operating model.