Foxconn’s Labor Condition

mental institution (A)Background of Foxconn Foxconn is the subsidiary of the Hon Hai Precision Industry Co. , Ltd. , which is a Taiwanese multinational electronics manufacturing guild headquartered in Taiwan. It is the worlds largest happen uponr of electronic components. Foxconn is primarily an airplane pilot design manufacturer and its clients include major(ip) Ameri discount, European and Japanese electronics and information applied science companies. Not sufficient affixs manufactured by the company include iPad, iPhone, iPod, PlayStation, etc.Foxconn has factories in many distinct countries, which to entranceher gear up around 40 percent of consumer electronic products in the world. The dry land why Foxconn stimulate famous is that it helps orc arduous apple tree to assemble iPhones. In recent year, need for apples products emergence dramatically. Foxconn and thence mainly focus on assemble its products and receiving fewer entraps from other company. However, Fo xconn has been involved in several contr e realwheresies, most relating to how it manages employees in mainland China since it is the largest private-sector employer.The employees suicide cases be reflecting on this problem. Therefore, apple hired the Fair Labour necktie to conduct an audit of on the job(p) circumstances at Foxconn in 2012. (B)Issue of the news Strike was happened in Zhengzhou factory of Foxconn in 5 October this year. third to four honey oils of employees stop run forss. This whitethorn relate the progress of the occupation line for collecting the iPhone 5. The poor reaching conditions are the main former belong to the fasten on as Foxconn did non contact intimately the tangible and mental health of employees.The long operative hours make employees recover tired. Their effort regorge into the work did not restrain conceiv commensurate return as they only urinate a very low fee for such a long working(a) hour. Employees therefore displ acenot concent valuate on their works. more thanover, Employees locution spunky embrace working at Foxconn. Recent news had pointed out that Foxconn thespians were run down to meet the high product gauge standard of apple, because the building of Iphone 5 is much complicated and workers put up not been habituated exuberant education before they arrest their work, so high calamity count is obtained.The long working hour and the off in the intersection of the iPhone 5 make employees therefore face tremendous psychological pressure. Although the spokesperson explains it is only the employee dispute and go forth not affect the factory production. We disagreed that the train did not bring any ostracise impact to Foxconn. In this report, we ordain show the consequences of the strike and recommend suitable methods to work the problem in order to derogate those negative impacts bring to the Foxconn. CausesFLA has investigated that Foxconn was fail to reserve l ogical work date, compensation as hygienic as working condition for the workers. For instance, more than 40 percent of workers had experience or witnessed an industrial accident in the factory. (A)Long working hour with low final payment The long working hour is untenable to the workers. In Foxconn, workers have to work for xii hours per day excluding overtime working only if they only have two to trio holidays per month. Thus, they need to work over 70 hours per week and they chiffonier only get one holiday after working for ten to fourteen days.The average recite of hours worked per week at Foxconn is found to be exceeded both the Fair Labor connectedness (FLA) Code Standard of sixty hours per week and the Chinese legal limits of forty hours per week. The stipend of the workers are excessively congenerly low. subsequently raising the absorb in 2010, the founding wage of a worker is some two thousand dollars per month. It is not reasonable for such a long workin g hour scarcely the wages is so low. If the workers want to earn more, they need to work over time so that they grass earn about four thousand dollars in which over 70% of the wage are overtime pay, reward and allowance. B)High pressure Leadership had high demand urgency for the quality of iPhone 5, for example the appearance of pitch stooge only within 0. 02 millimeters. however Foxconn did not pass on any instruction course for employees, employee faced difficulties in producing such perfect iPhone 5 chthonic the hard requirement. Supervisor blamed the assembly workers either day not only because of the failure in producing the perfect product but also because of receiving so many complaints about the appearance of iPhone 5 from all over the world. In Foxconn, worker is like a machine.Workers are specialized to maximize the productivity of the factory. They are required to complete from each one action in two seconds. Furthermore, workers who go to toilet more than t en minutes, converse or fail to meet the product targets will begin warning or even dismiss. The workers therefore are under pressure imputable to the tight plan and the dissatisfaction of the products quality from the ultimate users, the supervisor and themselves. Consequemces Employee is a very important asset of a company as it cant function well without enough manpower.It is very obvious in the manufacturing company that without enough workers it cannot produce the wides on time which whitethorn affect their boodle as well as their report card. Foxconn may need to sustain or even fail in delivering the iPhone 5 to Apple on time collectible to the strike. It may need to cut across the loss that Apple incurred due to the low supplies of iPhone 5 which may flow the pay estimated by Foxconn. Also, the complexity in producing the iPhone 5 may increase the be of production as the raw materials used may be more than expected mend the imperfect iPhone 5 provided for Appl e may affect the reputation of Foxconn.Besides, Foxconns bargain power may decrease due to the failure in providing the products that the customers wanted. Recommedations We are convinced(p) that Foxconn may suffer loss due to the strike and we are going to bound some good words to Foxconn in order to minify the potential loss that may incur. We conjure Foxconn to increase the basic salary, hire more employees and provide more training to realize the above problems. (A)Increase basisc salary Employees in Foxconn receive low basic salary and they have to work overtime in order to earn enough money for say their living standard.According to the National Bureau of Statistics of China, the consumer equipment casualty index of food, clothes and necessity change magnitude by 5%, 3. 1% and 2. 2% respectively in October (compared to same halt last year). ( http//www. stats. gov. cn/tjsj/jdsj/t20121112_402850686. htm). The inflation further increases workers perfume of living. If Foxconn increase workers basic salary then they do not need to work overtime which may shorten their working hour. (B)Hire more employees Employing more workers can also shorten working hours.Foxconn is now utilise two-shift organization, so workers need to work for dozen hours per day. If more workers are employed and three-shift system is used, workers only need to work for octette hours per day. Under this system, the factory can mute halt 24-hours operation while workers have shorter working hours. Besides, employing more workers can spark workers vast pressure. Workers are required to maintain high efficiency, so they are not allowed to do unnecessary things even talk and smiling.Based on the investigation, nearly half of the employees feel stressed while working (http//cn. nytimes. com/ hold/business/2012/11/06/cc06foxconn/zh-hk/? pagemode=print). If Foxconn employ more workers to share the heavy work load, workers do not need to work with the unjustified high effici ency. Then, their high pressure can be released. (C)Provide more training By providing training resource to frontline workers, the workers are able to much more familiar with the technological knowledge of the products, and lower failure rate which may also reduce their pressure.For example, Foxconn can invite a specializer from Apple Incorporation, in order to introduce or demonstrate the technical knowledge about product manufacturing in front of the frontline workers. Therefore, the probability of reservation mistakes decrease, workers will not be punished and they can be more relaxed. Although the above practice will march on the operating cost of the factory, the potential returnss can resolve the existing problems of the company that is the closure of the workers strike. How can the recommendation be beneficial to Foxconn The paint a pictureion we recommended not only minimize the potential losings that may incur.It can also ameliorate the overall situation of Foxconn in centering accounting perspective. (A)Higher situated cost structure Hiring additional employees study to an increase in fixed cost, while increase in overtime pay rate lead to an increase on multivariate cost. Since the specialist salary and training materials are usually a fixed amount, the overall training cost is regarded as fixed cost in general. With the speculation that China has great growth potential, and the global economic air will be improved in the coming future, a low variable cost tructure and high contribution gross profit ratio are most preferred. The reason is that Foxconns profit will increase more rapidly as gross revenue increase, in other words, greater profit can be solutioned in good years. In addition, our recommendation helps workers are able to take enough rest, so that higher efficiency can be achieved. (B)Ethical concern CSR Apart from amending the cost structure of Foxconn, we suggest the management should take account of unified fond r esponsibleness in decision making process.With reference to the article of Foxconn worker condition, they received low paid relative to excessive worktime and they suffer in high working pressure, especially in collecting the Iphone 5. By introducing corporate social responsibility, Foxconn should take in the needs of all stakeholders including employees when making decisions. In details, it should provide safe and humane working conditions for workers. Also, it should pay fair compensation and provide opportunities for training, promotion and personal bring onment.According to KPMG International flock of Corporate Responsibility Reporting 2011, reputation on brand, ethical considerations and employees motivation are top 3 businesses imperative that force back companies into corporate social responsibility. It indicates how companies enjoy the result of corporate responsibility. Except voluntarily fulfilling the incorrupt obligation, a company can develop a good image in socie ty which enables them to attract loyal customers. With the tyrannical reputation, the company will be elevated from the others and become the customers preference.Besides, employees tend to stay in the company with goodwill and work hard with the enjoyment of being ethic. Thus, corporate responsibility increases employees loyalty and productivity. The potential benefits of corporate social responsibility will be the bonus of Foxconn to take their employees into consideration and provide split support for them in decision making process. Conclusion To sum up, we think that the strike may bring negative impacts to Foxconn and it should welcome ways to prevent it and solve it as soon as possible in order to minimize the loss which may incur.Our recommendations of hiring additional employees and providing training resources will lead to an increase in fixed cost, and cabbage income will decrease consequently with the assumption that the variable cost keep constant. However, we beli eved that the decrease in profit can be compensated by the overall benefit bring to Foxconn by increasing the workers morale, production efficiency and higher product quality. More importantly, it helps Foxconn to create a positive popular image. Since our recommendation will lead to a significant increase in fixed cost, Foxconn should pay attention to its gross revenue mass.It is because increase in fixed cost will lead to an increase in break-even gross revenue volume, so margin of safety will be dropped consequently. It means that the risk of incur a loss will become higher. Therefore, Foxconn should ensure that current sales take should above or equal the break-even sales volume, and prevent from emerging loss. However, it is expected that Foxconn can clam up have a unfaltering growth in sales volume in the coming future, because there is still huge demand in Apple products.