Apple Inc. disclosed a comprehensive list of its major suppliers for the first time, along with a detailed report on factory inspections, moving to combat an array of criticism about working conditions in its supply chain and the company's transparency about it.
The report said Apple found continued problems in areas such as working hours, overtime pay and handling of hazardous waste. For example, the report said Apple's suppliers were in compliance with the company's code of a maximum of a 60-hour work week only 38% of the time. The company said factories fared better in other areas like fair treatment.
In one of his first interviews as Apple Chief Executive, Tim Cook said the Cupertino, Calif., company has long aimed to be more transparent and believes the steps it is taking—including nearly doubling the number of supplier audits it does—are "raising the bar" for the industry.
Tim Cook, Apple CEO, and previously Apple's chief operating officer who oversaw its supply chain said.
"I have spent a lot of time in factories over my lifetime and we are clearly leading in this area. It is like innovating in products. You can focus on things that are barriers or you can focus on scaling the wall or redefining the problem."
Apple's list of 156 companies came along with a major report—one of the company's largest ever—divulging the results of its recent factory inspections. While the company has long revealed some of its top suppliers, the new list covers those that represent 97% of its materials and manufacturing spending.
Apple Production Suppliers List 2011
The report makes several references to one of Apple's biggest manufacturing partners, Hon Hai Precision Industry Co. The company, also known as Foxconn, combated a spate of employee suicides at a facility in Shenzen, China, in 2010 and an explosion that killed four workers at plant in Chengdu, China, last year. Apple said it has put in place new requirements for firms dealing with combustible dust.
The report found 108 facilities didn't pay proper overtime wages and 93 facilities had records that indicated more than 50% of their workers exceeded the 60-hour work week. The audits also found 5 facilities had incidents of underage labor.
Tim Cook said.
"Working hours is a complex issue. I am confident the company can improve in the area by monitoring these plants at a very, very micro level. I know this is a journey."
The report also found 24 facilities conducted pregnancy tests and 56 didn't have procedures to prevent discrimination against pregnant workers. Apple said that at its direction, the suppliers have stopped discriminatory screenings for medical conditions or pregnancy.
Mr. Cook said Apple has been sharing more of its findings about working conditions in its factories over time, but this year's update represents its most detailed. It comes as the drumbeat of criticism against practices across the company's ballooning supplier footprint has grown from prominent Chinese environmental activists and others. Many of those have taken aim at the company's prior unwillingness to disclose all the suppliers it works with.
The report said Apple has taken new steps to better monitor and improve conditions at factories, including increasing audits in Malaysia and Singapore and expanding its worker education program.
Apple said it found 112 facilities that weren't properly storing, moving or handling hazardous chemicals and 69 weren't recycling or disposing of hazardous waste as required by law, including one that had a pipe dumping waste into a nearby farm.
The Fair Labor Association, a prominent labor standards non-profit, also said that Apple would join the group, opening it up to independent monitoring. In a statement, Apple's senior vice president of operations Jeff Williams said it was "extremely proud to be the first technology company admitted into the group."
COMMENTARY: In a blog post dated October 12, 2011, I introduced you to Foxconn International, one of Apple's major Chinese production suppliers for the iPod, iPhone and iPad. Foxconn has been in the news quite a bit over reports of how it treats its production workers, appalling working conditions, 15-20 hour work days, and 11 employees committing suicide in 2010.
In a blog post dated October 15, 2011, I reported that Foxconn International planned on replacing workers with one million robots over the next three years. Rising labor rates in China are the culprit, and its better to replace human beings with robots because they don't complaint, and you can work them 24/7, 365 days a year if you need to. Labor problems solved.
In a blog post dated November 7, 2011, I reported on the findings of China's Institute of Public and Environmental Affairs (IPE) , the equivalent of America's Environmental Protection Agency (EPA), about dozens of heavy metal poisonings that have occurred in China since 2009. According to the IPE, after several months investigating these environmental poisonings throughout China, Apple's suppliers came up again and again. The head of IPE saod.
"We found violations of wastewater standards and water pollution, air pollution, air emissions problems, and hazardous waste disposal problems. The volume of hazardous waste generated by the supply chain is amazing. In one case, we found that a single factory generated 110,000 tons of hazardous waste a year."
When the IPE confronted Apple directly about these violations of hazardous wastes, it refused to confirm that the guilty production suppliers even produced Apple products. Apple has always been very secretive about its product producers, and its policy was to refuse to disclose its suppliers. The IPE largely knew who Apple's suppliers were (from talking to locals, following delivery trucks with outgoing shipments, and monitoring media reports).
I was so pissed off at the hazardous wastes being spewed by Apple's Chinese production suppliers into the environment, rivers and canals, that I called Apple's headquarters and was given a "no comment." That's what prompted me to write the above blog post, and I am glad that I did.
It is apparent that IPE's aggressive investigation of Apple's Chinese production suppliers has forced Apple's hand, and the above Apple Production Supplier List for 2011 and Apple Production Supplier Report - Progress Report For 2012 are the result.
I have always been impressed with the simple, minimalist design and elegance of Apple's products. That has been its trademark and secret to success. However, you would think that a company that prides itself on product quality would take adequate measures to insure that its production suppliers are complying with local labor laws, fair labor standards and disposing of hazardous wastes properly and taking proper measure to protect the environment against pollution. Apple has been growing so rapidly, that it apparently ignored all these bad signals until now and the magnitude of violations listed in its Apple Production Supplier Report is clear indication of this.
Courtesy of an article dated January 13, 2012 appearing in The Wall Street Journal