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03.16.12

Apple’s Deal With the Devil

The iPhone maker is set to announce a massive profit for the last quarter—but a shocking New York Times article points out the cruel labor conditions in China that enable such a haul.

They wake you in the middle of the night, give you tea and a biscuit, and then you start your 12-hour shift.

That was the detail that struck me most from a New York Times article about why Apple can’t make products in the United States.

In 2007, when Apple made a last-minute change to the original iPhone, workers in China had to scramble to meet a tight deadline, according to an unnamed former Apple executive who spoke to the Times:

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” [the executive] said. “There’s no American plant that can match that.”

The question is: should there be? Would we accept the idea of a plant where people are packed into barracks and can be roused in the middle of the night, given a biscuit, and sent to work for 12 hours? Where workers have no right to complain?

We would not accept this in the United States because, quite simply, it’s barbaric.

Not “breathtaking.” Barbaric.

But we go along with it happening in China, and have turned a blind eye to it, because we want our gadgets and we don’t want to pay fair prices for them.

The Times story estimates that making iPhones in the U.S. would add $65 to the cost of each unit—a cost that Apple, which makes huge profit margins, could easily absorb. But as the article points out, the real issue isn’t the low cost of labor—it’s that “speed and flexibility.” (A great euphemism.)

To its credit, Apple recently joined the Fair Labor Association, a nonprofit that advocates for better working conditions around the world. Earlier this month, in a letter to Apple employees, CEO Tim Cook said Apple had just completed its annual review of supplier factories and found that things are getting better. Apple has helped improve living conditions for workers and even offers free education to some of them. “We insist that our manufacturing partners follow Apple’s strict code of conduct,” Cook wrote. And: “No one in our industry is driving improvements for workers the way Apple is today.”

Foxconn, the company that makes iPhones in China, provided a statement to the Times saying that its workers are covered by a “clear contract outlining terms and conditions and by Chinese government law that protects their rights.”

But what rights do they actually have? Last fall, I participated in a panel discussion with Mike Daisey, who does the one-man show called The Agony and the Ecstasy of Steve Jobs.

Why are we doing business with this kind of regime? Why are we making this bargain?

Daisey describes appalling conditions inside the factory in Shenzhen where iPhones are made. (Apple disputes some of Daisey’s claims.) The larger issue, he says, is not the factories but the government of China. His argument is that China is a fascist country run by thugs who have created the kind of exploitative environment that Western companies have long craved but could not get in the West.

It’s their dream, Daisey says—a country where hundreds of thousands of people can be herded into “worker cities,” stacked like cord wood in overcrowded dorms, and forced to work long shifts in cruel conditions. (No bathroom breaks, no talking, and you stand up the whole time.)

And the fascist government—Daisey leans on the word fascist, making sure you get the implied comparison—assures Western companies that they can do business there and will not have to worry about unions or labor unrest. If workers try to form a union, they can be sent to prison.

Why are we doing business with this kind of regime? Why are we making this bargain?

As the Times article points out, this isn’t just Apple. It’s every company. It’s every product we use. It’s our entire way of life, built on the backs of people who are being treated in ways that we would not allow ourselves or our countrymen to be treated.

Ultimately the blame lies not with Apple and other electronics companies—but with us, the consumers.

And ultimately we are the ones who must demand change.

So what if building that smartphone in China means we save 65 bucks and get things done faster? Maybe we would be better off paying a little more and waiting a little bit longer.

This week, Apple will report its financial results for the holiday quarter. It’s probably going to be another huge blowout, with Apple doing about $40 billion in revenues and keeping $10 billion of that as bottom-line profit—an incredible profit margin for a company that makes hardware.

Wall Street will be ecstatic. The stock will soar. But it’s worth keeping in mind how Apple did it.