|iFactory: An Unprecedented Look Inside Apple's Chinese Core|
|By BILL WEIR, REPORTER'S NOTEBOOK||Feb 19, 2012, 7:19 PM|
"Okay." "Okay." "Okay."
The voices are robot feminine and they never shut up, each chirp a surreal announcement that another new iPad is about to be born.
"Okay." "Okay." "Okay."
The factory floor is spotless under the bright fluorescent lights and with hypnotic rhythm, thousands of hands reach into a conveyor belt river, bringing each gliding gadget to life one tiny piece at a time.
A supervisor will bark the occasional order in Mandarin, but on this line the machines do most of the talking while the people work in silence.
Their faces are blank as they insert a chip or wipe a screen or plug in a diagnostic cable to hear that everything is "Okay."
And they will repeat that motion and hear that fembot voice a few thousand more times before lunch.
It is just an average day at Foxconn.
How 'Nightline' Got Inside Apple's Chinese Factories
Given the legendary secrecy of the world's most valuable company, you have to wonder: How am I seeing this? Well, a few years ago, I sent THIS to Steve Jobs, blatantly stealing the Apple beat from a more able colleague. I still feel guilty, but I don't regret it because I was genuinely taken with the second coming of Jobs and was unabashedly fond of Apple's products. My hope for a sweeping profile led to my covering a few launches and every six months we pitched them an ABC News special on the inner workings of Apple. They always politely declined.
But in recent months, the fond memorials for Steve Jobs and the company's record-breaking profits have been tarnished by some of the worst press in Apple's history, most of it related to its top Chinese supplier, Foxconn.
Just after a horrific rash of worker suicides at the Foxconn factory complex outside of Hong Kong in 2010, a monologist named Mike Daisey launched a one-man show called "The Agony and The Ecstasy of Steve Jobs." He described travelling to the gates of Foxconn and meeting people coming off 13-15 hour shifts on the Apple lines. He described a 13-year-old who spent her days cleaning iPhone screens.
Daisey's show was featured on NPR's "This American Life" in January and a listener named Mark Shields was so moved, he launched a petition drive online. Over 250,000 Apple users called on the company to build the first "ethical" iPhone, and protests were planned at Apple stores around the world.
It was around this time when Apple called me. They wondered if "Nightline" was interested in seeing their iPhone, iPad and MacBook final assembly lines at Foxconn during a first-ever audit by the Fair Labor Association. I said yes, very much, and immediately started imaging the reasons why they were offering such a scoop to me, of all people. Among the possibilities:
-I've said nice things about their products on the air.
-ABC News is owned by the Disney Corporation and Disney CEO Bob Iger serves on the Apple Board of Directors
-The Steve Jobs Trust is Disney's largest shareholder.
-They enjoy "Nightline."
It must be the last one, because the first three would have no bearing on my reporting and I'm pretty sure Apple knows it.
Watch "Nightline" anchor Bill Weir's exclusive full report on a special edition of "Nightline," "iFactory: Inside Apple." 'I Think About Resting'
Apple promised complete access, no dog-and-pony, no Potemkin Village, but they denied my repeated requests to interview Apple CEO Tim Cook or the senior vice president of industrial design, Jony Ive.
In a three-golf-cart convoy, both Apple and Foxconn reps took us around to a half dozen production lines in Shenzhen and Chengdu, and there were always five to six people with us as we toured the factories and dorms. But aside from suggesting a visit to the counseling center or canteen, they never steered us to interviews and never interrupted.
This is some of what we saw. See it yourself on Tuesday's "Nightline."
The pristine white boxes that roll off these lines in Shenzhen, China all carry the words "designed in California." But the collective genius of Cupertino would be nothing without the relentless, repetitive work of hundreds of thousands of Chinese and Taiwanese workers like Liang Juan.
Covered head to toe in a dust-free "bunny suit," the 26-year-old has spent most of the past three years flipping tiny camera lenses with a pair of tweezers.
"What do you think about all day?" I wonder. "I don't think much about other things," she says, "because the management is strict and we're busy working and have no time to think about other things."
But over on another assembly line in Chengdu, Zhou Xiao Ying admits, "A lot of times I think about how tired I am." Around 6,000 times per shift, she grabs an iPad housing and files the aluminum shavings from the iconic Apple silhouette. And once a month she takes a two-hour bus ride to see her parents and her children. (See Apple's clarification on Zhou Xiao Ying's statement regarding the 6,000 units.)
"I think about resting," she says.
Did Tragedy Cause Foxconn to Open Its Doors? 'Absolutely,' Says Executive
For years the world has marveled at a different kind of Apple line, the sort that stretches for city blocks outside stores each time a new product ships. In a single generation, those lines turned a garage start-up into the most valuable company in the world.
But while Apple fans bought over 17 million computers, 38 million iPods, 40 million iPads and 93 million iPhones last year, no one from the outside has ever seen the production lines that built them. Until now.
And in a stunning admission, a Foxconn executive, who spent 15 years at Apple, tells me he thinks "Nightline" probably wouldn't be here if it weren't for the deadly explosions and suicides.
"You being here is part of the openness, part of the learning, part of the change that Foxconn is undergoing," said Louis Woo, a former Apple executive who serves as an advisor to Foxconn CEO, Terry Gou. "Of course you can argue that we should have opened up five years ago. Well five years ago, we are under the radar screen, nobody really knows us, we are doing well. Why should I open it up?"
I ask if it took such deadly tragedy for Foxconn to rethink the way it treats its workers. "I think absolutely, absolutely, yeah," he says. "You know, success is the mother of failure. Because we've been so successful, successful in the sense that it seems everybody's happy. Right?"
We land in Hong Kong in darkness and after a two-hour drive, arrive in Shenzhen. This was a tiny fishing village 30 years ago, but after the Chinese declared it a "Special Economic Zone," there are now more people here than New York City.
'Everywhere You Look... Are Suicide Nets'
At the center is Foxconn City and we pull in at dawn, just in time for first light to reveal mind-blowing scale of the place.
As China's largest exporter, only the government employs more people than Foxconn, and the company earns more revenue than their next 10 competitors combined. Apple may be their most famous customer, but Foxconn also churns out products for Sony, Dell, Hewlett-Packard, I.B.M., Motorola, Toshiba and other major brands, keeping the details of each production line wrapped in total secrecy.
In order to make gadgets like the Xbox, the PlayStation and the Amazon Kindle this campus employs 235,000 people, roughly the population of Orlando, Fla.
And everywhere you look, on every factory and dormitory, in every stairwell and atrium, are suicide nets.
They went up during a three-month span in the spring of 2010, when nine Foxconn workers jumped to their deaths. A total of 18 Foxconn employees took their own lives, or tried to, in recent years and given the company's massive size, it is a suicide rate well below China's national average. But when people started jumping in a cluster, Woo tells me that Tim Cook rallied a team of psychiatric experts for advice. They suggested nets, on the chance it might save impulsive jumpers.
Foxconn also opened a counseling center around this time and there are a few people scattered in the waiting area when I visit. A counselor tells me that these days they are more likely to deal with lost IDs than bouts of depression. "So why did the horror happen?" I ask. "There are many reasons," she says. "We had many scholars here doing research. Of course some (suicide) has to do with the management. But they had more to do with the new generation of migrant workers from the rural areas, their state of mind and how they cope with society. Also it's hard to make friends here."
And then came the explosions. Last year, two blasts at two separate iPad factories injured 77, and four died when combustible dust exploded as iPads were being polished.
"A certain level of the aluminum dust was too high and this accident happened," Woo tells me. "We learned a lot from it, so we have changed a lot of processes. So now if you have a chance to go back and see it, you would not see any human being at all. We replaced the enclosure part with robots."
Apple Addresses Working Conditions in Its Supplier's Factories
But Foxconn wasn't Apple's only problem. The company says they stopped a supplier named Wintek from using a toxic chemical to clean iPhone screens after 137 workers were injured.
And labor rights groups both in and out of China have accused Apple of looking the other way while factories in its massive supply chain allegedly force overtime, ignore health and safety issues and occasionally exploit underage workers.
Both Steve Jobs and new CEO Tim Cook have long insisted that no company in the industry has done more to improve the lives of workers. The company says more than a million line workers have been informed of their rights, 60,000 have taken advantage of free college-level instruction and they've forced shady suppliers to refund workers more than $6 million in illegal fees.
"We think the use of underage labor is abhorrent," Cook told a group of Goldman Sachs investors and analysts last week. "It's extremely rare in our supply chain, but our top priority is to eliminate it totally. If we find a supplier that intentionally hires underage labor, it's a firing offense. We don't let anyone cut corners on safety. If there's a production process that can be made safer, we seek out the foremost authorities in the world -- the foremost experts -- and cut in a new standard, and then take that and apply it to the entire supply chain."
Apple says they have been ordering audits of its suppliers since 2006, and since 2007 have been publishing the sometimes disturbing results. After 229 audits last year, Apple reports that at least half of workers in over 90 factories exceeded the 60-hours-a-week work limit or worked more than six days a week.
By last year, Apple claims they inspected nearly 400 facilities around the world, but only 11 suppliers were terminated. It is easier to help improve the lives of workers by forcing a supplier to reform, Apple reasons, than by firing the supplier outright. But some activist groups say they could improve conditions faster with a "name and shame" strategy, listing the locations of specific violators. This is an idea Apple has resisted in the past, and some in the labor-rights field agree that in certain cultures, name-and-shame encourages factory owners to cover up violations instead of working with the customer to fix them.
An Honest Opinion?
The young men and women are brought into a dingy room by the dozens, and though some spend 10-hour workdays building iPads, this will be first time many of them actually get to use one.
The Fair Labor Association is using Apple's fastest-selling gadget to conduct what they say is the biggest audit the industry has ever seen. 35,000 Foxconn workers will be given an anonymous touch-screen questionnaire, with answers instantly uploaded to a server in New Zealand, so the watchdog group can understand the most common grievances. But given the stoic expressions and terse answers I've been getting from workers since I arrived, how honest can they really be?
"Some of them certainly do say what the boss wants them to say," auditor Ines Kaempfer tells me, "but the great thing about this survey is that we have such a big sample that you really always have workers who say what they're really thinking. Rather than the more traditional survey, where you ask 15 workers, you ask them face to face; they don't dare to say anything. And here, many of them feel quite protected. Because it's a big group, there's no way their boss can know what they were saying."
Critics of that methodology say interviews should take place outside the factory environment, and honest answers are more likely to come during one-on-one conversations than multiple-choice questionnaires.
Last month, Apple became the first electronics company to join the Fair Labor Association. The group was founded in 1999 and is funded by corporations as well as major universities hoping to insure that the t-shirts in the college bookstore aren't made in sweatshops. Critics of the F.L.A. say that corporate ties with the likes of Nike and Adidas create a conflict of interest. Apple will pay the group "well into the six figures" to conduct this audit of Foxconn, in addition to the $250,000 they are paying in dues to the F.L.A.
But F.L.A. President Auret van Heerden insists that while corporate cooperation is essential to get access to factories, member companies have no influence over inspections. And when the Apple/Foxconn audit is published in early March, he says any whitewash would be painfully obvious.
"That's very big news," he tells me, "because Apple is the first tech company to join the F.L.A., it's the biggest and probably most dynamic of the tech companies. So it gives us a chance to set the bar for the entire sector."
'I Expect Them to Put on a Show For Us'
While his team will spend most of their time poring over employee records and time cards, I'm with van Heerden as he walks a MacBook production line for the first time and he notes that the pace of the production is much slower than he's used to. In fact, critics of Apple and F.L.A. pounced when van Heerden told Reuters Foxconn's plants were "first class" and that he was surprised "how tranquil it is compared with a garment factory."
He said something very similar as we strolled around boxes of MacBook pieces. "In the garment factories, you see a very different work ethic, people are really pushing this stuff up, because they're paid for their own individual effort, not by group effort."
When Apple first called, I assumed this audit would include a surprise inspection. But Foxconn has known for days that we were coming and in fact helped us get Chinese visas. How can he sure these masters of efficiency haven't built a model assembly line over the weekend?
"I expect them to put on a show for us," van Heerden says. "That's normal with every factory you go to, even if it's just the time that it takes you to get from the gate to the factory floor, there's always fifteen or twenty minutes of protocol to get in there. The special equipment comes out, they put the ear plugs in, they put the masks on, and they can transform a factory in twenty minutes, so we expect that.
But our method is such -- the bottom-up method -- that over the next couple of days, everything will surface. As we talk to people, discussing how they do their jobs, the dysfunctionality starts to come up.
"Was Apple resistant to this idea when you first approached them?" I ask. "It was a long conversation," van Heerden smiles. "We've been in this conversation for about five years," he says. Apple joined the F.L.A. on Jan. 13, eight days before the New York Times ran a series examining the company's labor practices.
"We call it the 'Nike moment' in the industry," audit inspector Ines Kaempfer adds. "There was a moment for Nike in the '90s, when they got a lot of publicity, negative publicity. And they weren't the worst. It's probably like Apple. They're not necessarily the worst, it's just that the publicity is starting to build up. And there was just this moment when they just started to do something about it. And I think that's what happened for Apple."
'Compared With Other Factories, It's Quite Good Here'
As 3,000 applicants rush the Foxconn gates, there is first the squeal of police whistles and then a dizzying wave of body heat as the crowd surges past.
It is a Monday after a Chinese holiday, and since many overworked migrants will just stay home, the people who lined up before dawn know that the chances of getting an assembly line job are better than average. And in a country of 1.3 billion, where jobs are scarce, getting there first matters; especially for their families back in the village, where most of their paycheck will end up.
The young men and women range from 16 (the legal working age in the province) to their early 20s, and as they finally reach the head of the line, each is asked to wave their national ID card across an electronic reader. Since Foxconn needs to hire several thousand people today, most hear a satisfying beep and are waved in. Those with bogus IDs are silently turned away.
As groups of 300 are processed with military precision, an electronic billboard outside the recruitment center tells them what they can expect: starting salary is around $285 a month or $1.78 an hour. And even with the maximum 80 hours of overtime a month, the Chinese government considers them too poor to withdraw any payroll taxes.
If they want to share a dorm with seven strangers, $17.50 will be deducted from their salary and in the massive Foxconn canteens, a heaping tray of meat, vegetables and rice goes for about $0.80. After a training period, a new hire can be on an iPhone line in as little as three days, quietly assembling a gadget that would cost him three months salary.
"I heard work is hard here," says one 17-year-old applicant with a Justin Beiber haircut. "But I heard they just raised the pay," says another. On Feb. 1, Foxconn began paying more than the minimum wage in Shenzhen by raising the starting salary about $0.25 an hour.
Over three days in two cities, "Nightline" spoke with dozens of Foxconn workers, both on and off the factory campuses, both on and off the record. We were encouraged to enter any dorm at any time to gather as much insight as any strange Americans with cameras can. All the while, I kept imagining my own reaction if a Chinese TV crew burst into my home or office and started asking me how much I like my job.
But while we looked hard for the kind of underage and maimed workers we've read so much about, but we mostly found people who face their days through soul-crushing boredom and deep fatigue. Some complained of being overworked, others complained of being underworked and almost all said they were underpaid. And when I asked "what would you change?" we heard the kind of complaints you might hear in any factory anywhere.
"Compared with other factories, it's quite good here, because the benefits are good. And because a lot of things happened in the past, it's been improved a lot," said 26-year-old Zhang Ruohua after making printer cartridges for about a year. "But the dorm conditions are not that good. The rooms are crowed and we don't have much space to hang our clothes, and the shower rooms are small. And there is not much overtime. Many people come and go because there is not much overtime."
Is this a typical complaint? Was Mike Daisey wrong or did Foxconn clean itself up since he was here? With over one million employees it is impossible to say, and the limits of this method are just one reason Chinese groups like Students and Scholars Against Corporate Misbehavior (SACOM) think Apple's self-imposed audits are largely useless.
Debby Chan of SACOM says Apple's long history of internal audits proves the company already knows where the problems are. She says they've just been resistant to fixing them."There must be a genuine trade union at Apple suppliers so the workers can have a voice for themselves," she says.
After reports that union organizers are often fired, arrested or beaten in China, I ask Foxconn executive Louis Woo what would happen if iPhone line workers decided to organize.
"We do have labor unions at Foxconn," he says, "But it's not a freely elected labor union yet. I expect to see that in the next year or two, they will become more like a collective bargaining union, and they will be freely elected. In fact I see that some legislations in more progressive provinces would require labor unions to be sitting on the board of companies. So I do see hope of labor unions becoming more powerful but it's not here yet."
'Please Use It With Care'
In the meantime, Zhou Xiao Ying carves another aluminum Apple into the back of another iPad casing, lets her mind wander to her two sons and whether they can ever afford to live in the same city.
I pull out my own iPad to show her a few pictures of my kid and America and her eyes light up when she touches the screen to swipe another photo into view. She's never seen a working iPad up close before.
"For all the people in America who buy one of these, what do you want them to know about you?" I ask.
"I want them to know me," she says. "I want them to know we put a lot of effort in this product so when they use this please use it with care."
Then she goes back to work.
The line is calling.
"Okay." "Okay." "Okay."
Editor's note: Foxconn, Apple and the Fair Labor Association submitted responses to ABC News after "Nightline" anchor Bill Weir's exclusive report on Apple's Chinese factories aired on Tuesday, Feb. 21, 2012. Read their statements HERE.
Watch "Nightline" anchor Bill Weir's exclusive full report on a special edition of "Nightline," "iFactory: Inside Apple."