The Apple Inc. (NASDAQ:AAPL) supply chain is very delicate. One missed step here or there could cost the company quite a bit of money. Not to mention the fact that it could set back production and cause delays in getting consumers what they want.
For this reason, it is always important to keep a close watch on the Apple supply chain, including the many companies that are part of it.
In the past, the labor struggles associated with Foxconn Electronics have been well documented. In fact, this promoted Apple to become the first IT company to join forces with the Fair Labor Association (FLA).
Despite the fact that Apple Inc. (NASDAQ:AAPL) and Foxconn Electronics have taken some steps in the right direction, it appears that trouble is brewing once again.
Digitimes has the report: Foxconn faces more labor problems:
“Although Foxconn has been enthusiastic about cooperating with the inspections and implementing changes, the firm now faces the problem of lowering weekly work hours to 49 per week, including over time, before July 2013.
For Foxconn, cutting work hours to 49 hours per week is not easy, as production has been steady and lowering working hours means the firm needs to hire more workers to fill shifts. This could pose a problem for the firm as the labor market in China has been changing and it has been challenging to find production line workers. In addition, workers actually do not care about working overtime as long as they get paid. But with lower working hours, firms need to find strategies to maintain salary levels for workers.”
Overtime pay is a big deal for those working at Foxconn. Did you know that in China, overtime on weekends can amount to 200 percent of standard pay? On weekdays, this number can be as high as 100 percent.
In order to stay in compliance with what Apple Inc. (NASDAQ:AAPL) is looking for, Foxconn is going to have to lower its working hours. As you can imagine, this will have an impact on the company and how it operates its business.
Another problem is outlined here:
“If Foxconn adopts fully automated processes, then the firm cannot create employment opportunities and may not be welcomed by local governments in China.”
As you can see, Foxconn is in a tough spot because Apple Inc. (NASDAQ:AAPL) doesn’t want to make any mistakes concerning fair labor within its supply chain.