Apple Case Analysis

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Apple Case Analysis|
Dr. Jacobs Buad326.101|
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Charles Fields|
4/12/2012|

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Foxconn a major Chinese manufacturer and supplier of Apple products, was audited from February-March 2012, after receiving an increasing amount of criticism in relation to their current business practices. Accused of “turning a blind eye to dismal working conditions at partner factories” (Paronen, 1), Apple agreed to allow the Fair Labor Association (FLA) to conduct an audit of their suppliers’ factories which lead to the discovery of numerous labor, environmental, health and safety violations. The audit which was publically released in March 2012, led to increased pressure and negative media calling for Apple to ameliorate current Foxconn working conditions and practices. Of the three facilities audited, the Fair Labor Association (FLA) found “several problems with excessive overtime and overtime compensation, along with health and safety risks that led to a widespread sense of unsafe working conditions among workers” (FLA, Foxconn report). Below are a few of the health, safety and environmental violations disclosed in the report. At the Fu Tai Hua Industrial factory in Shenzhen, China, the FLA determined there was “sustainable improvement needed in recruitment, hiring and personnel development after they discovered the factory requires workers, excluding interns and short term workers, to sign a three year contract that provides for an extended probationary period of six months however, the FLA probation period limit is three months as noted in their benchmark” (FLA, Foxconn report). In addition to the FLA benchmark violations, several overtime violations were discovered. In the report obtained from the Fair Labor Associations website, 90% of workers interviewed at the Fu Tai Hua factory reported they were not paid for work related training and testing performed after regular working hours. Auditors found employees were unaware of their rights having no knowledge they should be compensated for all time spent at the factory while under management supervision. The report also noted “Employees lacked awareness of the factory’s Hours of Work & Compensation policy and procedures because there is no system in place or communication to workers on wages and benefits” (FLA, Foxconn report). It was also found that “some employees worked over seven consecutive days without having the required 24-hour minimum break” (FLA, Foxconn report). Although the Fu Tai Hua factory has a health and safety committee in place, it is inactive. One can attribute this as the primary reason why such an excessive amount of safety issues exist there. Some safety issues outlined in the FLA’s 2012 report included a gap in the health and safety policy which did not offer coverage to young (16-17years of age), elderly, pregnant, disabled, and interning employees. In addition, it was found that there is no sprinkler protection at fuel stations, emergency exits failed to meet local law requirements, and there were no fire detectors in some areas of the wastewater treatment plant (FLA, Foxconn report). Environmental violations featured in the audit included missing emissions permits for the factory’s extractors, the direct connection of the factory’s main discharge point over a storm water canal at a car washing section of the Fu Tai Hua plant that the FLA called for immediate action to resolve. The Fu Tai Hua factory also has no system in place for conducting periodic assessments of their environmental issues, or a control system to ensure the underground diesel tank is not leaking. Aside from the obvious concerns raised in relation to the many violations disclosed in the audit, serious problems have now emerged for Apple and its stakeholders. Many stakeholders stand to be affected if no immediate course of action is taken. For one, Apple risks a damaged reputation if they do not immediately work to amend the many labor, health and environmental...
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