Apple Profits From Decade-Long Supply Chain Labour Exploitation

Apple Cash Trend 2015
Apple Cash, Cash Equivalents and Marketable Securities
2006 to March 2015 (US$ billions) – Source: Apple Annual and Quarterly Reports

Apple Inc. is the richest and most iconic corporation in the world. In 2010 Apple became the most valuable brand, with an 84% jump in brand value to $153.3 billion. By March 2015 Apple’s revenue was up to $212.2 billion, while in February 2015 Apple attained a market capitalisation of $770 billion, nearly double that of ExxonMobil, Google and Microsoft. Apple’s large profit margins have contributed to a cash hoard of $193.5 billion, which means that the company has more cash on hand compared to cash balances of most industries in the United States combined. In a stark illustration of how extreme inequality disfigures operations in global value chains, Apple’s abundant wealth ultimately rests on the suffering of young workers in electronic sweatshops where human rights, labour standards, environmental safety, and business integrity are routinely ignored.

All this wealth has rapidly accumulated since 2006, the year in which Apple was first shown to source components from producers that have a poor reputation with regard to employment conditions and practices. It was alleged that workers were earning as little as US$50 a month, while working 15 hours a day. One worker described the regime at Foxconn, Apple’s main supplier, as: “[…] like being in the army. They make us stand still for hours. If we move, we are punished by being made to stand still for longer”. One of the factories was described as harbouring as many as 200,000 workers, who inhabit onsite dormitories that house up to one-hundred people and are not open to outside visitors.

Apple Revenue Trend 2015
Apple Revenue
June 2005 to March 2015 (US$ billions) – Source: Wolfram|Alpha Knowledgebase, 2015

Apple supply chain controversies took a dramatic turn for the worse in early 2010 when labour unrest shook up the south of China in the form of mass strikes and protests for wage increases and better working conditions. Protests received global media attention after a string of suicides and attempted suicides occurred at the factories of Foxconn. At the end of 2010, thirteen Foxconn employees had taken their lives, with another four attempting suicide, and surviving badly injured.

In 2011, during a strike at Wintek, another Apple Supplier, workers urged Apple to help resolve incidences of chemical poisoning by hexyl hydride. Also called n-hexane, the chemical is regarded as a narcotic, which in high concentrations can damage the central nervous system, induce vertigo and cause muscular atrophy. Chinese Authorities reported that 137 Wintek employees had been poisoned. In May 2011, an explosion at Foxconn in Chengdu caused three deaths and left many injured. In December 2011, an explosion occurred at RiTeng Computer Accessory, a subsidiary plant of Pegatron Corp, another of Apple’s Chinese suppliers, injuring 61 workers.

apple market capitalisation trend 2015
Apple Market Capitalisation
May 2005 to May 2015 (US$ billions) – Source: Wolfram|Alpha Knowledgebase, 2015

In 2014, while assembly workers gear up to work overtime to build the new iPhone 6, one of Apple’s key suppliers in the Philippines fired twenty-four workers that attempted to negotiate a new collective bargaining agreement. A 2014 investigation by the BBC programme Panorama exposed ongoing issues in Apple’s supply chain. It found that the identity documents of workers were seized by labour recruitment agencies, workers were sleeping in rooms with twelve people (where eight are allowed), suppliers conducted sham safety exams and created fake audit-trails, while the extremely exhausted workforce was drilled and intimidated. It also found children digging for tin in illegal mines.

It is the case that since these abuses in its supply chain were first brought to Apple’s attention in 2006, the company has made continuous efforts to eradicate problems and enforce higher standards in all of its suppliers. However there is much recent evidence to suggest that the successive interventions of Apple to advance audit and management systems and improve standards in suppliers’ factories are too often overwhelmed by the intensity of the production regimes being enforced: “[…] is ironic that Apple declared to the world that it would ensure that working hours and other working conditions would be improved, but would then push its major supplier Foxconn, and consequently its workers, to meet product schedules inconsistent with such improvements”.

apple profit margins trend 2015Apple Profit Margins
June 2005 to March 2015 – Source: Wolfram|Alpha Knowledgebase, 2015

Due to its size Apple has the power to end chronic labour rights abuses in its supply chain: “[…] the paramount issue remains whether Apple will ever choose to apply its legendary business prowess and spirit of innovation, and its enormous financial clout, to the goal of protecting the basic human rights of the people who make those products”. Former United States Presidential candidate and business ethics campaigner Ralph Nader argues that “[…] Apple is in the best position of any company in the world because of its massive surplus profits to clean up its supply chain and set an example for the rest of the world”.

Apple does not just have the power, but has the moral responsibility to end exploitative practices in its supply chain.

 

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