labor unrest

Foxconn Tries to Move Beyond Apple’s Shadow

But now Foxconn, a potent symbol of the perks and perils of globalization, is taking a step that, not all that long ago, would have seemed unthinkable: it is contemplating life far, far beyond Apple.

Foxconn, which is based here but does most of its manufacturing in mainland China, wants to reduce its reliance on Apple. Its new strategy is a shift away from making products that other companies design, and toward developing products of its own, with an especially aggressive push into designing and manufacturing large, flat-screen televisions.

“Foxconn senses that the Apple aura isn’t as invincible as before,” said Jamie Wang, an analyst at the research firm Gartner. “So they are worried that they need something besides Apple’s business that will allow them to grow.”

As the biggest contract manufacturer for American electronics companies like Apple, Dell, Hewlett-Packard and Amazon, Foxconn has been faced with labor unrest, worker suicides, industrial accidents and complaints about working conditions and labor practices. It has been working with many of its client companies to improve conditions, raise pay and improve labor standards. On a drizzly April afternoon at the headquarters of Foxconn Technology here, 300 employees gathered to burn incense and fake money in front of a statuette of Lord Guan, a Taoist deity. Mr. Gou, the chairman of Foxconn and a Taoist, had the statuette flown in from Shanxi Province in mainland China, carrying it himself to the door of his manufacturing empire. In Chinese tradition, Lord Guan is considered the go-to god for good business.

Good business is something Foxconn, one of the world’s largest contract electronics manufacturers, needs right now. Last month, Foxconn, also known as Hon Hai Precision Industry, reported that first-quarter revenue was dragged down 19.2 percent compared with the same period last year because of declining iPhone and iPad orders from its main customer, Apple.

Apple representatives declined to comment on the developments at Foxconn. But analysts estimate that Apple contributes at least 40 percent of Foxconn’s revenue. Moving beyond Apple could prove tricky; it is hard to make money in televisions these days, as many of the Japanese electronics companies can attest. And only 20,000 of Foxconn’s 60-inch TVs have been sold in Taiwan, according to Simon Hsing, Foxconn’s spokesman, who declined to disclose sales volumes from any other partners.

Foxconn’s predicament mirrors a common problem faced by Taiwanese contract manufacturers, whose fortunes depend heavily on those of their clients. A handful of manufacturers, like HTC and Asustek Computer, have managed to shed their contract manufacturing businesses altogether to develop branded products. But as they began competing with clients, those clients began deserting them.

Here is Foxconn’s problem captured with two sets of statistics. Global demand for LCD televisions declined 1 percent in 2012 compared with the previous year, and demand for all TVs dropped 6 percent, according to NPD DisplaySearch. Worldwide PC shipments fell 13.9 percent in the first quarter of 2013, compared with the same period a year earlier, according to IDC.

As a result, profits for many manufacturers are slumping.

“Taiwan companies have always relied on being a contract manufacturer and outsourcing manufacturer,” said Luo Huai-jia, vice president at the Taiwan Electrical and Electronic Manufacturers’ Association. “Now we need to start looking at original design manufacturing and directly matching the needs of consumers.”

Kay Chiu, vice president of Foxconn’s consumer electronics division, said in response to e-mailed questions that consumer interest and vertical integration — controlling all the steps in the supply chain — were behind the shift in production. “We still need to leverage business development partners’ advantage to provide an attractive and most competitive product to the market,” Mr. Chiu said. Other top Foxconn executives declined several requests for comment.

Article source: http://www.nytimes.com/2013/05/07/business/global/foxconn-tries-to-move-beyond-apples-shadow.html?partner=rss&emc=rss

Strike Adds to Problems at Indian Auto Plant

The strike is the latest in a series of labor relations problems at the four-year-old plant in Manesar, about 30 miles south of New Delhi, that are crimping sales for the automaker. The company, which makes about half the cars sold in India, is majority-owned by Suzuki of Japan.

Maruti Suzuki has said that its sales fell 20.8 percent in September from a year earlier, to 85,565 cars, largely because of earlier problems at the Manesar plant. The factory, where workers began the current strike last Friday, has the capacity to produce 1,200 cars a day, including popular models like the Swift, A-Star and SX4.

Shares of Maruti Suzuki were little changed in Mumbai on Tuesday, but the stock is down more than 24 percent this year.

Other Indian auto companies have also been hit by labor unrest this year. In March, some workers at a General Motors factory in the western state of Gujarat went on strike for nearly three months. There is a growing dissatisfaction among Indian factory workers, particularly those in the auto industry, that they are not sharing in the financial success of their companies at a time when inflation in India is running at nearly 10 percent.

Union workers are also angry over the growing use of contract workers, who are paid far less than regular employees and — unlike permanent workers — can be laid off without government approval. In some auto factories, contract workers make up more than half the staff.

Monthly manufacturing wages in India range from 6,000 rupees, or about $120, for contract workers, to about 35,000 rupees ($715) for highly skilled and experienced workers. While those wages are better than the average income in India — about $81 a month — living on them at the lower end of that range can still be tough.

Still, while government protection against layoffs gives union autoworkers some leverage, they know they have few employment alternatives — especially in north India where Maruti Suzuki and many other auto companies have built their factories.

About half of the country’s population is 25 or younger, and nearly 12 million people become working age every year. But India creates only a few million new jobs each year because of its stringent labor laws, weak infrastructure and anemic education system.

One striking worker at the Manesar plant, Satyawan, a 24-year-old who has been working at Maruti for five years and uses only one name, acknowledged that good factory jobs were few and far between. “Unemployment is increasing by the day so we won’t get a job, even if we look for one,” he said.

A company spokesman, Puneet Dhawan, said the company was not negotiating with the workers, who he said had seized “effective control” of the plant. He accused the workers of breaking furniture and damaging equipment at the plant.

“Negotiations can happen only when there is an environment for that,” Mr. Dhawan said by telephone. “Right now, we are looking at a mob of people who are going on a rampage.”

Workers at some Maruti Suzuki parts suppliers, a Suzuki engine factory and a Suzuki motorcycle factory also went on strike Friday, but some production has since resumed at those factories.

The Manesar auto plant, which began operations in 2007, has been the site of several disputes between managers and workers since July. The crux of the disagreement is whether workers there can form a new union, rather than join a union that also represents workers at Maruti Suzuki’s older plants in nearby Gurgaon. The Manesar union workers contend that the older plants’ unions are too compliant with management.

Vikas Bajaj reported from Munbai, India, and Sruthi Gottipati from New Delhi and Manesar, India.

Article source: http://www.nytimes.com/2011/10/12/business/global/strike-adds-to-problems-at-indian-auto-factory.html?partner=rss&emc=rss

Foxconn Tries to Move Beyond Apple’s Shadow

Strike Adds to Problems at Indian Auto Plant

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