Foxconn Raising Prices to Avoid Further Suicides

[L0tus]

[citation][nom]xrodney[/nom]Doubt difference will be more then 20-30$.As already said by some companies making electronics, salary is making only ~20% of manufacturing expenses.[/citation]

Actually, you're looking at a figure in excess of 50% (for the final product). The gap between Western/Developing country salaries for the same job is MASSIVE.

 

[Sicundercover]

Paying these people more wages isnt what is going to fix this problem. These people work under harsh conditions and practically live at their jobs.

They are killing themselves because their lives are hardly worth living. What is the point of making more money if you have no time to enjoy i?

 

[existencenow]

To all you trying to be Dults saying it cost $6.54... That is ENTIRELY inaccurate. That is not the WHOLE cost. That bit of info is only counting the LABOR COSTS! Which nonetheless less is ~ 1/8th the cost it would be in america. Which if it was built in a Non-third world country the cost would surpass the parts value.. Which i feel is suitable to now state at $187.51.
My favorite parts being the ~10$ CPU and ~28$ 3.5 display and 10$ touchscreen. GG Apple for charging your dult fanboys ~+128$ just for the screen and touchscreen filter.... Not counting the arseload of labor at your shops.

 

[deweycd]

The divide between what foxconn can pay it's employees there verses in the United States is the difference between two weeks pay and a yearly salary. They can pay their workers a few thousand a year where here they would have to pay 30-40,000 minimum to get workers to do similar jobs. People are greedy and so can be the companies. Foxconn should try and equalizes the difference because it will make a happier worker.

 

[jellico]

[citation][nom]protectionist_d0uche[/nom]Cheap labor is the new slavery. Slavery wasn't free back in the day, you had to feed them, so the slaves worked your field, and consumed part of the harvest. Contrary to republican propaganda, the US was never truly prosperous or powerful until after WW2, especially the south where slavery was most prevalent.By the same token, the US has never been prosperous since we gave up on job protectionism to pursue cheap-labor AKA neo-slavery. It's been one continuous downhill slide, and it won't get better until we move jobs back here, and pay a living wage for them.[/citation]
What are you blathering about, "republican propaganda"... you make it sound as if the Republicans were advocates for slavery. If that is your suggestion, then might I remind you (or more probably, INFORM you since you likely never knew) that it was a Republican President that waged a war to from the slaves from the Democrats who formed and comprised the Confederate States of America.

As for this who nonsense of "neo-slavery" and "living wage" explain to me this: are you willing to pay someone $15/hour to make you a hamburger? Does that even enter your mind? Are are you like most people who walk into McDonald's saying, "Damn I can't believe how expensive shit is now. I remember when I used to be able to get a Quarter Pounder with Cheese for $1.25!" The fact of the matter is that no one is forcing these people to work at McDonald's or Foxconn. You might argue that because the wages are "neo-slavery" it shouldn't be tolerated. Ok, then all of those factories would close down and those jobs would be eliminated. So now millions of people have no jobs, but at least they're not being paid slave wages, right?

Similarly in this country, if you insist that some no-skill burger flipper should be paid $15/hour, then there will be far less of those jobs available as these companies would have to raise their prices accordingly and that means much less business. Many small businesses would simply close their doors and put a LOT of people out of work... but hey, at least they wouldn't be getting slave wages anymore.

 

[maestintaolius]

[citation][nom]figgus[/nom]Did you even READ the article?[/citation]
No, because clearly that would cut into his commenting time.

 

[Compulsive1]

If you built the iphone in USA or EU, the labor might be 10 times higher, or 65 dollars. This would increase the price of the final product by roughly 100-120 dollars after markups. Right now the entry level iphone cost 600 dollars, so a 100 dollar price increase would make it 16.6% more expensive.
I bet that if given two choices at the store- to get an iphone made in China or EU / USA, vast majority would pick the Chinese phone knowing well they contribute to human misery. But they would justify it anyway.

 

[formin]

Any Western or European country wont waste its at home labor force making products with a 5 year life spans or less. Electronics get outdated so fast its not worth making.

 

[hoof_hearted]

http://news.yahoo.com/s/nm/20101012/tc_nm/us_china_labour_honhai

@ beamthegreat My comment still stands. Especially, note the part about Apples 60% profit margin.

Market research firm iSuppli estimates that a 4G iPhone costs $6.54 to make in China, or just around 1.1 percent of its retail price, while Apple's profits margins hover above 60 percent.

 

[elbert]

[citation][nom]Compulsive1[/nom]If you built the iphone in USA or EU, the labor might be 10 times higher, or 65 dollars. This would increase the price of the final product by roughly 100-120 dollars after markups. Right now the entry level iphone cost 600 dollars, so a 100 dollar price increase would make it 16.6% more expensive.I bet that if given two choices at the store- to get an iphone made in China or EU / USA, vast majority would pick the Chinese phone knowing well they contribute to human misery. But they would justify it anyway.[/citation]
Its getting to the point tho where fewer in the EU and USA can buy them thus becoming a wash. Job loss in the EU and USA is kill this concept from the market side. Walmart is having trouble in sales as they had to roll back their roll backs. I'm guess this will not end till the market is gone or the market is only for the rich.

 

[wydileie]

I fail to see how the labor would be 10x higher here in the US. If you are assuming the labor is making ~$1/hr in China to make these products, combine that with electricity cost to run the assembly line, you have maybe 45 minutes of labor so, $.75 worth of actual human labor cost.

My friend disassembled and reassembled his iPhone in 2 hours which is where I estimated 45minutes from based on practice and general efficiency of assembly lines.

Assuming the cost of electricity is equivalent (which based on some quick googling it would actually seem the US has cheaper energy), higher tax rate, and 33% of salary extra on top of salary for benefits, etc. and a manufacturing average worker rate of $13 I get:
($13 + .33($13) + $5 for manufacturing cost + $2 taxes) x .75 = $18.22 to assemble an iPhone here in America. So for $12 more you could buy an American made iPhone and pay people a rather decent salary with benefits to give people jobs here in the US.

 

[ceteras]

[citation][nom]hoof_hearted[/nom]What bugs the crap out of me is the fact that Apple only pays $6.54 per phone. Where does the rest of the money go? Hell, I'd for $100 for a Foxconn iClone, cutting Apple out of the picture and giving Foxconn an extra $93.46 per unit to spread between the CEOs and workers. It is win-win for everybody except Apple.[/citation]

It costs 6.5$ to make a phone, that is the fee paid to Foxconn for the assembly.
The parts in the iPhone are much more expensive.
Also, they have their own expenses, they still have to pay salaries to all contributing departments (design, development, testing, marketing you name it).

 

[xenol]

To those who commented about Foxconn being in China. Foxconn is in Taiwan, or what China would be like if they adopted democracy instead of communism. So I don't know what's worse.

 

[jellico]

[citation][nom]Compulsive1[/nom]If you built the iphone in USA or EU, the labor might be 10 times higher, or 65 dollars. This would increase the price of the final product by roughly 100-120 dollars after markups. Right now the entry level iphone cost 600 dollars, so a 100 dollar price increase would make it 16.6% more expensive.[/citation]
I'm afraid you're not even close. Current Foxconn workers in China make between 990 and 1030 Yuan Renminbi per month (approximately $150 - $155 USD). They work 12 hour shifts, 6 days per week. The company provides the workers with a dormitory and pays for or provides all meals. They pay
very little in the way of taxes, so the lion's share of the $6.54 per iPhone is labor cost.

In the United States, manufacturing working make an average of $20 - $25 per hour. Now China also mandates overtime after 40 - 45 hours per week, and the $150 - $155 reflects that (minimum wage in China is set by local provinces and ranges from $45 - $100 per month). In the US, however, the employer has a shitload of taxes to pay, plus other benefits, so the $20 - $25 per hour is more like $40 - $50 per hour in cost. Then, of course, the corporate tax rate is about 40%, but we'll ignore that for now. So a US manufacturing wage causes a labor cost increase of 4166.7%!! That's just a bit more than 16.67% that you came up with. So, if we now apply that percentage increase to the stated $6.54 manufacturing cost of an iPhone, the new cost is $279.04. So, you can imagine what the final end-user cost of the product will be. An earlier poster mentioned $1500 for a motherboard. As you can see, that's not nearly as far fetched as you might have thought.

 

[jellico]

[citation][nom]xenol[/nom]To those who commented about Foxconn being in China. Foxconn is in Taiwan, or what China would be like if they adopted democracy instead of communism. So I don't know what's worse.[/citation]
The Foxconn factory is just outside of Shenzhen, in the Guangdong province of mainland China, about 60 miles north of Hong Kong.

 

[pale paladin]

why is it that foxxcon can make decent stuff for other oems but their own branded technologies typically suck and are of poor quality?

Just wondering?

 

[Dirtman73]

Thank you American politicians for making Apple's obscene profit margin possible.

It's pretty sad that Apple and other companies have no problem screwing the American worker over so they can make a quick buck.

 

[Sabiancym]

People will complain all day about this, but once their ipod goes up $20, they'll throw a fit.

I'll gladly pay considerably more for my electronics if it means these people can have a decent standard of life.

 

[jazz84]

[citation][nom]back_by_demand[/nom]I've been saying this for ages - don't bother.After being attacked left, right & centre for stating the facts I just gave up.Part of me doesn't care anymore, mainly the part that thinks there's far too many people in China already and mass-suicide may actually do something to help the rampant over-population.[/citation]

The point that you're completely missing here is that the company HAS A SUICIDE RATE, PERIOD!

 

[jellico]

[citation][nom]Sabiancym[/nom]People will complain all day about this, but once their ipod goes up $20, they'll throw a fit.I'll gladly pay considerably more for my electronics if it means these people can have a decent standard of life.[/citation]
Yeah, sure you will. But even if any of us actually believed that, the fact is that as soon as ALL of the made-in-China products you own increase in price considerably, your zeal to pay (along with your concern for the well-being of people who voluntarily accept those working conditions) will go right out the window.

 

[bv90andy]

I approve of this! We don't need a new phone every 6 months and a graphics card upgrade every 12 months on the sweat of suicidal workers in China or anywhere else for that matter. Make the electronics ~25% more expensive, and we in the west have the money to buy them anyway. Or we buy a little less and Foxconn can give to their workers shorter shifts and more breaks.

ALso I hope that FOXCONN Logo in the picture is not on top of a tall building.

 

[kelemvor4]

[citation][nom]silentq[/nom]Apple is not overpriced enough? Yeah, just give Jobs another reason to crank up the prices. Jobs: "We incresed the price of iPhone 4 from $799 to $999 because Foxconn raised it's production value from $6.54 to $6.75 in order to compensate the workers and decrease suicides. Apple simply follows the rules."[/citation]
Eh. whatever imo. Apple customers are gullible enough to pay the existing prices; they ought to double what they charge. Apple customer will still pay it as long as apple continues to be trendy.

 

[tidex]

you'd think with apple sending them giant paychecks this wouldn't be a problem...

 

[Guest]

Any company that would treat employees this way will be trying to figure out how to keep any added revenue for the executives and stockholders (who probably include Steve Jobs - given his past abuses of offshore holding companies for manufacturers - but that is legal and legally hidden.)

 

[maestintaolius]

[citation][nom]jellico[/nom]I'm afraid you're not even close. Current Foxconn workers in China make between 990 and 1030 Yuan Renminbi per month (approximately $150 - $155 USD). They work 12 hour shifts, 6 days per week. The company provides the workers with a dormitory and pays for or provides all meals. They payvery little in the way of taxes, so the lion's share of the $6.54 per iPhone is labor cost. In the United States, manufacturing working make an average of $20 - $25 per hour. Now China also mandates overtime after 40 - 45 hours per week, and the $150 - $155 reflects that (minimum wage in China is set by local provinces and ranges from $45 - $100 per month). In the US, however, the employer has a shitload of taxes to pay, plus other benefits, so the $20 - $25 per hour is more like $40 - $50 per hour in cost. Then, of course, the corporate tax rate is about 40%, but we'll ignore that for now. So a US manufacturing wage causes a labor cost increase of 4166.7%!! That's just a bit more than 16.67% that you came up with. So, if we now apply that percentage increase to the stated $6.54 manufacturing cost of an iPhone, the new cost is $279.04. So, you can imagine what the final end-user cost of the product will be. An earlier poster mentioned $1500 for a motherboard. As you can see, that's not nearly as far fetched as you might have thought.[/citation]
Our manufacturing division (which we can't outsource due to ITAR/DoD restrictions) only pays a little better than 10-12$ an hour for the assemblers and that's in the metro. Our manufacturing plants in rural areas pay only about 8-10$ an hour for full-time and even less to part-time employees, I have no idea where you're getting this 20-25$/hour figure, 40-52k is a good entry-level engineer's salary (although, in this current market you can snag experienced engineers for 45-55k pretty easily). The tax-rate is a non-issue for comparison as US based companies manufacturing abroad pay the 30-40% rate on their profits anyway (the only difference in manufacturing in China vs Europe is you usually end up paying taxes in both the US and Europe vs just paying US taxes and the relatively minor China ones-but you can currently deduct those foreign taxes from your US ones). I would also argue that any company that pays the full 30-40% rate on their profits needs a new accounting dept. I will agree that a good rough estimate for US employee cost is double what you pay them.