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© Foxconn Electronics Production | March 05, 2010

Foxconn’s human rights record: Should OEMs be held accountable

Our last post about the Apple supplier audit problems provoked some interesting feedback. Most was supportive, but not all.
One reader felt that Apple’s , “… nearly $25B in cash, revenues of nearly $50B and profit margin over 20%…” in some way negated our comment “I’d be very skeptical of any analysis that found the time, money, and potential brand compromise of having to perform this level of diligence (and corrective action!) as being justified by the purchase price advantage achieved from these geographically remote, so-called lower labor-cost solutions?”

Hmm, given that the reader probably knew that we already knew these numbers it looks to us like their premise was that the ends (in this case Apple’s financial results) justify the means. An interesting perspective and perhaps one that’s broadly embraced in today’s secular, unrestrained business climate.

But to set the record straight and remove any ambiguity about our position we point out that the New England slave trade was also a wildly successful commercial enterprise. As historian Douglas Harper explains, “Slaves costing the equivalent of £4 or £5 in rum or bar iron in West Africa were sold in the West Indies in 1746 for £30 to £80. New England thrift made the rum cheaply — production cost was as low as 5½ pence a gallon — and the same spirit of Yankee thrift discovered that the slave ships were most economical with only 3 feet 3 inches of vertical space to a deck and 13 inches of surface area per slave, the human cargo laid in carefully like spoons in a silverware case.”

And while we have Supplier Codes of Conduct, to ensure that suppliers to electronics industry OEMs adhere to minimal standards to avoid human rights violations and that the one from Apple goes beyond enforcing local labor laws and requires its suppliers “must uphold the human rights of [workers] and treat them with dignity and respect as understood by the international community” — still, we are appalled by all the news stories and therefore re-ask our questions directly… “Does Apple really understand how important these issues are to its customer base, and its image as a hip, socially responsible leading edge company?”

We commend Apple and other Foxconn customers for conducting supplier audits. But what happens when suppliers like Foxconn, surely one of the most secretive, least transparent organizations on the planet, are caught violating the code of conduct multiple times, and efforts by OEM customers do not seem to be successful in changing long term behavior.

Should the OEM be held accountable in the Court of Public Opinion? We think this is already happening, as evidenced by articles on social media users groups, and accounts on Techie fan sites, as well as articles in the Washington Post and other national media.

Our bottom line, if Apple and other OEMs don’t have the courage to disengage with companies like Foxconn that won’t adhere to human rights standards, and move their production to companies that do (even if prices have to go up) then they deserve to see their most valuable asset, their brand disgraced! As Warren Buffet once put it, “It takes 20 years to build a reputation and five minutes to ruin it.”

We don’t believe there are any ifs, ands, or buts about it. An OEM is either serious about Corporate Social Responsibility or they are not.
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Author: Charlie Barnhart at Charlie Barnhart & Associates

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