Foxconn deal: iPhone, iPad prices may rise

March 30, 2012 at 3:30 AM
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CUPERTINO, Calif., March 30 (UPI) -- Apple Inc. iPhones and iPads could jump in price after the firm's top supplier in China agreed to cut workers' hours and increase wages, industry analysts said.

Retail prices could increase for smartphones, tablet computers and other products, unless Apple accepts lower profit margins, the analysts told The New York Times -- after Hon Hai Precision Industry Co., known as Foxconn, pledged to sharply curtail the number of working hours in its Chinese factories and significantly increase wages.

Apple had no immediate comment on the agreement's effect on its products' prices.

"At the end of the day it's a matter of image, a matter of recognition, a matter of reputation," Georgetown University global logistics Professor Ricardo Ernst told the newspaper.

Foxconn agreed to make the changes after a far-ranging inspection by the non-profit Fair Labor Association monitoring group found widespread problems -- including numerous instances where Foxconn violated Chinese law and industry codes of conduct by having employees work more than 60 hours a week, sometimes for 11 or more days in a row.

Forty-three percent of 35,500 non-management workers surveyed at three Foxconn plants making Apple products said they experienced or witnessed accidents, and almost two-thirds said their compensation "does not meet their basic needs."

Apple, which requested the investigation and has audited its suppliers since 2006, said in a statement, "We share the FLA's goal of improving lives and raising the bar for manufacturing companies everywhere."

Foxconn said in a statement it would work with Apple to remedy the issues FLA raised.

"Our employees are our greatest asset and we are fully committed to ensuring that they have a safe, satisfactory and healthy working environment," it said.

The association said Foxconn agreed to bring its factories within China's legal limits of 40 hours of work a week and 36 hours maximum overtime a month, or about 9 hours a week, by July 2013.

As a result, "tens of thousands of extra workers will need to be recruited, trained and accommodated at the same time as hours worked are progressively reduced per worker," in the next year, said FLA's report, reviewed by United Press International.

Foxconn, a multinational electronics manufacturer headquartered in New Taipei, Taiwan, is the world's largest maker of electronic components.

It is China's largest and most prominent private employer, with 1.2 million workers making electronic products that also include the Amazon Kindle e-reader and Sony Computer Entertainment's PlayStation 3, Microsoft's Xbox 360 and Nintendo's Wii home video-game consoles.

The changes in labor practices have the potential to increase wages and improve working conditions across Foxconn and at non-Foxconn plants across China, the Times said.

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