Apple issues Preliminary Proxy Statement, urges shareholders to vote against Icahn proposal & Human Rights Board committee

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Apple today issued its Preliminary Proxy Statement via its Investor Relations website. As a publicly traded company, Apple issues this document annually, and it discusses pay packages for both executive team members and board members, company practices, and topics which shareholders will vote on at the upcoming shareholder meeting. Apple says that the next shareholder meeting will take place on February 28, 2014. Some interesting tidbits include that Apple’s board met seven times in 2013 with 75%+ attendance during each meeting. Additionally (to be voted on), a shareholder wants Apple to create a board committee related to human rights. Apple says that it is against this additional committee:

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Apple’s challenges in ensuring fair treatment of workers in complex supply chains

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Bloomberg has a lengthy piece illustrating just how great a challenge it is for Apple and other multinational companies to ensure the fair treatment of workers in complex supply chains.

When one of Apple’s suppliers like Flextronics wins a new contract, it needs to take on additional workers – lots of them, and fast. Those workers are recruited through employment brokers, which are required to adhere to Apple’s rules. But many of them are brought in from other countries, like Malaysia and Nepal.

Alok Taparia, the managing director of Transworld Manpower, another of the four Nepalese brokers retained for that drive, says he was given clear instructions: Workers shouldn’t be charged; Flextronics would pay the brokers. But Taparia and the other Nepalese brokers say Flextronics demanded so many men so quickly that there was no way to do it without tapping the country’s network of subagents, stretching into Himalayan villages reachable only by foot. As Apple itself has described in reports on its supply chain, the subagents always charge…

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Foxconn workers in Brazil threaten strike over working conditions

Following audits and a major overhaul of workers’ rights at Foxconn factories in China, a report from newspaper Jornal de Jundiai (via Evertiqclaimed 2,500 workers at a Foxconn plant in Jundiai, Brazil are threatening to strike if the company does not meet their demands by May 3. The plant in Jundiai is currently responsible for the assembly of some of Apple’s iPhone 4 and iPad 2 units:

Newspaper Jornal de Jundiai reports that workers at the plant will strike if issues surrounding severe water shortages, food, and transportation of employees are not resolved… In a statement the United Steelworkers of Jundiaí and Region said workers decided to give 10 days (from the Monday) for the company to resolve the issues raised in a meeting on Monday… According to the report by Jornal de Jundiai, a spokesman from the union said that lack of water as well as poor quality food was an issue for workers. As the number of employees at the plant grows, workers also complain that the infrastructure for transport has remained the same size, causing overcrowding in buses. Read more

FLA president says Apple/Foxconn agreement raises bar, but will it raise prices?

The results of the Fair Labor Association’s investigation into Apple’s suppliers beginning with three Foxconn facilities officially published yesterday. While finding excessive working hours and many violations of Chinese labor law, Foxconn and Apple agreed to reduce workweek and overtime hours within Chinese law to 49 hours per week and 36 overtime hours per month based on the FLA’s recommendations. Foxconn will also hire tens of thousands of new employees and implement a compensation package to make sure workers’ salaries remain the same amid reduced working hours.

In the interview above with Reuters, head of the FLA Auret van Heerden talked about the investigation and noted the agreement could set a new standard for working conditions throughout China. One unanswered question is whether the agreement will lead to higher prices for consumers (which is not necessarily a bad thing)…

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Fair Labor Association publishes findings of Apple/Foxconn Investigation

We knew the Fair Labor Association would publish the initial findings of its investigation into Apple’s Foxconn facilities, and now the report is officially available through the organization’s website. The full report released today and is here. The press release outlining the investigation is below. According to the recommendations, Foxconn committed to “bring its factories into full compliance with Chinese legal limits and FLA standards on working hours by July 2013.”

The last we heard from the FLA about its audits into Apple’s Foxconn facilities was that it found “tons of issues.” Apple became the first technology company accepted as a member into the organization after controversies surrounding working conditions in Apple’s supply chains abroad became mainstream. As for what the FLA found in its audits of the three Foxconn facilities, here is an excerpt from the report:

FLA’s investigation found that within the last 12 months, all three factories exceeded both the FLA Code standard of 60 hours per week (regular plus overtime) and the Chinese legal limits of 40 hours per week and 36 hours maximum overtime per month. During peak production periods, the average number of hours worked per week exceeded 60 hours per worker. There were periods in which some employees worked more than seven days in a row without the required 24 hours off.

The FLA said Foxconn’s commitment will “reduce working hours to legal limits while protecting pay, improve health and safety conditions, establish a genuine voice for workers, and will monitor on an ongoing basis to verify compliance.” This will lead to a maximum 49-hour workweek, including overtime for employees and a decrease in monthly overtime from 80 hours to 36 hours. While we reported some workers were unhappy with working fewer hours, Foxconn also committed to a compensation package for workers with reduced overtime:

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Foxconn reportedly hid teenage workers from inspectors, Daisey’s monologue available as royalty-free download

As the Fair Labor Association inspectors interview Foxconn employees about working conditions at iPad plants, early reports coming our way are a bit ambiguous and a tad confusing. First FLA president told Reuters that plant floors are spotless, then Bloomberg published an article claiming the organization found “tons of issues,” and finally those two video teasers (here and here) from ABC Nightline’s ‘iFactory’ documentary added ambiguity as the producers apparently “didn’t find any egregious violations.”

Knowing ABC’s parent company Disney has the Steve Jobs Trust as its largest shareholder, and considering that FLA is funded by the biggest players in the industry, including Apple who commissioned the Foxconn inspection that began last week, some watchers are speculating there must be more to this than meets the eye. Read on…
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FLA president: iPad plants are no sweatshops; boredom and monotony contributing to suicides

With the Fair Labor Association audit of Apple suppliers at Foxconn City underway for several days now, the first details are starting to trickle in. The non-profit agency’s head Auret van Heerden told Reuters that working conditions at Foxconn’s iPad plant are “far better” than those at their factories elsewhere in the country. It is a personal impression and not the official stance, because 30 FLA staff members have three weeks to interview about 35,000 workers at two Foxconn plants in China.

Workers will answer questions anonymously by entering their responses with iPads. Van Heerden was also surprised, he confessed, with how “tranquil” the floor at Foxconn plant is compared with a garment factory.

I was very surprised when I walked onto the floor at Foxconn, how tranquil it is compared with a garment factory. So the problems are not the intensity and burnout and pressure-cooker environment you have in a garment factory. . It’s more a function of monotony, of boredom, of alienation perhaps.

He speculated that workers are jumping out of windows to take their life due to boredom and alienation stemming from repetitive assembly tasks:

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Pegatron: Apple hasn’t informed us about forthcoming labor audits

Apple’s contract manufacturer Pegatron Technology of Taiwan is unaware of any forthcoming labor inspections at its Asian plants because its client has not officially tipped them about labor audits, according to Chief Financial Officer Charles Lin tells to Bloomberg. Lin was reacting to yesterday’s announcement by Apple of California that the first audits in cooperation with the Fair Labor Association have started at Foxconn City in Shenzhen, China.

Pegatron Corp., a maker of Apple Inc.’s iPhones, said it hasn’t been informed of any pending inspections of factory work conditions by labor groups, a day after the U.S. company said checks would start this spring. Pegatron is aware of Apple’s corporate social responsibility policies, Charles Lin, chief financial officer of the Taipei-based company, said by telephone today. The client hasn’t informed him about any upcoming audits, Lin said.

Apple previously confirmed that audits at Pegatron and Quanta Computer, the company assembling Mac notebooks, are due this spring. The company said the results of FLA audits will be made available on its website at the end of March. In the wake of the Foxconn scandal, a month ago Apple became the first technology company admitted to the FLA. That announcement followed Apple’s release of 2012 Supplier Responsibility Report that for the first time named 156 companies currently supplying components for Apple products, which left only three percent of suppliers absent from the list.

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Fair Labor Association begins audits of Apple suppliers at Foxconn City

Following the release of Apple’s “2012 Supplier Responsibility Report,” Apple announced it would be the first technology company admitted to the Fair Labor Association. The FLA will “independently assess facilities in Apple’s supply chain,” and then publish its independent findings online. Apple announced through a press release today that the first audits have officially started with FLA President Auret van Heerden and his team beginning inspections at Foxconn City in Shenzhen. Apple CEO Tim Cook said the audits are “unprecedented in the electronics industry”: Read more

Group plans disruptive protest tomorrow at Apple’s Grand Central Store over Foxconn conditions

Consumer groups SumOfUs and Change.org are waging a war over the working conditions at Apple’s (and the rest of the electronics industry’s) main outsourced manufacturer Foxconn. The groups said that over 35,000 people signed their “Stop Worker Abuse” online petition in just 24 hours. Today, the groups announced they would deliver a quarter million petition signatures to Apple.

Furthermore, a protest will be staged tomorrow at 10 a.m. outside Apple’s new Grand Central Terminal retail store and representatives from both SumOfUs and Change.org promised to join the protesters. Change.org’s Mark Shields called abusive working conditions at Foxconn factories “appalling,” adding he was shocked to learn about them.

The two consumer groups are demanding that the iPhone maker release a worker protection strategy for new product releases because these are the instances “when injuries and suicides typically spike because of the incredible pressure to meet quotas timed to releases.” They are also pressuring Apple to publish the results of Fair Labor Association’s audit (to which the company willfully agreed): “Including the NAMES of the suppliers found to have violations and WHAT those violations are, so that there is transparency around the monitoring effort.” The petition (found here) opens with an interesting paragraph:

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Foxconn issues go mainstream thanks to This American Life and The Daily Show

Earlier this week, Apple pledged to let the Fair Labor Association access its suppliers’ facilities to monitor working conditions. Even though Apple is the first technology company admitted to the FLA, the snowballing issue of harsh conditions at Far East plants will not go away with the announcement. Quite the contrary, the problem has escalated and gone mainstream, with both The Daily Show and This American Life focusing on the grim reality of earning a living at Foxconn-operated sweatshops in China.

Jon Stewart, The Daily Show host and chief satirist, remarked in an episode yesterday:

By creating a convenient ecosystem, China’s Foxconn draws in employees who earn 31 cents an hour working for 35 hours straight, thereby saving American companies money.

As you know, Foxconn (also known as Hon Hai Precision Industry) is Apple’s favorite contract manufacturer, it but also produces gadgets for Amazon, Microsoft, HP, Dell and a variety of other brands. With that said, both shows tackle larger issues that affect just about every electronics manufacturer. The last week’s episode of This American Life, the popular radio program, weighed in as well. You can listen to their free audio stream here.

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