Apple Works to Remedy This Public Relations Nightmare
Apple Inc. (NASDAQ:AAPL) and its Chinese supplier, Foxconn Technology Group, have agreed to improve working conditions at Chinese factories that manufacture the blockbuster iPhones and iPads.
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Initial costs of improving facilities and conditions at the plants would be split between Foxconn and Apple, according to an announcement by Foxconn chief Terry Gou on Thursday.
The move follows up on previous steps taken by Foxconn: an increase in wages by 16 to 25 percent announced February and fresh hiring of thousands of new workers to cut overtime hours, agreed with Apple in March.
Speaking at the launch of Foxconn’s new headquarters in Shanghai, Gou said, “We’ve discovered that this (improving factory conditions) is not a cost. It is a competitive strength. I believe Apple sees this as a competitive strength along with us, and so we will split the initial costs.”
No details were available on the estimated costs of improvement, nor the ratio by which they would be split between Apple and Foxconn.
Rising costs took a toll on the first-quarter results for Hon Hai Precision Industry Co Ltd, Foxconn’s flagship unit, which turned out weaker than expected.