In the past few months, the media has had a spotlight on Apple Inc. and its supplier Foxconn International. Now, it seems, the companies have seen the light. I wrote recently ("Apple gets caught outsourcing ethics") about how seems like U.S. consumers were starting to pay attention to where and how Apple products are manufactured. Since that report the issue has continued to attract attention, including "Foxconn: An Exclusive Inside Look" by ABC News. Yesterday Ed Frauenheim, senior editor at sister magazine Workforce Management. weighed in on the impact of the news reports, in his Work in Progress Blog. "Apple and Foxconn blinked," Frauenheim wrote. "And those blinks are big in the shift away from worker abuse -- even in low-wage nations -- as a legitimate business model in the 21st century." Apple said it would invite an outside labor rights group to audit its suppliers. Foxconn said it would raise salaries 16-25 percent, and reduce overtime. These appear to be positive steps, and they should help to further shrink the gap between worker pay in China vs. North America. That gap is already a lot smaller than some readers may realize. For proof, see "How big is your year-end bonus?" by my colleague Nina Ying Sun, which explained how much money Chinese autoworkers made last year. And improvements in working conditions are just as important. What's the bottom line? Well, Apple will have to absorb those higher costs -- it's not immune to the forces of supply and demand. And even if Chinese factories become more expensive links in the supply chain, I don't expect to see Made in America iPhones or iPads anytime soon. Still, North American factories have become lean and efficient to survive the Great Recession. So, as costs in China continue to rise, North American plastics suppliers should be in a better position to compete for global business.
Apple and Foxconn see the light
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