Steve Klingaman

Steve Klingaman
Location
Minneapolis, Minnesota,
Birthday
January 01
Title
Consultant/Writer
Bio
Steve Klingaman is a nonprofit development consultant and nonfiction writer specializing in personal finance and public policy. His music reviews can be found at minor7th.com.

Editor’s Pick
FEBRUARY 23, 2012 8:59AM

Foxconn Raises Wages. Why?

Rate: 15 Flag

foxconn-workers

cultofmac.com 

Chinese manufacturing behemoth Foxconn Technology announced Sunday that it is raising wages up to 25 percent for its 1.2 million-member workforce.  The world’s largest manufacturing company also promised to reduce overtime for workers who are routinely compelled to work 14-hour days seven days a week.  Why?  The apparent answer is fourfold:  workforce suicides followed by unrest at Foxconn, international agitation, a stellar New York Times exposé, and the unstoppable magnification of the web.

            Of all those factors, I would rate the unstoppable magnification of the web as the primary factor.  The articles in the Times, by David Barboza, Charles Duhigg, and Keith Bradsher, beginning with “How the U.S. Lost Out on iPhone Work,” which appeared on January 21, and followed by  “In China, Human Costs Are Built Into an iPad,” which appeared on January 26, sparked massive U.S. scrutiny of the working conditions behind America’s favorite toys.  But the traction gained by the repetition of the themes and facts of the articles in every nook and cranny on the wired world so crucial to Apple is what really made the difference. 

    The Times series should be a contender for a Pulitzer Prize for its impact here and abroad.  The coverage it inspired, from pipsqueak bloggers, to the L.A. Times series, and ABC’s Nightline, seems to have done the trick.  Apple announced that a nonprofit organization would monitor working conditions at Foxconn.  Foxconn announced that wage boosts in the range of 16 to 25 percent would bring worker wages to the $400 a month mark.

            Regardless of how this compares to wages in the West it’s a big deal in China.  It appears to be enough to spark a paradigm shift at Foxconn.  That shift, crazy to say, seems to be a move away from human capital and toward robotics and automation.  Yes, eschewing the sweet spot of wage growth and job security enjoyed by American factory workers in the 1950s and 1960s thanks to unions, Foxconn seems poised to go from medieval exploitation directly to worker redundancy.  And I suppose this should be a lesson to all that Chinese business has become an ardent student of unreconstructed capitalism and, furthermore, that it can change course in a heartbeat.

            According to an article published in the Times on Monday, reported by Barboza from China, entitled, “Pressure, Chinese and Foreign, Drives Changes at Foxconn,” “Foxconn has announced plans to invest in millions of robots and automate aspects of production.”

            What effects this initiative will have on the numbers of workers employed at Foxconn plants remains to be seen.  But it does portend that a new wave of automation may prevent any appreciable numbers of manufacturing jobs to be repatriated to the U.S.  Certainly, some manufacturing technician positions will return, but the idea that large numbers of line workers will ever onshore remains highly unlikely, for this industry at least.

            At any rate, kudos to Apple, for undoubtedly putting pressure on Foxconn to clean up its act.  Yes, it’s late, and it's too little, but it is change.  Apple has far too much to lose if an Arab Spring ever comes to public perceptions of worker exploitation in China.  And yes, the events of the last few weeks do represent the first sprigs of a movement that could lead to the perception that Apple’s cash cows are dirty devices.

            In a more perfect world, Apple would not be able to outrun a significant wave of rising awareness.  But despite Apple’s close controls over its retail brand, the purchasing public cannot resist driving prices to the iBottom using the Amazon button, or whatever mechanism is available to thwart reasonable wage-price relationships in the mean old macro world.  It certainly isn’t news that our consumer instincts overwhelm our instincts for job preservation, but that isn’t going to change anytime soon.  Nor will the sordid realities of Chinese manufacturing.

            However, for a perhaps brief but shining moment, worldwide media pressure has opened a crack in the façade of China, Inc.  Even if their workers hold jobs that used to be "ours,” it is a good thing to see workers anywhere make a major stride towards a living wage, and for the economic system that virtually enslaved them to be corrected ever so slightly in a manner that will indirectly benefit workers around the globe, including presumably, here.

* * * 

 P.S.  For a wicked parody submitted by a reader, try this link, from whoacomedy.com.

 

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Of course, one thing that rarely gets discussed is that China is a Communist country. That allows the government to fund these businesses. In the US, a move to re-tool factories with robots would cost companies billions; there, the government will probably largely fund the replacing of millions of jobs, however crummy.
Well, at the very least -- and it is the least -- and at long, long last -- one of the promises of globalization would seem to becoming to pass. That said, robotizing does not bode well for workers there or here. One wonders how the Chinese expect to deal with displaced workers -- do they expect to return them to the farms? No, the future does not look so bright for workers, especially those without connections or specific skills, skills which will quickly become outdated.

If you'll excuse the shameless self-promotion, here's how I put it in my show The Life and Hard Times of the Blues:

"Industrialization came with the promise of a century of peace and prosperity for all. But instead of peace, the Machine Age gave us the horrors of mechanized warfare. Instead of prosperity for all, it gave obscene wealth to a few, whose rank speculation led to the Great Depression. Machines would free men from monotonous, laborious, dangerous work, but at a price. From now on, men would be slaves to machines -- when they weren't actually replaced by machines."
Globalization is the ultimate slippery slope. It is the ultimate negative equalizer. It makes a one-world workforce out of humanity itself.

So...when this all dies down - and it will - Apple will go to Vietnam for better pricing. And after Vietnam, they will go to some even crappier economy (Bangladesh?) and have their iPads assembled.
And so on, until every one of the 5 billion workers are busting their chops to just live.

The truth of the matter is that the multinationals have figured out that there's a huge, worldwide, labor *oversupply* and taking down the barriers allows them to take advantage of it.

See, in this country 80 years ago, labor unions solved the problem, (along with FDR) by creating the closed shop.

Well, we all know how that play ended. People who work with their hands are valueless. Whether they're in China or Hanoi or St. Louis.
At least we now know that America's objection to the slavery of communism was it wasn't the slavery of capitalism.

In the long run, impoverishing labor will leave too few customers to buy the products. It works the same everywhere as it's working here. Ultimately, it's one global, dysfunctional, stripping of wealth from the many to the few. At that point, the difference between communism and capitalism is the spelling.
@ PJO
My brother introduced me to one of my favorite quotes, tho I know not the source:

"Communism is the exploitation of man by man, while capitalism is the opposite."
Baltimore, just to clarify, I, too, attribute worker unrest at Foxconn to internal communications and interactions, even if these are aided by smartphone communications. Of late, perhaps some job actions have been fueled by knowledge of external support. At any rate, worker unrest exists. Inthesetimes.com reported on 1/13:

"After Foxconn Technology Group announced it was going to close an assembly line for Microsoft’s Xbox 360 video games and transfer 600 workers to a new production line, this week about 150 workers climbed to the top of a factory’s six-story dormitory roof—and some threatened to jump. They remained there for two days."

External, worldwide pressure on Foxconn, by contrast, has been accelerated by web-based accounts as well as old-school journalism.
Thanks for the update Steve. As I had said in response to a post Toritto had done on the topic (If Your Phone Was Made by Slaves):

"To quote Bruce Hornsby, "That's just the way it is. Some things will never change." Until they do, that is. What does it take? Something to rip away the complacency, The Triangle Shirtwaist Fire, one example. Upton Sinclair, laying waste to the appetite of America with the appalling details of "The Jungle". Steinbeck, turning "Oakies" into humans, Tom Joad into everyman. Prior to that, it's easy to turn a blind eye and worse yet, take easy advantage of corruption, befoulment and injustice."

As you point out, while the workers magnified their internal struggle and leveraged threats of sacrifice, it was through the web, that so many who don't read The Times, watch news documentaries or otherwise are informed, became aware of the issue and the mechanisms of social disapproval began to rattle Apple's bank vault.

It may not matter when only the workers who are considered expendable protest, but when the market begins to be disturbed by such knowledge, the combination will cause change. It wouldn't take too many people deciding to not purchase a product who otherwise would have, to completely obviate all the profits gained by such despicable practices.
R.
I tend to agree with the very article you cite in that, “When people read about bad Chinese factories in the paper, they might have a moment of outrage. But then they go to Amazon and are as ruthless as ever about paying the lowest prices.”

Frankly, most consumers care about the slave labor that gives them cheap goods as much as many abolitionists cared about the blood, sweat and tears that were the source of their cotton finery or the tobacco they smoked.

“Kudos to Apple, for undoubtedly putting pressure on Foxconn to clean up its act”? With all due respect, please. Whatever Apple et. al. do is strictly public relations spin. “Think different”? They think the same. Remember Nike? Does anyone really think those working conditions have improved much since we learned that the African-American sports-hero descendants of slaves were exposed as profiting off virtual slave labor? Toss the peasants a bit of chump change, tighten security, plug up the leaks, and when the brouhaha is over it will be nefarious business in secret as usual. The Madison Avenue propagandists move on to stamp-put the next brush fire. All is forgotten - until the next worker manages a public way around the suicide nets.

Come on. This is Kabiki Theater. “Apple announced that a nonprofit organization would monitor working conditions at Foxconn”? So feel good about buying Apple? And no doubt Donald Trump has some under-water ocean-front property in Arizona he’d like to sell us too. The Apple rots from within its core.

How easy it is for Madison Avenue to manufacture consent and nullify the muckrakers at the NYT by issuing Upton Sinclair's infamous ‘Brass Checks.’ For the wizards of Madison Avenue pulling the wool over our eyes is as easy as taking candy from a baby. We can all rest assured there are plenty of sycophant ‘journalists’ one step away from the unemployment lines who are willing to shill for Apple et. al. and Madison Avenue.

Come on. If Apple was serious about workers’ rights this story would never have to be told in the first place. Like Nike they got caught denying what they had a duty to know. “Think different”? No, this corporation thinks the same. If they were really serious
they’d be demanding unfettered, unannounced, random inspections with no notice just the way the INS and OSHA bust American employers. Transparency? This is no search for the truth. Last night’s Nightline travesty (with an admitted conflict-of-interest) was as depressing as hell no matter how well they dared to white-washed it. One can only imagine what the unvarnished truth really is. It was in insult to anyone’s intelligence to even think workers would speak candidly even if they were assured anonymity. Can anyone *actually* believe the workers could trust so-called anonymous input was a real projection? I hope few Americans are that stupid. Packed like sardines into company dorms, minimum 12 hour work days, and further extorted by the company store this is Pullman all over again. “This is how capitalism works.”

I had a very dear friend and former client who was an investment banker selected by Nixon’s State Department be part of the team to travel to China to open it to American manufacturers desperate to escape labor unions and environmental laws and, of course, get tax benefits to boot. The investment bankers were all foaming at the mouth. Imagine it. Talk about “Big Government”! What a perfect solution to pesky labor unions, environmental laws, OSHA, and all those government regulations. What capitalists got and needed was a slave-wage labor force that Big Government could keep under its boot and prevented from organizing. Crush labor, pollute the environment, while keeping political control beyond the reach of the People and, oh yes, keep as much of profits off-shore as they can. I’ll not go on. It was an investment bankers wet dream. Turning a shill’s work back at him “this is the way capitalism [really] works.” Kudos to the NYT but when the shills who call themselves journalists are done it will all blow away.

Wonderful, thanks to taxpayer bail outs GM is back on top. Why? How? The lion’s share of GM profits(assured by taxpayer dollars) were made by selling cars to *Chinese* that were made in China by workers paid slave wages and who have no right to organize. Nice. "This is the way capitalism [really] works."

Suffice to say that Lenin’s proverbial rope by which the capitalists will hang themselves will be infamously stamped “Made in Red China” and, no doubt, sold to Americans on credit extended by Shylock Chin Yang.
So. The Chinese wage slaves get replaced by robots.

I grew up in a timber town in Oregon. While people argued left and right that the death of the timber industry was due to environmental regulations, the inability to cut every last tree, and the spotted owl, the real culprit was automation. A modern sawmill doesn't need 300 or 400 people (or 3,000 or 4,000 people) to run it. The saws are computerized, there are robots, machines, and tools to do what people used to.

So my town shrunk, and has slowly been replaced by tourism. Not anything that anyone can build a life on. Hand-to-mouth restaurant and hotel jobs.

What will we all do to keep from starving? Taking in each other's washing won't get us there.
You and Tom Cordle seem to lament automation and mechanized production. Yet automation has improved the wealth of the world; we are less poor because of it. Our standards of living are greater, our leisure time expanded, because of automation.

What, do you think we should all be out in the fields in the fall picking corn by hand, for 18 hours a day, rather than one guy with a huge combine? Automation frees up labor, wealth, capital and resources for other areas that are next in line on the "wish list" of society. Technology replacing human labor is not a bad thing.

As the great economist Murray Rothbard stated:

"Who was displaced by the steam shovel? How many millions of ditch diggers are now out of work because of it? Where are the billions of unemployed that are supposed to have been caused by the replacement of the human pack animal by the wagon and the truck? Where are they, if the doctrine of technological unemployment is correct? Where are the millions of unemployed resulting from the Industrial Revolution—when the truth is the other way around, that thousands of beggars had nothing to do until the Industrial Revolution rescued them!"
Francoise, I expected a wide variety of reactions to this story and my take on it, and yours doesn't surprise me. It's about what I would expect from Pulitzer Prize winning journalist Chris Hedges, so I don't say this to oppose your reaction. I am just more from the school of realpolitick, and if I see a baby-step in the right direction, I'll call it such, as I did with the phrase, "it’s late, and it's too little...", which appears in the line following "kudos." So we're talking about a highly qualified kudos here, ironic even.

It is important to point out that Foxconn manufactures for Amazon, Sony, IBM, Dell, Hewlett-Packard, Asus, Samsung, Panasonic, Motorola, Nintendo, Microsoft, Vizio, Nokia and Intel. So where does that leave us? Are we to secede from the Republic of Technology? Most of the crap you buy of whatever description comes from tainted derivation in terms of how workers are treated. I know there is funny business built into the coming oversight at Foxconn. And Apple deserves to be the big target here, by virtue of its size, cachet, market share and hubristic world view. I get it. As to the whitewashing you find in the Nightline version of reality--and I am not arguing with you about that--I just don't weight it as you do, I recommend you check out monologuist Mike Daisey.

From Mashable: "In early January, the radio program This American Life aired an episode titled “Mr. Daisey and the Apple Factory.” The episode took a closer look at the issue, based on an excerpt from Daisey’s one-man show, The Agony and the Ecstasy of Steve Jobs. In the show, Daisey, a lifelong Apple fan, describes traveling to China to see the conditions of the Foxconn factory for himself."

I should have credited Daisy in my piece, but 700 words is short.

Thanks for reading the piece.
Larry, I'm not opposed to automation. I write a lot about manufacturing, automation and technology with the point of view of trying to utilize and develop all to points of real use for real people. As I see it, it's a balance thing. With 7 billion people on the planet we have to have a few jobs around as long is it incumbent upon us to earn a living to feed ourselves. Otherwise the sitting back and watching the gears fly isn't such a picnic. Automation causes dislocation and structural unemployment as a natural course of progression. But unless you have an economy that includes a place for real people, you get Palestine, Rawanda, Slovenia, Cambodia, Somalia, and so on.
"It is important to point out that Foxconn manufactures for Amazon, Sony, IBM, Dell, Hewlett-Packard, Asus, Samsung, Panasonic, Motorola, Nintendo, Microsoft, Vizio, Nokia and Intel. So where does that leave us?"

You almost make my point for me for that was addressed in my own longer post on the same subject and from which my comment was taken.
Well at least a robot won't have to sign a no suicide clause in their work contract. When I read that was one of the fixes they did after the summer of suicides I thought that's like asking a slave to sign a I won't run away contract. Loved the update China is getting a lot of competition from other Asian countries that a really courting foreign manufacturers with lower wages China may find out about outsourcing far sooner than they expected.
Sorry that should be are courting and I was happy to rate this post.
Pretty good post for a pipsqueak blogger Steve. I wonder if and how much the Chinese government leaned on them to make this move.
Expect the consumer to pay for this increase.
Bit by the mouth it feeds. Now if they can only keep education away from the robots they should be uber alles for at least another generation.
@Larry
Steve answered you charge as I would. My point is that industrialization created other problems -- dehumanization, dislocation, compartmentalization, etc, etc, etc. Read Robert Bly and plenty of others for details of the human cost of industrialization.

Having done my share of ditch-digging, I'm not fool enough to pine for a return to those "golden days". Unfortunately for all of us, we are too often led by politicians and informed by pundits who do imagine -- or at least claim -- to want to lead us back to some "golden age" that never existed. They espouse nonsense about rugged individualism and competition being the cure for every socioeconomic ill, when history clearly says otherwise.

Men, being a physically inferior species in many ways, has long understood the necessity for cooperation. Latter-day Luddites are in denial about that, and ignorance and greed have rendered them blind to history and reality.
At least partially, the raises were a shell game. Workers used to be given free dorms, now they will be charged for them. Workers say the new charges wipe out most of the raise.

So much for Communism being the Worker's party.
David, thanks for the heads up. Would you mind sharing the source? I didn't see it just now in Google News.
Steve Jobs was reincarnated as a Chinese Foxcon worker.

( That's what he gets for becoming a Buddhist. )
@David Kinne

"St. Peter don't call me 'cause I can't come
I owe my soul to the company store."
Froggy...

"St. Peter don't call me 'cause I can't GO
I owe my soul to the company sto (re)."

:)
What seems to be missing in this discussion is a realistic look at the relationship of work to life. No doubt there are fascinating and useful and creative jobs that make life a joy but the kind of work that ties a person to a table assembling expensive and silly junk for the bulk of living time and inherently destroys mind and body merely in order to minimally survive is more related to torture than the way people should spend their lives. Yes, automation will deprive millions of people of the access to the power to gain basic necessities but it will free them to live sensible lives. The problem is not the loss of work, it is the loss of a function in an insane society that enriches a few and prevents the many from gaining access to the necessities to stay alive. Technology is inevitably undermining the whole economic relationship of people and production and the marketplace and temporary fixes of cheap labor are fast running out. Some sort of radically new relationship must be found to make sense of human economics. I have no simple easy answers but obviously the crunch is building very quickly and unless some incisive intelligent remedy is discovered or invented in the near future terrible things will inevitably occur.
RE: my Feb 23 comment-- "I recommend you check out monologuist Mike Daisey." He has recanted on his account of Foxconn's working conditions as presented on This American Life in January. The "truthiness" of his whole deal turned out to be Untruthy. Luckily, none of his "reportage" was relied upon in my account, which was sourced primarily from the New York Times. I did not catch the March 17 This American Life but understand it contains his explanation of what he did and why he did it.