INTRO: Over the past few decades, tech has transitioned
from being a luxury consumer product to a necessity.
From easy access to information and savings in time, energy and effort to mobility, safety,
and of course entertainment.
There's no doubt that tech has become an integral part of all of our lives today, and that it’s
pros far outweigh its cons.
But, when we’re so dependent on a set of products, it becomes very important to protect
the source.
Luckily, there’s thousands of tech companies today and dozens of competitors in each sector,
so even if some companies went under, we would have plenty of options to choose from right?
Well, even though there’s thousands of tech companies, there’s only a handful of companies
that manufacture all the tech with the most prominent one being Foxconn.
Foxconn is a Taiwanese contract manufacturer who assembles 40% of all global consumer electronics.
Basically every tech company you can think of works with Foxconn including Apple, Amazon,
Dell, Google, Intel, Microsoft, and everyone else.
But, despite their dominance, the ethics and morality of the company are much more questionable.
So, here’s how Foxconn became the modern day plantation that we can’t live without.
TERRY GOU: Taking a look back, the story of Foxconn circles
back to a man named Terry Gou who was born in Taipei County on October 18, 1950.
His parents were originally from mainland China, but they had fled to Taiwan near the
end of the Chinese Civil War.
In Taiwan, Terry’s father continued his career as a police officer while Terry worked
his way through school.
With entrepreneurs, we often see polar ends of the spectrum when it comes to education.
Either they dropped out of school to start a business or they got a PhD from MIT.
But, Terry was a middle of the road student.
He would end up attending Taipei University of Marine Technology where he got his bachelors.
It’s not clear what Terry majored in, but it doesn’t seem to be too influential to
his career as Terry ended up getting a low level job at a rubber factory following college.
For most of his early 20s, Terry found himself working many such jobs, but despite his low
wages, Terry was slowly able to build up some capital thanks to his frugality.
By the time he was 24, Terry had saved up $7500 which he would use to start Hon Hai.
Terry manufactured plastic TV parts which had quite a bit of demand, but it wasn’t
glamorous by any means.
Hon Hai was originally run out of a rented shed in Tucheng, and the staff consisted of
10 elderly workers who probably weren’t able to find jobs anywhere else due to their
age.
Despite the rough start, the TV parts were enough to make ends meet until Terry received
his first breakthrough order.
In 1980, Atari would ask Hon Hai to manufacture their console joystick, and this would motivate
Terry to travel to the US and try to acquire more western buyers.
Terry commonly arrived at company headquarters uninvited, and as you would guess, he had
security called on him many times.
Terry wasn’t phased by these experiences though, and he would continue to hustle his
way into HQs and secure a couple of contracts by the time he returned to Taiwan.
These new western contracts substantially helped Hon Hai’s financials, but this new
link with American companies was just the beginning.
FOXCONN: In 1988, Terry would purchase the company’s
first formal factory in Shenzhen China.
Since then, Terry has purchased and built dozens of factories around the world, but
this original factory is still one of his largest.
Anyway, in 1996, Terry would get a contract from Compaq to manufacture desktop chassis.
This quickly grew into contracts with HP and IBM as well, but the nail in the coffin didn’t
come till 2000 when Foxconn inked a deal with Apple.
Foxconn had already manufactured parts for Apple in the past, but this time, they were
contracted to produce the iMac itself.
This project not only changed Foxconn’s balance sheet, but it permanently changed
the quality of their manufacturing.
As we all know, Apple has high quality standards, and meeting these standards was a prerequisite
to continue working with Apple.
Meeting Apple’s quality standards wasn’t easy though because it wasn’t just a case
of sourcing high quality materials and ensuring excellent consistency.
In many cases, Foxconn had to invent new manufacturing procedures to make Apple’s slick design
aesthetic a reality.
While this was often quite challenging, this helped Foxconn make a name for themselves
in the manufacturing space.
They were no longer just another Asian manufacturer that competed based on price.
They were turning into the go to manufacturer if you wanted customizability and quality.
And this new role would really be put to the test with the launch of the iPhone.
Between 2009 and 2012, Apple went from accounting for 25% of Foxconn’s revenue to a peak of
55%.
Also, don’t forget, Apple was actually regularly changing the iPhone’s design during this
time period, so keeping up with exploding demand and constantly evolving design was
extremely challenging.
But, by the time Foxconn got to the other side of the mobile adoption curve, they were
one of the most desirable manufacturers in the world.
Foxconn was receiving orders from every tech company you can think of, and Foxconn’s
revenue exploded from $40 billion in 2009 to $140 billion by 2016.
In the meantime, Terry was using all these new found profits to acquire company’s left
and right.
But behind the scenes, the story of Foxconn was completely different.
THE TECH PLANTATION: One of the biggest reasons that most people
have never heard about Foxconn is not because they’re underrated, but because they actively
try to fly under the radar.
You see, the working conditions at Foxconn aren’t particularly pleasant, and the less
media attention they can get, the better.
First of all, most factory workers live at the factories.
On the brightside, this means that employees don’t have to spend any money on housing,
food, recreation, and other basic amenities as all of these are taken care of by Foxconn.
Foxconn has gotten a bit more stingy over the years forcing employees to pay for things
such as laundry, but for the most, if you’re a Foxconn employee, your cost of living is
extremely low.
The problem though is that unless you’re sleeping, eating, or performing other basic
day to day functions, you’re working.
This means 12 hour shifts 6 days a week if not 7 days a week.
Employees aren’t allowed to talk to each other, and they get a 10 minute bathroom break
every 2 hours.
Apple actually received a lot of backlash for these working conditions in the early
2010s, and they worked with Foxconn to reduce these hours to 60 hours per week.
But really, this doesn’t mean much.
Sure, Foxconn employees are only required to work 60 hours a week, but given that most
of them are in terrible financial situations, they’re desperate to work all the overtime
they can which leads to 12 hour shifts once again.
At least, they’re getting paid for the overtime, but again, this doesn’t really mean much
either.
As of November 2021, the average Foxconn employee was receiving a base monthly salary of a whopping
$314 before deductions.
Even if we assume that this only includes 40 hours of work per week, we’re looking
at just $1.96 per hour.
If we assume a more realistic 60 hours per week, we’re looking at $1.30 per hour.
After mandatory deductions, taxes, and pension payments, this drops to a net take home income
of a measly 98 cents per hour.
But terrible working conditions and pay are just scratching the surface.
THE ETHICAL BORDER: Despite basically operating a tech plantation,
Foxconn is not breaking any laws.
They follow all the minimum wage and worker requirements laid out by China and Taiwan.
But, this doesn’t mean that they aren’t crossing ethical boundaries.
Aside from it being immoral to pay employees $2 per hour and letting them work till exhaustion,
the most unethical result of Foxconn’s work culture is literally death.
No asian Foxconn factory worker chooses to work there because they want to.
Usually, people apply to Foxconn because they have no choice, and this is their last means
of survival.
But unfortunately, many would rather just not live at all than continue working at Foxconn.
Starting in 2010, dozens of factory workers started jumping off the factory buildings,
and this issue actually got so common that Foxconn had to install nets on the sides of
their buildings to reduce deaths.
I don’t think I have to say anything else about Foxconn’s work culture.
Foxconn’s work environment isn’t the only toxic part of their business either.
Their business itself is literally toxic both to workers and the environment.
It’s no secret that loads of toxic materials and chemicals are used in the production of
electronics.
Between 2010 and 2014, 13 workers under the age of 20 developed leukemia.
Many have speculated that this is due to the employees coming into contact with Benzene
in the factories, but Foxconn has repeatedly denied this asserting that there is no contact
with Benzene.
Even if this is true though, given the non negligible number of leukemia cases, it seems
like Foxconn does play some role in this.
Moving onto their environmental impact, their most obvious form of pollution is of course
air pollution.
Running their factories requires a lot of energy which in turn leads to a lot of air
pollution.
Foxconn has been working on installing solar panels and transitioning to renewable energy,
but this is still in the early stages.
Switching to renewable energy wouldn’t clean Foxconn though as a large portion of their
pollution is water pollution.
Many of their factories draw water from nearby lakes and rivers to use in the manufacturing
process.
And then, they dump their polluted chemical water back into the same lakes and rivers
ruining local environments and potentially poisoning nearby residents.
So while Foxconn may not be breaking any legal boundaries, their stance on ethical boundaries
is a lot more questionable.
SUPPLY SHORTAGE: Activists have tried to fight back against
Foxconn’s ethical issues for years now, but it’s been difficult to make any real
progress.
The supply shortage, however, is causing change.
The shortage has revealed the brutal reality of relying so heavily on one company for the
world’s consumer tech.
Foxconn’s clients are pushing Foxconn to diversify outside of Asia, and they’re contracting
out more and more work to other manufacturers.
While this doesn’t directly address the ethical concerns regarding Foxconn, it does
indirectly solve many of these issues.
For example, western countries have much stricter policies when it comes to worker’s rights,
minimum wage, and pollution.
So, hopefully Foxconn’s business will become cleaner as they diversify into western countries,
but only time will tell.
As for Terry, he’s currently 71 years old and he still serves as the CEO and chairman
of Foxconn.
He currently ranks in the top 500 richest people in the world coming in at $6.15 billion.
It’s a bit ironic that he’s only worth $6 billion given that his company is the lifeblood
of many trillion dollar companies, but then again, he only pays his employees $2 per hour,
so maybe he doesn’t even deserve this in the first place.
Do you guys think Terry deserves his wealth?
Comment that down below.
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