Amazon, Dell, HP & Sony Might Not Be Happy About Apple Helping Improve Foxconn Factory Conditions

Amazon, Dell, HP & Sony Might Not Be Happy About Apple Helping Improve Foxconn Factory Conditions

The employees and customers of Apple might be pleased with the groundbreaking steps Foxconn and Cupertino have undertaken to guarantee the health, safety and mental well-being of their workers today… but Apple’s competition are probably not.

Apple’s move to help improve working conditions in its factories by putting its weight behind an independent Fair Labor Association audit of Foxconn’s facilities could indirectly raise costs (and lower margins) of products from Dell, Hewlett-Packard, Amazon, Motorola, Nokia, Sony and more.

According to Paul Martyn, vice president of Supply Strategy at BravoSolution, speaking to The Chicago Tribune, Apple’s move today could cause labor-intensive manufacturers all over Asia to spend more on wages and accept lower products.

In other words, workers at other factories might soon expect to be treated as well as at Foxconn. And that could cause lower margins across the whole tech industry.

That’s not to say that the price of iPads and iPhones are going to shoot up. Labor costs are actually a very small percentage of the overall cost of most gadgets. For example, labor costs are estimated to only make up about 5% of the cost of an iPhone.

But in the high pressure, high stakes world of tech manufacturing, every penny counts. And while Apple might be in a position to accept slightly smaller margins to ensure the well-being of its supply chain workers, more beleagured companies might not.

There’s reason to believe, though, that whatever happens, the price of your next iPhone or iPad will roughly say the same.

“Wages in China have been increasing significantly for years and that hasn’t had any effect on retail prices,” said Brad Gastwirth, co-founder of ABR Investment Strategy, an independent research firm.

Good news for everyone… except Apple’s competitors.

  • aardman

    Crazy as a fox, this Cook chap, what?

  • shannon_f

    Hmm maybe this will lead to China not having such a gigantic economic advantage over the US. It’s not hard to beat us when you treat your workers worse than the animals in your country. People need to wake up and realize that a lot of our economic problems are stemming from the fact that our product prices can’t compete with those in China where Americans make more money in an hour than the Chinese do all day. I wish Apple would open more production and manufacturing here in the states but I guess there’s that whole “not enough engineers in the whole country” thing. Is that because everyone gets a liberal arts degree? :)

    Also, I hate this new vanilla forums crap. I had to retype this whole damn paragraph just because I wasn’t logged in when I wrote it and logging in caused the paragraph to disappear. Bring back DISQUS!!!!

  • Aidan Taylor

    Apple could damage the whole of the tech industry here, company’s will be put out of business as margins are smaller and taxes are going up. All though then apples competition will be wiped out.. The det for each country will be worse.

About the author

John BrownleeJohn Brownlee is a Contributing Editor. He has also written for Wired, Playboy, Boing Boing, Popular Mechanics, VentureBeat, and Gizmodo. He lives in Boston with his wife and two parakeets. You can follow him here on Twitter.

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