From Silicon Valley To Shenzhen [Exclusive Book Excerpt]


A view of Shenzhen, CC-licensed on Wikimedia by Mauchai.
A view of Shenzhen, CC-licensed on Wikimedia by Mauchai.

Mike Daisey’s NPR monologue may have misrepresented his experience at Foxconn in China, but his main findings about working conditions there ring true.

Underage workers, health hazards and debilitating overtime are findings echoed by sociologist Dr. Boy Lüthje, who has spent the last decade researching labor conditions at China’s contract manufacturers where U.S. tech giants including Apple, Dell and HP make the electronic devices that populate our homes.

(You can read Cult of Mac’s exclusive interview with him here.)

Along with a team of researchers, he’s the author of a forthcoming academic work titled From Silicon Valley to Shenzen. The data here, Lüthje notes, is from late 2009 (before the wave of suicides hit Foxconn) but the general conditions remain largely unaltered. When it hits shelves, the book will include updated comments on Foxconn and Apple, he says.

Publisher Rowman & Littlefield granted Cult of Mac permission to publish an excerpt from Chapter 4, which similarities between electronics assembly plants in Mexico, China and Eastern Europe.

Chapter 4: Global Taylorism? Work and politics of production in low-cost locations

Electronics contract manufacturing as a system of global mass production includes far- reaching standardization of labor processes. This is a key element of this model of production and distinguishes it from other forms of modular or network-based mass production, e.g. in the automobile or garment industries. In this chapter, we will analyze the way contract manufacturers try to achieve a globally uniform labor process by selecting and shaping certain production technologies and forms of work organization. We will assess the extent these strategies are successful, and examine the way companies try to regulate and control work on the shop-floor, using specific national and regional labor policies. Our analysis is based on the assumption that global standardization of service portfolios, customer relationships, production processes and logistics enables comprehensive standardization of labor processes. The social control and regulation of the labor process, however, takes place in the context of very different labor markets, industrial relations, labor migration, and ethnic and gender discrimination (Lüthje/Schumm/Sproll 2002; see chapter 1).

We contend that the emergence of large IT contract manufacturing complexes has driven a massive expansion of neo-Taylorist forms of work, which are becoming particularly widespread in low-cost locations. Contract manufacturers are using standardized work systems in a similar fashion around the globe, making the parameters of economic and organizational efficiency widely comparable between locations in developed and developing countries. Technology conditions appear highly uniform between locations, since the same manufacturing systems and equipment are used throughout transnational production systems. Globalized neo-Taylorist work, however, needs to be established politically and socially as well. Corporations, therefore, use local and national institutions to recruit the large numbers of workers required for mass production of this kind. The production systems within greenfield locations or free trade zones therefore often differ from normal industrial relations in these countries.

In this chapter, we will first trace the organizational aspects of global labor standardization, and its key elements within corporate organizations. Following this, extensive case studies will examine the way shop-floor relationships are formed through national and regional regulations in various low-cost locations in Mexico, Malaysia, China and Eastern Europe (focused on Hungary and Poland). We will look at the forms of control in shop-floor based practices, and conflicts of interest between labor and capital. The generic forms of work organization, social control, and labor policies are analyzed as specific production regimes. As explained in chapter 1, we distinguish three basic dimensions of regimes of production, i.e. regimes of work (work organization and quality management, including occupational safety and health), regimes of employment (wages and benefits, working hours, forms of workforce recruitment and training, and the underlying segmentations by gender, ethnicity and migration status), and regimes of control (industrial relations at plant, regional and industry levels including relevant government policies). We look at company and plant based regimes of production in the broader context of the industrial relations systems, and the industrial and development policies, in different countries.

4.1 “Common processes”: the global standardization of work in electronics contract manufacturing

Work and employment practices in electronics contract manufacturing facilities around the world have some common characteristics. They result from the particular role of this industry segment within the IT-sector. Although there are often massive differences between individual plants, companies, regions and national states, the basic characteristics of the labor process are shaped by the typical “service-orientation” of production work, rarely found in comparable industries. The leading contract manufacturers use state-of-the-art technology in their assembly processes and in IT-based supply chain management. Work organization in contract manufacturing did not emerge from specific innovations in production technology, however. Rather, the basic methods and processes are generalized throughout the electronics industry. Those in contract manufacturing do not differ significantly from more traditional areas and companies.

Electronics contract manufacturing is based on five basic work processes (for a detailed analysis Lüthje/Schum/Sproll 2002: 44ff.):

Assembly of printed circuit boards: Formerly performed exclusively on manual assembly lines, this “bread-and-butter” activity of electronics manufacturing has become highly automated since the 1980s. The process technology known as Surface Mount Technology (SMT) is widely available and used in electronics factories around the world. Small electronics components, such as chips, resistors, or connectors are mounted on printed circuit boards made of epoxy laminate. This work is performed by programmable precision machines that can place several thousand or ten thousand parts per hour. The placement machines are usually combined on assembly lines with soldering ovens of varying size and configuration, according to the requirements of the product, production volume and quality management. Today most assembly processes can be automated, but manual assembly remains an integral part of the manufacturing process, particularly in low-cost locations. Manual assembly is used where an excessive amount of software programming would be required. It is used as well for mounting non-electronic or “hybrid components” such as microphones or coils, or for flexible handling of frequently changing assembly jobs. Manual assembly classically consists of relatively simple, segmented work steps with minor training requirements. However, operators usually need several years of experience to gain multiple skills, and for special soldering, quality inspection and testing procedures.

Final assembly and system configuration (also known as “box-build”): Printed circuit boards are assembled with pre-manufactured components, such as hard disk drives or displays, cables or connectors and the plastic or metal enclosures, into the final product. These production processes are usually not automated, since manual labor is still the most flexible method for handling disparate requirements for inserting pre-assembled components into enclosures, frames, and racks of different shape. This kind of work is mostly organized along assembly lines, especially for high-volume products. Group work in the form “assemblycells” is used for products of higher complexity, such as servers.

Manufacturing of raw printed circuit boards: As opposed to PCB assembly, the production of printed circuit boards themselves is a highly specialized process, with many elements and stages of high complexity. They include the design of the circuitry, the production of various layers of the circuit board, metallization, lamination, galvanization, drilling of connection channels and precision cutting at microscopic levels. Most of these tasks are skilled or semi-skilled machine jobs. In up-to-date facilities, most of the chemical processes are performed in closed systems, a precondition for minimizing the considerable health and safety hazards of this work.

Manufacturing of metal parts and enclosures: This work is mostly performed by metal stamping and punching machinery of different sizes. The human component consists of semi- skilled machine work at individual work stations with varying degrees of automation. Maintenance and tooling is performed by technicians or engineers. Work at stamping machines often includes physically demanding tasks, such as lifting heavy metal parts, noise and other health impacts. Health hazards are also involved in spray painting metal parts and enclosures.

Manufacturing of plastic parts and enclosures: Production is performed by injection molding machinery of varying size, with work places for individual operators. Preparation and maintenance of the highly complex injection tools is performed by technicians and engineers. Serious health hazards are caused by fumes, bonding substances and paint, as well as the physical requirements of lifting heavy parts and tools.

Given the high degree of standardization of the work process, it is not surprising that the technological and organizational level of factories in low-cost locations is not very different from facilities in developed industrial countries. The emergence of large-scale, vertically integrated manufacturing leads to massive expansion of very modern production processes and work organization. Standardized mass production is accompanied by an increasing array of specialized products, with small volume and prototyping operations. The considerable variety of metal, plastics and cable supplies leads to the rapid differentiation of work processes. Significant sectors of skilled industrial work emerge, such as the maintenance of injection molding tools.

Globally uniform work procedures and instructions throughout the companies have become a characteristic of contract manufacturing. These practices are also designed to ensure that factories of the same company appear uniform to the customers, encouraging the idea of global “one-stop-shopping” in manufacturing services. During the 1990s, Solectron became a pioneer in this field. The company won the prestigious Malcolm Baldridge Award for quality manufacturing from the U.S. Department of Commerce twice. It used the criteria from quality audits and certification procedures to create so-called “common processes” for work and management practices in Solectron facilities around the world. Many of those factories had been taken over from other companies with disparate management systems. Flextronics developed world-wide work standardization through a concept of material flow and quality control known as Demand Flow Technology (DFT).

Quality management in electronics contract manufacturing is typically organized through quality teams on the shop-floor, controlled by higher levels of management. Quality teams implement concepts of management and workplace discipline adapted from Japanese multinationals by Western consultants, such as the well-known Six Sigma-System. Teamwork concepts based on autonomous decision making among workers do not exist in contract manufacturing. Assembly lines in contract manufacturing do not even practice the limited forms of job rotation in the Japanese “Toyota model”, except for a few cell-based work concepts in final assembly.

Work in contract manufacturing is shaped by the service orientation of work in this type of production. It includes the following characteristics:

Relatively low wages: Particularly in emerging economies, wages and benefits are low, typically below the existing national standards for assembly work in older segments of the electronics industry. Bonuses and other performance-related pay, including profit sharing schemes, are designed to ensure “customer orientation” among workers. Low-base wages provide a strong incentive for overtime work.

Flexible employment: Frequent and often abrupt changes in production contracts and volumes require extensive employment flexibility. They often produce precarious and insecure conditions for many production workers. Temporary and contract labor has become a common form of employment in low-cost locations such as Mexico and Eastern Europe, and increasingly in the U.S. and Europe.

A high proportion of women, migrant and ethnic minority workers: In most areas of electronics assembly in industrialized and developing countries, most production workers are women. Contract manufacturers and most other new manufacturing companies in IT-industry (Lüthje 2001a) tend to hire workers who are immigrants and racial minorities, in lower wage and insecure jobs. This is the case for Latin and Asian immigrant workers in the U.S. In most low-cost locations, the employment of a workforce with these characteristics is possible because of complex systems of labor migration and ethnic, religious and cultural division and discrimination.

Despite the fact that work is highly standardized, diverse work practices exist to varying degrees in many contract manufacturing companies. This is mostly a result of the rapid expansion of the industry during the 1990s, driven by a wave of acquisitions and mergers among the emerging industry leaders (cf. chapter 2). North American contract manufacturers in particular had to integrate the work practices of the numerous factories they took over from traditional electronics manufacturers with entrenched corporate cultures (in detail: Lüthje/Schumm/Sproll 2002). The stereotype of contract manufacturing as a “McDonalds strategy in production”, often heard in industry circles, has to be viewed with caution. In fact, contract manufacturers continuously try to integrate various production “philosophies” and “cultures” in the different locations of transnational production systems. The companies have accumulated considerable expertise in the integration of different employment systems.