Foxconn trumps Apple to sit pretty on Fortune 500 Contract manufacturer Foxconn managed to steal a march on its illustrious partner Apple this week after it was ranked several places higher than the fruity toy maker in the latest Fortune Global 500 rankings, with a whopping $117.5bn (£75.7bn) in revenues. The Taiwanese giant’s parent company Hon Hai Precision Industry was …
It should come as no surprise that a company that actually produces something would get traction on the list. The 'West' has forgotten how to make things and seem hell bent on a 'knowledge economy'. The blood, sweat & tears that goes into making anything seems too high a price to pay for the pansies that make up our workforce today. If people don't want to do then the only people who make money are companies who mine natural resources & manufacturers of finished goods.
Its not that American workers are afraid of hard work, its about the fact that Apple and most other companies can have their manufacturing done in third world nations where workers are paid slave labor wages. In a previous Reg article, there is only $8.00 direct labor in producing an Iphone. This is true for most companies in the US., With free trade agreements to third world countries, American workers do not have ay weapons to fight this
When we hear that Foxconn employees are treated poorly, poor conditions, poor wages etc. then a minority of people point the finger at Apple and say 'it's all your fault!' so just stop and think for a moment.
Foxconn make a lot of money, they are the ones that should be raising standards and better working conditions, because it now appears they have the money to do it.
Foxconn couldn't have made a macbook or ipad on their own and even now they don't make all the bits. They assemble the things.
But the reason they're high on the list is because they don't just work for apple despite the reg's biased reporting.
They make bits for nearly everyone. From xbox 360s to phones to PCs. Why wouldn't they be high up? The only surprising thing is their minimal profits for having fingers in just about everyone's pies.
Err, yes, this sounds very sensible indeed.
"The 'West' has forgotten how to make things and seem hell bent on a 'knowledge economy'. "
Those people in the knowledge economy, doing the programming, design and retailing, seem to be making $40 to $200k a year and producing fat great profits while doing so.
Those actually making things are on $6k a year and produce very little profit.
Which end of that deal do you want your economy to be on?
There is evidence that in several industries that due to the huge increase in wages in China in recent years that there are no longer the huge differencies in costs between China and the West.
One key selling point of using more local manufacturing is the ability to quickly change what 'widgets' they are making in response to local demand. There is no longer the delay of 3-4 weeks as you ship the goods half way around the world even if you could get your chinese/indian/etc factory to switch from widget A to making widget 'Q' in a few days.
The downside is that the long term costs of workers in the West are higher than in Asia. Pensions and in some places Healhcare add to the hourly rate paid to workers when evaluating their total cost.
All correct points there, although where China has overbuilt capacity and infrastructure, and demand has declined, the country is now exporting deflation to the rest of the world. Arguably wage arbitrage has always been an export of jobs from the buyer to import deflated goods, but we're now seeing Chinese manufacturing having to sell at below cost to survive (for how long I can't say). A quick web search should turn up the details, but I seem to recall that the five largest Chinese shipyards have had a single order between them in the first six months of 2012, and the low margins being quoted for Hon Hai don't look very sustainable to me.
There's also the problem that having completely trashed our domestic manufacturing we can't easily rebuild the skills quickly. So toolmaking or production engineering skills are in short supply, and workers able and willing to do high quality blue collar work are few and far between.
The two things that would make a financial difference would be free floating currencies in Asia, and Western governments giving up their pernicious payroll taxes. That'd see the renminbi rise by about 30% against the dollar, and reduce the costs of employing staff in consuming countries by between 7 and 20%. China's in no hurry to lose the export focused jobs, so the first of these won't happen anytime soon, and you can be sure that your democratic representatives are in no hurry to give up tax income that they can then spend on ***t of their choosing.
Foxconns dollars with go further than Apple's though, given the low cost base of China. It would not surprise me if it's "effective" profits are 2-3x more than the dollar figure.
This is assuming that money stays or is spent in China. If it needed to important anything from abroad - say strong CHF'ed Switzerland - then it's more of an issue. You'll only get 12 toblerones from your £1.1bn these days. 13 if you go for the horrible dark chocolate ones.
What people forget is that these low wages are low by western standards but actually higher than a lot of people on our world live on. If you want to get off your high horse try sending some money to Africa etc. where they would probably be glad to earn half a Foxconn wage.
Also consider what would happen to all these workers if Apple (and others) were to pull all production - these people travel long distances to queue for jobs with Foxconn factories. Instead they would either have no jobs or be working in the fields for much less.
So many people b*tch at Apple over this - it's all manufacturers - but would you be prepared to pay more for your goods as a result and if you really want to do something about it - how much do you give directly to charity as a percentage of your wage 5%, 2%, 1% or less? I'll do the maths for you if you earn £30k a year - 1% is £300 - so do you give £25 a month?
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