Foxconn ripples: Higher costs for PC makers
Source: Agencies |
June 9, 2010, Wednesday
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Print Edition
Print Edition
iPhone maker Foxconn International Holdings said it will seek higher prices from its clients to help offset wage hikes at a plant in southern China that has been hit by a series of suicides.
Meeting shareholders in Hong Kong for the first time since the deaths, executives at Foxconn, owned by Taiwan's Hon Hai Precision Industry, said the company hoped to reach a consensus with customers this month.
Hon Hai, the world's biggest contract electronics maker with a client list including Apple Inc, Dell Inc and Hewlett-Packard Co, has been wrestling with the fallout from 10 suicides in the last five months at Foxconn's Shenzhen factory.
The suicides come amid growing labor unrest in southern China, in the world's top manufacturing region, where millions of migrant workers from the country's poor hinterlands churn out goods for top global companies.
At a separate shareholder meeting in Taipei, Hon Hai Chairman Terry Gou defended the company he founded in 1974 to make plastic switches for televisions, saying a report he had commissioned showed no clear link between the suicides and work issues.
"We have to carry the 12 crosses, we have no options," Gou told shareholders, referring to the 10 suicides and two other attempted suicides in the Shenzhen plant.
But in a sign of changes ahead, Taiwan's richest man said the company was looking for locations in Taiwan to shift some unspecified production from the mainland to automated plants in Taiwan and wanted authorities on the mainland to manage its worker dormitories.
Analysts said already razor-thin margins at Foxconn and Hon Hai would likely suffer as they wait to pass on the cost increases. Shares in both companies continued to slide, taking losses over the past two days to more than 10 percent.
Hon Hai said the wage rises would hit profits in the fourth quarter and into next year's first quarter.
Hon Hai has announced two wage rises in the past two weeks for workers at the Shenzhen plant, where some 400,000 staff assemble iPhones and other gadgets.
Gou also told shareholders yesterday he would limit overtime at mainland plants to no more than three hours a day.
About a dozen protesters stood outside the Hong Kong shareholders' meeting, calling on Apple to act over Foxconn. Apple CEO Steve Jobs last week expressed concern over the deaths but said the plants were not sweatshops.
Holding signs reading, "Workers are not machines. They have self-esteem," and a picture of a rotten apple, protesters handed a petition to a company representative.
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