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Post Leadership
Posted at 09:28 AM ET, 03/30/2012

Apple’s Tim Cook faces leadership challenge on labor issues


Apple CEO Tim Cook visited the Foxconn manufacturing facility ahead of a report released Thursday by the Fair Labor Association. (AP - AP)
Apple CEO Tim Cook went to China this week to meet with vice premier Li Keqiang and tour its supplier factories in the country. He had (ahem) uncanny timing: His trip came just before the release Thursday of a new report from the Fair Labor Association, a monitor group that investigated working standards at Foxconn, one of Apple’s major suppliers. The study found at least 50 issues related to the organization’s code of conduct and Chinese labor law, namely the number of hours worked per week by Foxconn workers. The average time worked at each of the three factories in question was more than 60 hours per week during peak production periods.

The report comes amid a growing number of questions about the relationship Apple has with its suppliers. Even if an NPR story about the issue featuring monologuist Mike Daisey turned out to include fabrications, questions have been swirling around the working conditions at these suppliers for months. A New York Times story in January made waves when it raised questions about Foxconn’s working conditions; Apple has begun releasing the names of 156 of its suppliers since January.

Both Foxconn and Apple agreed with the report’s findings and said they would work to implement the Fair Labor Association’s suggestions. For Foxconn, that will mean hiring tens of thousands of new employees, and significantly raising wages while keeping working hours within acceptable norms. Such moves could ripple throughout the consumer electronics industry.

And for Apple’s Tim Cook, implementing the changes will bring a host of new challenges, too. If Foxconn follows through with the report’s recommendations, it’s hard to see how equipment costs won’t go up — and potentially trickle down to consumers. If that’s the case, Cook could face the wrath of shareholders who, no matter how well they’ve done by Apple, won’t want to see prices on the company’s products increase. Meanwhile, now that the company has said it would follow the report’s recommendations, all eyes will be on how well it follows through.

But the biggest dilemma for Cook will be navigating the fine line between how not to start pointing fingers at competitors (Foxconn reportedly makes more than 40 percent of the world’s electronics products, including those for brands like Amazon, Dell and Hewlett-Packard) without letting his company become the poster child for unwelcome labor practices in China. After all, the head of the FLA, Auret van Heerden, told The Wall Street Journal that the conditions it found at the Foxconn factories that make Apple products were "no worse than any other factory in China."

And yet, Apple is the company that has had one-man plays written about its business practices and is quickly becoming most associated with the issue. That’s the price, one has to suppose, of the company’s runaway success, and its unrivaled position of power in the consumer electronics industry. As a result, my guess is that it will take more than just following through on the FLA’s report to make this matter quiet down for Apple. Because Cook’s company leads the industry in brand reputation and breakthrough products, he will need to lead the industry on this issue as well, urging competitors to follow suit and establishing best practices with suppliers for others to emulate. 

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By  |  09:28 AM ET, 03/30/2012

Tags:  apple, tim cook, technology, leadership

 
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