At first glance, Quanta Computer, Inc., (Shanghai Quanta) which employs over 47,000 employees at a single factory, may seem like any other streamlined high tech manufacturing operation in the region, albeit at a larger scale than almost any other. The organization is the largest notebook computer ODM in China (or the world) and produces systems for IT vendors such as Dell, Lenovo, HP, Toshiba, Samsung and Sony. Like other plants, workers really don't have much of a say regarding how much they work during peak times. From November to March (the most frequent overtime period), worker requests to work only standard hours are rarely granted. Even though many of Quanta's clients require that workers do not work excessive overtime, the company will grant days off when they know they're being audited on site.
Consider what happened on 21 December 2010. On this day, a client showed up at the facility, but the company had some inside or advanced notice, as "managers asked all workers to take that day off." Here's what happened when the client's supplier audit team showed up: "When the client auditors first arrived, they checked the attendance and hourly work sheets and workers' monthly wages. Workers have to work at least 70-80 hours overtime every month and sometimes 150-160 hours of overtime every month. Therefore, whenever the client comes to audit, QSMC issues a day of vacation for the workers."
HP and Dell used to be among the more frequent auditors of Quanta Shanghai. "When they arrive, line supervisors tell workers not to talk, clean the machines, work hard and not to speak with HP and Dell representatives." This assumes, of course, no one is injured that day as "work-related injuries often occur" at the facility such as "workers' hands [being] burned while soldering iron, sleeves tangled with screwdrivers and fingers [being] crushed," etc. Despite the risks, workers tend to show up to work on time given the consequences of being late. To wit, a worker that is more than one minute late to their shift is faced with loss of a loss of half-days wage and a fine of $3 US.
HP and Dell should get credit for taking a proactive supplier auditing stance. But when a supplier is so skilled at avoiding detection of practices -- except when undercover activities such as the research that led to this report occur -- perhaps they should insist on having a permanent supplier development office at the facility. After all, to improve the practices that Quanta is accused of violating, what's needed is a quantum leap forward in supplier management.
Stay tuned as we turn our analysis to another Chinese facility supplying large, Western branded companies.