Foxconn: An Outsourcer Takes to Outsourcing — Worker Dorms

If we were the Academy and we could grant an Oscar for the greatest "ironic production" of the year, the drama of Foxconn would be sure to win our favor with this headline from the NYT. Perhaps the story itself is not all that surprising. Foxconn, the giant contract manufacturer responsible for all those Apple products (and many others) that Westerners are all addicted to, has taken to outsourcing part of its own operations -- the dorms that workers live in. After a chaotic few months of blocking and roughing up journalists who tried to enter its facilities plus worker protests, suicides and a responding hike in laborer wages, Foxconn is taking another step at righting its apparent labor wrongs by outsourcing its 153 dormitories, which contain roughly half the firm's 420,000 workers in Shenzhen.

According to the story, "the company said that it was essentially outsourcing its living arrangements to two Chinese real estate companies." This is actually a very significant move for a Chinese companies, as it marks "the first time one of China's biggest exporters has pledged to abandon what most manufacturers say is an integral part of China's factory model -- a system that depends on housing migrant workers near factories that specialize in low-cost, around-the-clock assembly line operations."

In the US, when we think of measuring outsourcing success (or failure), we often turn to metrics such as on-time performance, quality, SLAs, etc. However, one of the metrics that we would not be surprised if Foxconn uses to measure performance hits closer to a sad home: suicide. Accordingly, "the suicide rate at Foxconn is not above the national average of 14 suicides per 100,000 people this year, but the 10 deaths were a sharp increase from each of the last few years, when there were only one or two suicides." Whether the newly outsourced dormitories amount to a material change in Foxconn policy toward workers or become simply an arms-length suicide and worker condition distancing exercise remains to be seen.

Regardless, the news should not prove positive for overworked supplier audit and development professionals who will have to add yet another tier of suppliers to look at in terms of gauging labor and operating conditions in China facilities.

Jason Busch

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