Gou Motors On

Under different circumstances, would Foxconn’s Terry Gou be considered the second coming of Henry Ford?

This Business Week article suggests so. I’ll have to study my Henry Ford history, because while the piece breaks little new ground, it is filled with Gou quotes that are ironically delicious: “Work itself is a type of joy”; “A harsh environment is a good thing”; “Hungry people have especially clear minds”;  “An army of one thousand is easy to get, one general is tough to find.”

All this from a man worth an estimated $5.9 billion. It doesn’t sound like the man who said of the Model T, “”When I’m through, everybody will be able to afford one, and about everybody will have one.”

Also, the new Madison Avenue p.r. agency’s touch is coming through, as Business Week reports on how Guo’s family fled the China and the Mao-led Communists in the late 1940s. There also is background fodder on his personal family tragedies — his wife and son both died of cancer in the same year — and how he practices yoga and regularly takes his 85-year-old mother for Taiwanese noodles.

The article attempts to smooth over criticism of the employee suicides (calling it a classic cluster, despite evidence by the Wall Street Journal to the contrary), and completely misses the boat on how overtime works in China, finding several workers who say they welcome the extra hours, without bothering to acknowledge the reason they work OT is because they need the money.

The gold nuggets come when Gou intimates his strategy to move workers off the company rolls and onto the government’s. “I think we need to change the way things are. Businesses should be focused on business and social responsibility should be government responsibility.” Comparisons of Foxconn to Wal-Mart sound more apt than ever before.

I don’t expect a smear job. However, this piece has the fingerprints of a PR agency at its finest all over it. Read it with that in mind.

Twisted Realities

The latest failed attempt to write off the spate of suicides at Foxconn comes courtesy of the Global Supply Chain Council.

First, consider the source. The GSSC is China based, and because of the relationship (read: censorship) of that nation’s government and domestic businesses, it calls into question the basic perspective any organization will have when it comes to critically examining the local landscape.

Second, by putting “crisis” in quotes, it seeks to diminish what reasonable people consider appalling: a host of suicides across multiple manufacturing campuses. Further, it calls the discussions of Foxconn and Apple “headline hype,” akin to the military phrase for civilian deaths, “collateral damage.” These are human lives at stake. If there is something more precious, I don’t know what it is.

Then there are minor factual liberties, such as the suggestion that a February 2010 CSR investigation into child labor practices was initiated by Apple, when indeed it was spurred by widely disseminated media reporting.

And then there’s this monstrous statement:

In any population of 300,000 young people in urban China, one should statistically expect at least as many suicides per year as seen at Foxconn recently. Factory workers are overwhelmingly younger than 25, and the suicide rate among Chinese youth (similar to youth everywhere) is higher than the overall average. Many U.S. universities would be ecstatic if their suicide rates fell to levels as low as those at Foxconn China.

Wrong, wrong, wrong. As we’ve noted before, the proper context for the suicides at Foxconn is not how they stack up against China (or US schools, for that matter) at large, but rather against other large industrial manufacturing operations within China.

To understand whether working at Foxconn decreases the suicide rate, as the GSSC argues, the suicide rates at operations like ECS must also be baselined. And if people are jumping off tall buildings at Honda in Shenzhen, I haven’t read about it.

What has taken place over the past year at Foxconn is nothing short of an unmitigated disaster. I’m not surprised a Chinese-based organization is defending its benefactors, but that doesn’t make them right.

http://www.hopkinschildrens.org/Depression-Lack-of-Social-Support-Trigger-Suicidal-Thoughts-in-College-Students.aspx

All Screwed Up

If you work for Foxconn, don’t cheat on your wife.

That’s the message the world’s largest EMS company explicitly sent yesterday, according to several published reports.

Apparently, working for Foxconn means no cheating on spouses, gambling, prostitution, drugs or bribery (not to mention telling the company where you are during certain holidays or overseas trips).

Not that I’m condoning any of that behavior, but I can’t help but note the irony of the rules.

So it’s OK for the company to screw the employees, but not OK for employees to screw each other. Got it.

5 Predictions for the Second Half

Here’s my 5 predictions for the second half of 2010.

  1. All of 2009’s 10 largest EMS companies – Foxconn, Flextronics, Jabil, Celestica Sanmina, Cal-Comp, Elcoteq, Venture, Benchmark and Plexus – will be intact at year end, and with the exception of Elcoteq, will finish 2010 in the same order.
  2. One of the mid-tier publicly traded EMS companies will be acquired, however.
  3. Component availability issues will not ease until mid 2011.
  4. Foxconn’s many employee problems will blow over as the media tires of the story.
  5. “Computer-aided innovation” will become the big buzzword in software.

Just Who is Hon Hai?

Curious as to just who is Hon Hai, better known as Foxconn? Here is a list of its holdings in China, along with a synopsis of what the unit does:

  • Fu Ding Precision Component (Shenzhen) Co., Ltd. Manufacturing and marketing of computer components, computers
  • Champ Tech Optical (Foshan) Corporation    Optical lens
  • Hongfujin Precision Industry (Wuhan) Co., Ltd.       Manufacturing and marketing of molds and tooling
  • Foxconn Precision Component (Shenzhen) Co., Ltd.            Manufacturing and marketing of computer cases
  • HongHengSheng Electronical Technology (Huaian) Co., Ltd.          Printed circuit board products manufacturing and sales
  • Fukui Precision Component (ShenZhen) Co., Ltd.    Printed circuit board products manufacturing and sales
  • Futaijing Precision Electronics (Beijing) Co., Ltd.     Manufacturing and marketing of computer components, computers
  • System Integration Electronics (Hangzhou) Co.,Ltd.            Electronic components, network
  • Hongfujin Precision Electronics (Chongqing) Co., Ltd.        Computer chassis and metal stamping parts
  • FU-SIN Precision Component (Huaian) Ltd. Manufacturing and marketing of computer components, computers
  • Fu Jin Shun Precision Industry (Shenzhen) Co., Ltd Manufacturing and marketing of computer components, computers
  • Fuhuajie Industrial (Shenzhen) Co., Ltd.       Manufacturing and marketing of computer components, computers
  • Foxconn Precision Electronics (Lang Fang) Co., Ltd.           Manufacturing and marketing of handset and components
  • Ambit Microsystems (Zhong Shan) Corporation        Manufacturing and marketing of computer components, computers
  • Foxconn Shenyang Precision Industry Co.,Ltd.        Numeric control machine tool manufacturing
  • Honyeh Precision Component (Kunshan) Co., Ltd    Manufacturing and marketing of computer components, computers
  • Foxconn Goodfield Precision Industry (Dalian) Co., Ltd.    Manufacturing and marketing of auto part related product
  • Foxconn (Tian Jin) Technology Co., Ltd.       Manufacturing and marketing of handset component product
  • Shenzhen Fu Tai Hong Precision Industry Co., Ltd. Manufacturing and marketing of computer cases
  • Yantai Zheng Yi Precision Electronics Co., Ltd.       Manufacturing and marketing of monitoring device
  • Fulin Electronical Technology (Changshu) Co.,Ltd.  Manufacturing and marketing of computer components, computers
  • Fuyang Electronical Technology (Changshu) Co.,Ltd.          Manufacturing and marketing of computer components, computers
  • Fu Tai Kang Electronice Development (YanTai) Co.,Ltd.     Marketing of computer chassis and metal stamping parts
  • Hongfujin Precision Industry (Qinhuangdao) Co.,Ltd.         Connector related business
  • Hong Tai Precision Industrial (Hang Zhou)Co., Ltd. Router and related modules and components
  • Hong Fu Jin Precision Electronics (YanTai) Co., Ltd.           Manufacturing and marketing of computer components, computers
  • Honxun Electrical Industry (Hangzhou) Co., Ltd      Manufacturing and marketing of computer cases
  • Alibaba (China) Software Co., Ltd.   Software and technology services
  • Futaikang Precision Component (Shenzhen) Co., Ltd           Manufacturing and marketing of computer components, computers
  • Hongzhun Precision Tooling (Shenzhen) Co., Ltd.    Manufacturing and marketing of computer cases
  • Antec Auto Electric System (Kunshan) Co.   Auto electronics and auto wire harness
  • Amworld Microsystems (shanghai) Ltd.        Manufacturing and marketing of data networking products
  • Hongqunsheng Precision Electronics (Yingkou) Co., Ltd.    Printed circuit board products manufacturing and sales
  • Hongqisheng Precision Electronics (Qinhuangdao) Co., Ltd.            Printed circuit board products manufacturing and sales
  • Amlink(Shanghai)Ltd.     Manufacturing and marketing of computer components, computers
  • Foxconn (Nanjing) Communications Co.,Ltd.           Manufacturing and marketing of handset and components
  • Kangzhun Precision Tooling (Kunshan)Co., Ltd.      Manufacturing and marketing of computer components, computers
  • Fuyu Electronical Technology (Huaian) Co., Ltd.     Manufacturing and marketing of computer components, computers
  • Fu Meng Electronical Technology (Huaian) C.., Ltd.            Manufacturing and marketing of connector and cable products
  • Fuzhun Precision Tooling (Huaian) Co., Ltd. Manufacturing and marketing of computer components, computers
  • CJ Electric Systems Co., Ltd. Auto electronics and auto wire harness
  • Dong Guan Hong Song Precision Component Co., Ltd.       Manufacturing and marketing of computer components, computers
  • Fu Xiang Precision Industrial (Kunshan)Co., Ltd.     Manufacturing and marketing of computer components, computers
  • Foxconn Precision Electrons (Yantai) Co., Ltd.         Manufacturing and marketing of computer components, computers
  • Alibaba (China) Technology Co., Ltd.           Software and technology services
  • Foxconn (Nanjing) Software Co., Ltd.          Computer Software, hardware and other digital product
  • Alibaba (Shanghai) Technology Co., Ltd.      Software and technology services
  • Foxconn Precision Component (Beijing) Co., Ltd.    Manufacturing of telecommunication cases
  • Fujin Precision Industry (Shenzhen) Co., Ltd.           Manufacturing of telecommunication cases
  • Dong Guan Eson Precision Tooling Co., Ltd.            Manufacturing and marketing of telecommunication cases
  • Kunshan Eson Precision Engineering Co.,Ltd.          Manufacturing and marketing of electronic components
  • Wuxi XinGuan Metal Science & Technology Co.,Ltd.          Manufacturing and marketing of plastic mould
  • Kunshan Eson Technology Inc.          Manufacturing and marketing of computer components, computer
  • Hongfuqiang Precision Electronics (Yingkou) Co.,Ltd.        Manufacturing and marketing of computer components, computers
  • Fuding Electronical Technology (Jiashan) Co.,Ltd    Manufacturing and marketing of computer components, computers
  • Futaije Science & Technology Development(Shenzhen) Co., Ltd.    Manufacturing and design of computer components
  • Fuhon Precision Component (Shenzhen) Co., Ltd.    Manufacturing and design of computer components
  • Beijing Sinya Online Information Technology Co., Ltd.       Software and technology services
  • MediaMarkt (Shanghai) Commercial & Trading Company Limited  3C
  • Ambit Microsystems (Shanghai) Ltd. Manufacturing and marketing of computer components, computers
  • Hong Fu Tai Tooling (Yan Tai) Co., Ltd.       Components of automatic data process equipment
  • Yantai Jiray Electronic Technology Co., Ltd.            Manufacturing and marketing of monitoring device
  • Competition Media Technology (Shenzhen) Co., Ltd.          Pick up head
  • Foxconn Electronic Industrial Development (Kunshan) Co., Ltd.    Manufacturing and marketing of computers
  • Foxconn (Tian Jin)Precision Industry Co., Ltd.         Manufacturing and marketing of computer components, computers
  • Premier Image Technology (China) Limited  Camera Production
  • Foxconn Precision Electronics (Tai Yuan) Co., Ltd.  Manufacturing and marketing of computer components, computers
  • Foxconn Computer Connectors (Kunshan) Co., Ltd.            Manufacturing of connectors
  • GDS Software (Shenzhen) Co., Ltd. Computer Software, hardware and other digital product
  • Futaihua Industry (Shenzhen) Co., Ltd.         Manufacturing and marketing of computer components, computers
  • Liuzhou Antec Fangsheng Electric System Co., Ltd.            Auto Electronics and Auto Wire harness
  • FuHonYang Precision Industrial (Shenzhen) Co., Ltd.         Manufacturing and marketing of computer components, computers
  • HonFuJin Precision Industry (HuiZhou) Co., Ltd.    Manufacturing and marketing of computer
  • Fugion Material Technology (Shenzhen) Limited      Managing, Developing and manufacturing advanced
  • Hongzhun Precision Tooling (Kunshan) Co ., Ltd     Manufacturing and marketing of computer components, computers
  • Foxconn (Qin Huang Dao) Limited   backlight and antenna components
  • HongHuaSheng Precision Electronics (YanTai) Co., Ltd.     Printed circuit board products manufacturing and sales
  • Hong Fujin Precision Industrial (Shenzhen) Co., Ltd.           Manufacturing and marketing of computer components, computers
  • Guangzhou OED Technologies Co., Ltd.      Manufacturing and marketing of flexible displays

And outside of China:

  • Ambit International Ltd. British Virgin Islands
  • Foxconn (Far East) Ltd.  Cayman Islands
  • Foxconn Holding Ltd. British Virgin Islands
  • Foxconn SA B.V. Netherlands
  • Image & Vision Investment Corp. British Virgin Islands
  • Margini Holdings Limited British Virgin Islands
  • ?????(??)???? Hong Kong

No wonder it’s so hard to know just what the world’s largest EMS company is up to.

Jabil’s Turn in the Hot Seat

You can forgive — if only slightly — Terry Gou if he is smiling today.

One of the chairman of Foxconn’s main competitors, Jabil, stands accused today of creating and maintaining a what can best be described as a cruel environment for its 6,000-some workers in Guangzhou.

While no suicides have been reported — unlike the dozen at Foxconn’s Shenzhen plant this year alone — the accusations, by the very official-sounding National Labor Committee, a US-based NGO, are damning.

In a less-than-stellar initial response, Jabil took issue with the report’s summary, saying , “A quick look over this lengthy summary, written by a ‘respected Chinese worker rights activist and scholar, who must remain anonymous,’ paints a very accusatory but not very accurate picture.” Jabil’s response is too cute by half: the full report was authored by NLC director Charles Kernaghan, based on undercover investigations in China. Only the  three-paragraph preface, per the report, is credited to the anonymous Chinese scholar.

Regardless of whether the charges are warranted, Jabil will certainly have to answer for itself. For the workers’ sake, let’s hope they are exaggerated. But if they aren’t, Jabil faces the same disdain the world holds for the likes of Terry Guo — and deservedly so.

Foxconn, China Tied For Good (or Bad)

The pundits are out and speculating that, in the wake of a dozen worker suicides, higher wages and reams of bad press, Foxconn might relocate from China.

AppleInsider thinks Foxconn might move production back to Taiwan. John Dvorak suggests a fed-up Terry Gou might either replace workers with robots or leave altogether. Others pose similar notions.

Two fundamental problems exist with this line of reasoning (three, if you factor in that a scaled-up lights-out electronics manufacturing operation has never existed).

1. No other country, save for India, offers the population China does. Foxconn’s model is built on having access to hundreds of thousands of workers in company towns. Where else in the world is that possible? What other government would even allow it? Taiwan, for example, has neither the space, the population nor the wage rates necessary to pull this off, even if it wanted to.
2. Foxconn has established complete supply chains in or near its campuses. It’s one thing to move a factory. EMS companies do this all the time, and (with some notable exceptions) have actually become fairly good at it. But relocating an entire supply chain takes time and commitments. Foxconn may be the largest EMS player in China, but it’s not the only one, and in just a handful of cities those chains can feed the 75% or so of all electronics manufacturing in the world. Simply put, there are good reasons everyone is in China right now and not, for example, India.

For better or worse, Foxconn and China are bound together.

Not in Vain

The impact of Foxconn’s decision to raise wages at its Shenzhen campus could have longer-term repercussions.

As the New York Times reports today, workers in the region appear emboldened, with Honda plant workers staging a walkout, TPV Technology contemplating raises, and the entire contract manufacturing industry under the world media microscope.

Foxconn itself seems to be reconsidering the scope of its agenda, with a spokesman saying that the all-in-one model might not be the best going forward.

Let’s hope the death of the dozen (and counting) workers is not in vain.