[Swordmaker]

FUD Season has started. Apple will be making its new product announcements in early September so the three weeks leading up to is always FUD Season. Like clockwork China Labor Watch pumps out another hit job from this New York based organization that does not even have a presence in China. The photos in the report may look familiar which are of supposed Pegatron dorms have been recycled from supposed FoxConn dorms from a previous such report.

I like the way they compare factory wages of young people working for Pegatron against the entire averaged incomes of the population of Shanghai, the richest city in China, which would include the incomes of all the people in the upper classes.

Another little ploy they use is to compare that 44% of the US's GNP is from labor but only 11% of Apple's supply chain's costs are labor, ignoring that the supply chain essentially 100% manufacturing while the US has moved to an almost 80% service economy and only 8.8% of the US labor force only 8.8% is in manufacturing.

Their specious claims that Apple is demanding that Pegatron reduce "Costs" 5% to 10% every year and that the manufacturers, including Pegatron, have to purchase the "cases, screens, circuit boards, packaging and other materials" show that China Labor Watch does not understand at all what contract assemblers such as Pegatron and FoxConn even DO. Pegatron does not purchase ANY of those things for Apple, Apple purchases them. Pegatron is an ASSEMBLER. Screens are purchased under contract by Apple from other companies in their supply chain. Similarly, Circuit boards are purchased by Apple who has designed them and had the manufactured to their specifications, as are all of the other components, from other Apple suppliers in the supply chain. The packaging is shipped to Pegatron under 'Just in time' inventory control originally designed by Tim Cook, from another contractee.

There is zero evidence that Apple is forcing 5% to 10% cost cutting on Pegatron. Apple is a strong negotiator creating strong competition with suppliers for materials and can frequently get huge quantity discounts on materials and supplies that will be assembled in those amounts one sees in the industry press by playing one supplier against another. Apple applies pressure on Pegatron and FoxConn to MEET the needs of their workers, not cut their wages.

The Cases are indeed manufactured at Pegatron from materials supplied by Apple on computer controlled mills purchased and owned by Apple but operated by Pegatron employees. Pegatron has contracted to assemble all of these supplies Apple provides to Pegatron.

CLW also makes a big deal of there being little overtime for the production staff in the "off season" which is obviously the month of March. . . but lots in maintenance. March is the month when the assembly lines are down for retooling for the new models which will go into production for September release. Obviously the production workers can't work overtime when the assembly lines are down, being retooled.

They are NOT purchased by Pegatron and then the finished product is not sold by Pegatron to Apple, Apple owns the inventory at all steps as it moves through the process. Pegatron sells MANUFACTURING and ASSEMBLY SERVICES under contract.

The CLW then compares Tim Cook's approximately $400 million FIVE YEAR stock maturity bonus which finally vested on the fifth anniversary of his being named CEO of Apple, which is not a cash grant, with the Pegatron workers' total pay, as if that vested stock grant could have been distributed. That stock value was EARNED by Cook by increasing the value of the company over his term as CEO. The value represented by those certificates does not come out of the coffers of the company at all. If he were to sell that stock, it comes out of the money IN THE MARKET. Right now, it's merely pieces of paper with imputed value. Apple spent ZERO dollars to give it to him. All that happened was that the outstanding stock of all the millions of other stockholders was diluted a itty bit and no one would even notice that small amount in the increased value he's added to their stock.

The implication of this is that Apple owns Pegatron. It doesn't. Pegatron and FoxConn are independent companies, contracting with Apple which is merely one of the numerous companies that Pegatron and FoxConn contract to manufacture Consumer Electronic products for. Between the two companies, they manufacture and/or assemble more than 70% of the world's consumer electronics devices for brand names such as:

• Acer Inc. (Taiwan)
• Alcatel (France)
• Amazon (United States)
• Apple Inc. (United States)
• Archos (France)
• ASRock (Taiwan)
• Asus (Taiwan)
• Barnes & Noble (United States)
• BenQ (South Korea)
• Blackberry (Canada)
• Cisco (United States)
• Dell Inc.(United States)
• EVGA Corporation (United States)
• Fujitsu (Japan)
• GE Thomson
• Google (United States)
• Griffin Technologies (United States)
• Gründig Mobile (Germany)
• Hewlett-Packard (United States)
• HTC (Taiwan)
• Huawei (China)
• Intel (United States)
• IBM (United States)
• Kyocera Communications (Japan)
• Lenovo (China)
• Lenovo/Motorola Mobility (China)
• LG Lucky GoldStar (South Korea)
• Microsoft (United States)
• Microsoft MSI (Taiwan)
• Motorola Communications (United States)
• NCR (United States)
• NEC Casio Communication (Japan)
• Netgear (United States)
• Nintendo (Japan)
• Nokia Oyj (Finland)
• PackardBell (Netherlands)
• Panasonic (Japan)
• Philips (Netherlands)
• Pioneer Electronics (Japan)
• Samsung (South Korea)
• Sanyo (Japan)
• Sharp (Japan)
• Siemens (Germany)
• Sony (Japan)
• TCL Communication Technology (China)
• Telefunken (Germany)
• Thomson (France)
• Toshiba (Japan)
• Vizio (United States)
• Xiaomi (China)
• Zoostorm (New Zealand)
• ZTE (China)

All of the above are among the over 500 companies that have contracted with Pegatron and FoxConn to assemble their products.

[Swordmaker]

Apple FUD (Fear, Uncertainty, and Doubt) Season has started with the annual China Labor Watch's annual hit piece on Apple's supply chain. This time the target of choice is Pegatron. Using the usual recycled dormitory photos, CLW trots out their usual distorted claims of worker abuse. — PING!

Thanks to dayglored for the heads up!

Apple FUD Season Has Started
Ping!

The latest Apple/Mac/iOS Pings can be found by searching Keyword "ApplePingList" on FreeRepublic's Search.

If you want on or off the Mac Ping List, Freepmail me

[gunsequalfreedom]

Those poor people are already committing suicide over working conditions and this scumbag wants them to work harder for less.

Anyone with a Apple phone should be ashamed.

[roadcat]

Shocking, just shocking, that people aren’t boycotting Blackberry, Cisco, Dell, Google, HP, Intel, IBM, Lenovo, LG, Microsoft, Motorola, NEC, Netgear, Nintendo, etc., etc,... oh of the course the big offender Samsung. Shocking, that there is a bias that goes after one company (Apple) that is not as exploitive as Samsung and the others.

[central_va]

I would be better if Americans made their own electronics for other Americans.

Slap a 30% tariff on all imported electronics.

[jrestrepo]

This is the only post I have ever read that understands CM services... Which happens to be my field of employment.