Even though Apple said initial sales of the new iPad were very strong, something very odd is happening. Workers at Foxconn's plant Shenzhen, China are being given time off. A lot of it, in fact.
According to China Business News, Foxconn, which makes more than 40 per cent of the world's electronics for companies such as Apple, Dell and Amazon, has promised to cut working hours in its Chinese factories and significantly increase wages.
This is because inspection by a monitoring group found widespread problems - including instances in which Foxconn violated the law and industry codes of conduct by having employees work more than 60 hours a week, sometimes for more than 11 days in a row.
The monitoring group, which surveyed more than 35,000 Foxconn employees and inspected three large plants in which Apple products are made, also found that 43 per cent of workers had experienced or seen accidents, and almost two-thirds said their compensation did not meet their basic needs.
To remedy this situation, Foxconn has guaranteed that by July of next year, no employee will work for more than 49 hours a week -- the limit set by Chinese law. Foxconn has also pledged that despite cutting hours, employees' pay will not decline. We will see how this plays out.
Experts say such promises will most likely require Foxconn to hire tens of thousands of extra employees, which along with the wage increases could cost hundreds of millions of dollars annually.
And what does this mean to the consumer? These moves, in turn, are likely to influence the prices paid by customers, and could increase the retail cost of such things as smartphones and tablets, unless Apple and others accept lower profit margins.
Only time and earnings will tell.
Apple shares were down at
the time this article was published.
*Lavell Malloy is a corporate attorney and manages a hedgefund, with offices in Birmingham and New York. Lavell regularly invests in biotech companies and stocks.