Why My Beloved iPhone Now Makes Me Sick To My Stomach

I didn’t know it at the time but my love affair with Apple began on November 22, 1983 … the day I bought my first business.   I was 22.  That fateful decision changed my life in many ways …  and also unexpectedly started a 30-year infatuation with Apple.  My business partner and I purchased a well established, and well known, family owned photo and computer business in the Baltimore-Washington metro area.  The business had a retail component but the real growth (and opportunity) was coming from the commercial division who was just starting to sell personal computers.  Our strength was selling to educational systems.  We eventually sold the business but that’s another story.

In 1983, the computer business was very different world.  Personal computers were just starting to catch on.  This was long before the Macintosh took the world by storm in the mid-80s.  There were a number of players, operating systems and technical approaches vying for viability but markets were beginning to settle around the following segments: personal computers for hobbyists (Commodore 64 and others), personal computers for business (IBM PC and compatibles), and personal computers for education (Apple II series).  Commodore and others faded as Apple and IBM (based on the Microsoft DOS operating system) were the two surviving approaches.  This was long before Windows and is still true today.  The winners from the early 80s are still the winners today.  Even though IBM smartly exited the PC business in 2005, the battle is still fought today between Apple and Microsoft powered personal computers.

Back to 1983 … there were no cell phones, no Internet, no e-commerce, no Apple stores and computers were manufactured in the USA … not in China.  Both Apple and IBM used resellers (or dealers) as their sales channels to market.  Apple even had a unique “black” version of the Apple II that was only sold to schools.  This is where we came in.  We used to sell Apple IIs by the truckload (literally).  We also customized and serviced them from the ground up.

Through all this, I developed an insider’s perspective and a fondness for Apple.  My respect and admiration for Apple has grown over the years.  I’ve stayed connected and involved with Apple in one way or another at key stages of my career.  I applauded the major successes (Macintosh, iPhone, iPad) and chuckled at the failures (Newton, Lisa, MobileMe).  I’ve never had a reason to think poorly of the company.  Until now.

It’s no secret I work for IBM today (see the personal opinion disclaimer).  IBM and Apple haven’t competed with each another for years.  One is corporate … the other is consumer.  I point this out because I have no agenda driving me to write this other then my conscious.

Today, Apple is the most successful consumer technology company by just about any measure.  Skyrocketing stock price, top 10 brand recognition and tons of cash  (~$97 billion).   Apple also stunned everyone with their recent earnings announcement.  During the last quarter of 2011, they made ~$13 billion in profit.   That’s more than twice as much for the same period in 2010, and more than any company has ever earned during a single financial quarter … except one.   Exxon Mobil made over $14 billion in a single quarter (thanks to high oil prices) in 2008.

Are you kidding me?!?!  Congratulations!  They deserve all the spoils and accolades.  Their products work better and are craved by the masses.  Their customer loyalty and devotion is like nothing we’ve ever seen in business before … myself included.  I have an iPhone, iPad and MacBook Air and love them all.  Within the last six months, I stopped using Windows and Blackberry completely.  I outwardly promote how great my experience with the company has been.  Even the AppleCare tech support is great … at a time when most companies call centers are a joke or non-existent.

But wait a minute, something doesn’t add up for me.

It’s the China worker thing.  Over recent years … as Apple’s bank account has increased … so have the charges about labor conditions in iPhone factories in China.  The New York Times, The Huffington Post and others are zeroing in on this at the moment.  My Mom used to say, “Where there is smoke, there is fire”.   We all know the media can be unreliable on these topics but they can be a pretty good watchdog too … just ask Rupert Murdoch and his staff.

In my mind, there are too many outrageous claims to ignore this any longer!

“Working excessive overtime without days off ” …. “Living together in crowded dorms” … “exposure to dangerous chemicals” … “Two explosions ‘due to aluminum dust’ killed four workers” … “Almost 140 injured after using toxin in factory,” … “Nets on buildings to prevent or deter stress related suicide attempts” … “falsification of records” … “worker suicides” … “beaten and interrogated by superiors over lost prototype”.

I want to know what is really going on.  Are workers really beaten or killing themselves so I can have an iPhone … or so Apple can have even more cash?  Neither is acceptable and both make me sick to my stomach.  This can’t be true, can it?  The more you read the harder you gulp.  It’s making me reach for the Pepto-Bismol.

Apple is certainly not a bad company.  They did donate $50 million to charity in 2011.  But considering how much is sitting in the corporate coffers at Apple it seems light to me.  I mean … they ARE loaded.  Apple donations represent a paltry .1% of their holdings and are a far cry from what others are doing.  Kroeger donates  almost 11% of profits to charity.  Even the allegedly “greedy” financial services firms are more charitable then Apple.  These firms seemed to get blamed for everything but you have to give them credit on this issue (no pun intended).  Morgan Stanley, Goldman Sachs and Bank of America are all among the top corporate givers.

But money is not my issue.  Taking responsibility for your actions is.

I am not an expert on this topic but Apple seems to have a reasonable policy on supplier responsibility.   However, I know from experience that having a good policy is not the same thing as enforcing a policy.  Some of the reports out there are claiming that Apple is not doing enough. In other words, looking the other way and pointing it back to the labor contractors.  Ahhhh … the beauty of outsourcing (if true).

It seems to me; that they hold all the cards and could fix this in about a nanosecond if they really wanted to.  This nonsense has been going on for at least six years and needs to stop.  Are the lower offshore labor costs worth all of this … loss of human life, inhumane conditions and reputation damage?

Apple is truly (and maybe uniquely) in a position to change how the world’s goods are made.  It has the money and the muscle to effect major change.  At the moment, it appears they lack the will, or conscious, to do anything serious about it.  I wonder if too much greed is driving behavior in Cupertino?  The numbers don’t lie.

Tim Cook should seize this opportunity and make this his issue.  Following Steve Jobs as CEO must be an incredibly hard thing to do.  I hope the new guy takes a stand and fixes this, before it is their undoing.  Nike and Wal-Mart both survived offshore labor scandals and so can Apple – but the time for decisive action is now.  Maybe it’s time these jobs come back home to the good ole USA.

I hope Apple grows a conscious soon. With new leadership in place, this should be easier to do.  Good luck Apple, I still love you but I won’t wait forever for you to fix this and I hate the taste of Pepto-Bismol.  Seriously, I wouldn’t normally blog about something like this but I felt the need to do something.

The Chinese government needs to man-up as well.  The economic growth in China is literally being fueled by blood, sweat and tears (not a joke) of their citizens.  I can only hope the conditions are not as extreme as being portrayed.

What about you … does it turn your stomach also?  Are you outraged?  You should be.

Blog update on February 13, 2011Apple issues statement about labor situation in China.  What do you think?  A strong enough response?

17 thoughts on “Why My Beloved iPhone Now Makes Me Sick To My Stomach

  1. There was a report this week that Foxconn is expanding in Northern China, hiring 100,000 more workers to expand iPhone production.

    IBM did set a precedent when they sold off the PC line to Lenovo, but they sold the product line, Apple rather gave over the all the assembly. IBM can always unbrand Lenovo, Apple can’t..

    Also there’s the issue where Steven Jobs when asked about bringing manufacturing back to US told President Obama, “those jobs are never coming back…”

    One of four things needs to occur, or whats happening in China and Foxconn will continue. their indentured citizens can revolt and perphaps forced them to cease, new ventures might tke take them on that don’t employ slaves, the consumers who enable this behaviour boycott them and force a change, or laws might be enacted to force a change.

    Frankly of all these the most likely eventuality will be the first option change from within not from without…

  2. Well this certainly changes my mind about which computer I will be purchasing next. I have been seriously considering buying an Apple as I only hear good things about the product. But this is a different can of worms. I also heard that the companies that take old computers for recycling have been shipping them out to China as well, as the chemicals are so dangerous that they can find no one stateside to do the dirty work. Maybe all computer manufacturing should be redesigned. This is a hugh issue for me. I will be looking for more information on this.

  3. Excellent post Craig!

    In regard to “Tim Cook should seize this opportunity and make this his issue.” I believe, Tim was the guy behind the supply chain well before he was CEO (based on my reading of Walter Isaacson’s Steve Jobs biography).

    Either way… the world needs some fair labor practices, basic agreement on the treatment of workers. The US and other developed nations are ahead of the game in comparison to China. It’s going to take exposure like this to improve the situation in the long run.

    Does this mean you’re going to reconsider purchasing the iPhone 5 when it comes out?

    1. Thanks Eric. Tim needs to differentiate himself from Steve Jobs and get out of that shadow. This is a perfect way to do that considering his lineage. Won’t be easy though.

      I am not an automatic iPhone 5 purchaser if they stand still on this issue. Time will tell.

  4. Great post Craig. You’re definitely not alone in your concern!

    As you point out, lots of manufacturers use Foxconn – including IBM, Apple, Dell, Hewlett-Packard, Lenovo, Motorola, Nokia, Sony, Toshiba.

    So long as the singly most important measures of corporate success are profitability and EPS, I don’t know how this will change on a macro scale.

    It’s a troublesome situation. I guess all we can do as individuals is to be as ethical as possible in our decisions about where to spend our money.

    1. Paul – Profit does tend to rule the day but corporate responsibility is important too. The purpose was not to villify Foxconn, Apple or anyone else. I wanted to send a “wake-up” message. It seems to me the golden rule applies here for all parties involved … “do unto others … “

  5. Love the article! One of the main important points, which is buried at the bottom… “Maybe it’s time these jobs come back home to the good ole USA”. I agree 100%!

    For three reasons, lower our unemployment rate, get back to buying products & exporting products with “Made in America” tagged on them. When was the last time anyone walked into a Best Buy, WalMart, Verizon, or Apple Store and saw, Made in USA?

    Yes, I hope Apple are the leaders in making the much needed changes, with hopes others will follow.


  6. I agree with the sentiment here. This is reminiscent of the struggle between the mega-corporate entities and the local businesses (a decade or so ago this was the McDonalds-ization of the world, I believe). There is a profit driver, there is also a corporate responsibility driver.

    My 2 cents worth – the issue underneath it all is the expectation of unreal sustainability of a profit margin despite real market factors. One example: a large retailer expects lower costs each year from their suppliers, regardless. Occasionally the suppliers will go out of business trying to drive further savings, and in a quest to survive, the standards/ethics take a back seat. It can lead to ridiculous things, such as shorter coffee filters, or even to the horrible conditions in a sweatshop.

    There is a (roughly) 12 year economic cycle, yet the expectation is savings/percentage positive profit growth each year. Some years cannot sustain that savings/growth with all other factors being equal, so the two possible responses are to take costs and relocate them to where the labor expense is much lower, as is the adherence to what most would consider fair and ethical treatment of employees, or to explain to stockholders that there was not as much (or no) profit because times are hard.

    The solution is awareness and group determination to fix the problem. Once we are aware of the human issues behind something, then we either have to vote with our wallets/feet, or continue doing what we do with the knowledge of the effects of our choices. Do right first, then do right by the books.

  7. Hi Craig,

    Great Post, the first time I read about it, it disturbed me a lot. We may all wish and pray, but in my humble opinion, I don’t think things will change soon.

    There was a piece in another article that said that talks about how 8000 people were herded back to work after a long shift to make a urgent change in the product (http://www.ibtimes.com/articles/293960/20120206/apple-iphone-5-foxconn-workers-work-conditions.htm). You couldn’t do this in any other place in the world, I mean even other Asian countries not just the western world. How can any manufacturer walk away from this “luxury”. The labor conditions in China will not drastically change any time soon, but hopefully it will get a little more humane.

    And at some point in the article it says if Apple very to marginally increase the price it pays its suppliers, it will be able to alleviate some of the problems. With ~96 Billion it can afford to, it is this place the change should come from. If many more of us are vocal and equate it snowballs into a “Blood Diamonds” like campaign, Apple will have to react.

    Lets stay Vocal and Conscious….

  8. If Apple were a different type of organizational entity, something other than a for profit business, and if they weren’t in business to maximize profits, I could see the “responsibility” angle, but since they are a business, created to make a profit, I think what has to be the determining factors are questions like “Have they broken any laws in the countries in which they do business?”, “Has it been proven that they’ve deceived people about their business practices and processes?”, “Have they simply leveraged a less expensive, more cost effective labor pool, or have they artificially moved jobs offshore in violation of a law?”

    I guess the main question is “Have the stockholders (the real owners of the company) been concerned enough about these issues to challenge management’s handling of the situation?” – or are they happy wiht the way management is running the company, realizing a 150% share price increase over the past two years?

    And as far as Apple donating only .1% of their holdings to charity – if I was an Apple shareholder, I’d scream loudly about management taking MY money and donating it to any cause or causes that I may not believe in – I’ll gladly donate my money to my causes, but don’t take my money and make those decisions for me – THAT’S the only real crime here that I see.

    Apple is a business – not a social services organization – if I were to invest in Apple, I’d expect the management to do everything they could do, legally, to maximize profits, and maximize the return on shareholder value.

    I, too, worked for IBM in the late 80s and early 90s – they were great times, and what a wonderful environment in which to start my career in this industry – but things have changed – “respect for the individual” doesn’t always carry the same importance at many companies as it did with IBM back then – I believe that’s unfortunate, and short-sighted, but it’s the way it is – it’s business, and businesses aren’t judged on social responsibility – they are judged on profitability – at least that’s the way I see it.

  9. The title of your post was very engaging. I saw only the title in my Linkedin updates. When I saw it, I had to click through. I did not expect the subject you covered rather perhaps that you were spending too much time with your i-device and not eating well or exercising. I think there is a marketing lesson in your title.

  10. Now folks are starting to clue in on what greed for profit does to others. The workers in China have no real chance to improve their lot unless the govt let’s it happen. You don’t think a Board of Directors do not know what really happens their? Done purely for profit, even Steve Jobs. American workers had a system to use to make their lot better. It doesn’t exist in China and will not in any foreseeable future. The govt in China will pay a lot of lip service while doing what they really want to do. There are very few companies that require worker wages, benefits and treatments of their China vendors and follow up on them. Apple among others are blatant in their lack of real caring. It’s why I do not buy their products.

  11. How many factories could Apple build in America with that $97 billion dollars?

    How many Americans could Apple put to work in America with that $97 billion dollars.

    We all know the road to recovery in the United States must include a rebirth of our great manufacturing capabilities and human potential to grow companies on American soil and not in Chinese rice fields being overrun to manufacture products that we buy in America.

    Let’s hope Apple will do the right thing and start spending some of that money to benefit the people who are spending their money on Apple products.

  12. There must have been quite a backlash – there will now be some inspections – the link: http://m.zdnet.com/blog/btl/apples-external-inspections-of-foxconn-a-good-first-step/69254?tag=nl.e019 . As Craig indicated, Cook seems to be on the ball.

    While it can be said this is a case of the horse getting out of the barn before the door gets closed, and while it is true it can’t be nearly like an OSHA inspection (the true worker safety challenge would be for one of those to be conducted to evaluate as well – out of jurisdiction but informative, and perhaps a good requirement for companies doing business here to ensure that mfg. competition is truly ‘apples to apples’, and American factories don’t start a bid for work with a strike against them because they spend money on safety, etc.), this is truly a good step. In the evolution of the global economy, worker treatment is actually one of the steps. It has been so long since the garment district and slaughterhouse sweatshops that it is easy to forget that adjusting the factors of production and profit are part of how you stay in

    business for an extended period of time. Now, if there were only someone who could help explain that continuous and uninterrupted growth is how you get abuses of workers, or Enron-esque abuses of investors. Sanity and good business practices are vital, because the trip from blue chip to penny stock is one that can contain abuses of both.

  13. Really great post ~ After reading more about this – I decided to get rid of my iPhone. I know that won’t hurt Apple, but they will no longer have my mobile phone business.
    I have bought my last 2 computers from Origin PC, hand built in the United States, with customer phone support in the United States. Amazing service, and the best computers out IMO. One of the few companies that surpass Apple’s customer phone support – which I do agree, is outstanding. I do like Apple products, but they seem to have turned into the kind of company they used to despise.

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