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The Supply Chain Enters the Spotlight

Image courtesy of This American Life

By Melissa J. Anderson

Last month Apple came under fire after a shocking description of the working conditions at one of its Chinese suppliers was broadcast on the radio program This American Life. The broadcast featured portions of monologist Mike Daisey’s one-man show “The Agony and the Ecstasy of Steve Jobs.”

Dasiey’s show, which he has performed around the US since July of 2010, details his trip to China to gather information on Foxconn, a major electronics manufacturer. While Apple is known for being secretive, the company claims to be a progressive force when it comes to labor rights and the safety of its supply chain.

The company is so admired that in a recent New York Times survey, 56 percent of respondents couldn’t think of anything negative to say about Apple. According to 14 percent, the worst thing about Apple is its pricey products – and 2 percent pointed out labor issues as the worst thing about the company.

This generally high level of esteem combined with Apple’s secrecy around its manufacturing practices contributed to the surprise that many reacted with to the radio program. According to Daisey, child labor, 12 hour shifts, injuries and suicides at the plant, and even the government blacklisting of people who stand up to the system are the norm for Apple’s suppliers. This American Life fact checked the story and found few inconsistencies. Even the New York Times followed up with a lengthy report.

The whole situation reveals how supply chain secrecy can backfire, cause workforces to question corporate leadership, and damage a company’s employer brand.

Responsibility at the Top

Before he died, former Apple CEO Steve Jobs spoke glowingly about conditions at  one of Apple’s supply chain manufacturers. The New York times quotes him as saying, “I mean, you go to this place, and, it’s a factory, but, my gosh, I mean, they’ve got restaurants and movie theaters and hospitals and swimming pools, and I mean, for a factory, it’s a pretty nice factory.”

In fact, Daisey reports, conditions aren’t quite so luxurious. “The dormitories are cement cubes, 12-foot by 12-foot. And in that space there are 13 beds, 14 beds. I count 15 beds. They’re stacked up like Jenga puzzle pieces all the way up to the ceiling. The space between them is so narrow, none of us would actually fit in them. They have to slide into them like coffins.”

The Times continued:

“Others, including workers inside such plants, acknowledge the cafeterias and medical facilities, but insist conditions are punishing. ‘We’re trying really hard to make things better,’ said one former Apple executive. ‘But most people would still be really disturbed if they saw where their iPhone comes from.’”

In a culture like Apple’s, characterized by top-down leadership, reports that run contrary to the official company line are easily overlooked. In fact, as the Times reported, most of the company’s workforce was unaware of any issues.

“…a British newspaper, The Mail on Sunday, secretly visited a Foxconn factory in Shenzhen, China, where iPods were manufactured, and reported on workers’ long hours, push-ups meted out as punishment and crowded dorms. Executives in Cupertino were shocked. ‘Apple is filled with really good people who had no idea this was going on,’ a former employee said. ‘We wanted it changed, immediately.’”

By denying supply chain issues, when there appear to be real problems that were growing more public. he company set its workforce up to question its leadership.

Steps toward Transparency

After the New York Times piece was published, Apple’s new CEO Tim Cook sent an email to employees claiming to be outraged at allegations that the company doesn’t care about its supply chain workforce. But his email does not deny the accusations set out by Dailey or the New York Times piece. He wrote:

“Every year we inspect more factories, raising the bar for our partners and going deeper into the supply chain. As we reported earlier this month, we’ve made a great deal of progress and improved conditions for hundreds of thousands of workers. We know of no one in our industry doing as much as we are, in as many places, touching as many people.”

The company said it will start by revealing the names of its main suppliers. Additionally, it said, it has partnered with an outside auditor, the Fair Labor Association, to do unannounced visits to factories. But, as pointed out on This American Life’s blog, these steps may not amount to much.

“It doesn’t appear that Apple’s partnership with the FLA will increase transparency in this regard either. The FLA will audit 5% of the factories that make Apple products, but like Apple, it will not name which ones it checks or where it finds violations.”

The program’s host Ira Glass commented, “As it is, Daisey says, Apple is basically saying, trust us, we’re taking care of the problems. But without supplier names, nobody can independently verify any of it.”

Can real progress be made without transparency on this issue? It is debatable whether Apple’s US employees will be convinced, but working in a culture of secrecy, they may have no choice but to accept that the company is making efforts toward correcting problems in good faith.

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