Protests continued for a week at the main iPhone assembly plant in Zhengzhou, China, provoked by strict quarantine measures. Foxconn employees, who are virtually trapped in the giant factory complex, refuse to come to work and quit, despite the company’s attempts to retain them with bonuses. Apple’s riot at Foxconn could cost at least 6 million underproduced iPhones of the Pro line – before Christmas and the New Year, when demand for smartphones traditionally increases.
How it all started
A few weeks ago, a coronavirus outbreak began at the Taiwanese Foxconn plant in central China. The Zhengzhou plant is the world’s largest iPhone assembly plant, employing more than 200,000 people before the protests began. Most of Apple’s newest smartphones are assembled there, including 80 percent of all the latest iPhone 14 and 85 percent of all Pro models.
To avoid closing the facility for quarantine, its management decided to impose strict anti-coronavirus measures inside the factory complex. Foxconn employees live in dormitories near the factory. Before the covid outbreak, restaurants and athletic fields operated on campus. But in recent weeks, some 200,000 workers have been effectively trapped inside the factory complex in inhumane conditions, as described by Bloomberg.
- After the first cases of the coronavirus were reported at the plant, Foxconn banned workers from gathering even in small groups. They were only required to take certain routes to get to work, so as to have less contact with each other. In order to separate the routes, yellow plastic barriers about 2 meters high were installed on the campus. Because of this, the situation sometimes reached the point of absurdity: once employees who got lost in this maze of barriers were forced to spend the night outside.
- In mid-October, Foxconn closed the canteens for employees, and from that point on the company began to experience power outages. The company simply did not have the staff to prepare, pack and distribute take-out meals to the dormitories several times a day. It was decided that the daily ration of food would be given to workers in a single meal at the end of their shift. According to the employees, the food they were given was insufficient and of terrible quality. Those who stayed in their rooms because of a suspected coronavirus might not get their food at all, because they were not allowed to leave their rooms, and delivery workers did not always reach them. All of the dining establishments around campus closed, too, and prices at the few stores that were open skyrocketed.
- Another problem was trash, which accumulated for weeks in the quarantined dorms because no one was allowed to leave the building.
Separately, employees complained to Bloomberg about the useless daily testing for coronavirus: to cut costs, medics placed tests for up to 20 employees in a single test tube. If they tested positive, everyone whose swabs were in that tube was sent to isolation. Those who worked on the same production line as those who were sick were also immediately suspended from their duties. As a result, the number of those who could still work had been rapidly declining since mid-October.
Foxconn did not disclose how many of its employees were sickened by the coronavirus. In general, all data about the COVID-19 outbreak at the plant was carefully concealed until recently – so much so that Chinese social networks deleted messages with any mention of the coronavirus at the Foxconn campus. Because of this, all sorts of frightening rumors began to spread. For example, there was a fake story on the networks that eight female Foxconn employees had died in one of their dorm rooms from the coronavirus. The company and fact checkers then had to deny this information.
Employee flight and protests
At the end of October, the company’s management felt that the anti-coronavirus measures introduced were not enough and announced that they would be tightened. This prompted tens of thousands of quarantined workers to make mass layoffs. Foxconn struggled to keep them down by increasing wages. But at this point, Zhengzhou authorities intervened, declaring a seven-day quarantine in the area where the Foxconn campus was located. And the factory complex itself was ordered to be cleaned and disinfected. Many workers, taking advantage of the campus closure, left the campus and did not return to work. Some of the campaigners were able to return with the promise of a pay raise. However, as the employees later found out, they would only get bonuses if they worked until at least mid-March.
When tens of thousands of workers were laid off from the factory and tens of thousands more were trapped in dormitories because they tested positive for covid, the company was forced to rush to hire new personnel, whom it promised increased wages. The bonuses for the new employees caused discontent among those who had been working for Foxconn for a long time, so the company changed its decision and reduced the salaries of the new employees – which caused discontent among them as well. All of this, combined with strict quarantine measures and the constant fear of contracting the coronavirus in the dormitories and production facilities, led to a riot at the company.
The protests began on November 22, and the next day they escalated to a stage that required police intervention. Employees smashed buildings in the factory complex, smashed windows and glass doors. Some broke through to Foxconn management to voice their discontent. The company sees the reason for the protests in the fears of staff about their wages, it promised to solve this issue. Foxconn does not comment on the living conditions of its employees.
To ease tensions, the company first announced a $1400 severance package for anyone who chooses to resign at will. That offer, according to Reuters, was accepted by about 20,000 people. Then the company promised to pay $1800 each to those who choose to stay.
How the revolt will affect Apple
The U.S. corporation has already officially announced that shipments of its newest iPhone models in the last quarter of the year will be significantly lower than expected. Apple employees are trying to resolve the situation in Zhengzhou – how exactly, the company did not specify. Analysts expect iPhone production to drop by nearly a third in the short term.
Production at the Foxconn plant was almost completely paralyzed – and it happened on the eve of Christmas and New Year, before which demand for smartphones traditionally increases. The company is unlikely to return to normal operations in the coming days, Reuters sources said. And iPhones, according to its data, stores were already in short supply during the “Black Friday” sale.
Shares of Apple fell 1.9 percent on news of the manufacturing protests on Friday. According to analysts at Morgan Stanley, the riot at Foxconn will cost the U.S. corporation 6 million iPhones not released. Reuters cites an even more significant figure of 10 million.
WSJ sources say that the situation at the Foxconn plant has forced Apple to step up efforts to increase production outside of China, including in connection with the country’s ongoing “zero-tolerance” policy for the coronavirus. Apple in recent years has relied too heavily on Foxconn and China as a whole, writes the FT. And Foxconn, as the publication notes, had more than enough time and resources to automate the assembly of the iPhone, but it did not.