What would you pay for a gadget made under better conditions?

[Billi]

Originally Posted by elemenoP

I was thinking yesterday that this thread would get very little response, because these things are unpleasant to think about.

No, no, it's a very interesting topic, thank you for bringing it up!

[fjtorres]

Originally Posted by DiapDealer

I watch hours worth of news per day, and I'd never heard the the name Foxconn until reading this thread.

It's all a matter of the circles you move in and the news you track.
In tech industry and economic circles they're extremely well know. So are the other big Chinese contract manufacturers. On sites like CNET's News.com hardly a week goes by that they don't pop up here or there.
Of course, that will change shortly when they change their corporate name to outrun their reputation.

It's no big deal.
Different people have different interests.
And different reactions to discovering where that drumstick or hot dog came from. Not everybody goes vegan

[DiapDealer]

Originally Posted by fjtorres

And different reactions to discovering where that drumstick or hot dog came from. Not everybody goes vegan

Point taken.

[Andrew H.]

Originally Posted by fjtorres

Well, now:

1- Apple is the one raking in a cool billion a week in *net* profit...
2- ...at a time the Commander-in-chief is betting his reelection on populism and demonizing the wealthy...
3- ...and a time when the media is free of the old distortion zone and feels free to take shots (earned or otherwise) at previously-untouchable Apple.

Translation: Without St Jobs at the helm, Apple is just another greedy evil corporation, according to the mainstream media.

About time they got a turn as the whipping boy!

Apple was never untouchable in the media and it and its users are *constantly* bashed by defensive techie-types.

The problem with the poll is that it presents a false dichotomy. It's simply not the case that Apple, Amazon, MS, etc. could produce the same product in the US or another western country by simply paying the wage differential.

The fact is that they couldn't produce the products in the west *at all.* Just looking at labor costs assumes that the US already has the existing factories and other infrastructure and just needs to plug in the US workers. But that's not true at all - first you'd have to build the factories from scratch, and then come up with a comparable infrastructure...which is very difficult because the 100's of suppliers you would need are also in Asia.

And I have no idea how complicated it would be to build something on the scale of of Foxconn factory - it's been 80 years since the US had a factory with 100,000 workers, and I'm not sure if building something like that is even really doable.

And, maybe more importantly, I'm not sure that any western factory would have the flexibility that the Chinese factories have to quickly retool and begin producing new devices.

And - even assuming that it were possible to produce an iPad, iPhone, Macbook, etc., for 50% more, this would basically kill that product unless all competitors also manufactured their products in the west. It's a big problem for iPad-type competitors that they can't produce basically equivalent products for less than the cost of the iPad (i.e, the 32 GB Asus Transformer Prime costs $600, as does the 32 GB $600 iPad. ) If the equivalent iPad suddenly costs $900...well, I don't think that many of the workers at the US iPad plant should count on lifetime employment.

I actually voted for the first three options. I would pay more for products produced in an environmentally safe manner, under good working conditions and good wages here in the US because that very much benefits the people of my own country, except perhaps the very small investor class that has for long been getting to much of the pie anyway. My second choice would be a product produced under ethical conditions in another country, and to me that would include the same sorts of environmental and worker protections present in the US. I also selected option three “I would pay more, but 50% is outrageous” because labor costs, particularly those found in factories in countries such as China are no where near enough of the cost of production to justify 50% higher costs for dosing things ethically.

[Quexos]

Not sure what is meant by better conditions, I would pay more for a reader that is technologically superior and of quality, the rest is irrelevant to me.

[HansTWN]

Originally Posted by Ralph Sir Edward

I bow to you wider "on-the-ground" knowledge. I merely note that Foxconn is undergoing a massive effort to automate its assembly lines. That is going to be the real "job killer", and it's steadily increasing even in the low wage countries. The days of using an "endless source of cheap labor" for assembly are limited...

This has its own human disasters coming...

You forget that due to China's "one-child" policy a lot fewer jobs will be needed.

Automation will be a good thing, because it means higher paying jobs and the same productivity with fewer workers -- with fewer workers available anyway and higher wages, automatikn is the only way there will be any jobs at all.

And don't fool yourself, a lot of processes can't be automated. The need for labor will never disappear.

[HansTWN]

Originally Posted by fjtorres

In coastal China, perhaps.
There's plenty of places left to exploit.
(In fact, Foxconn is already building factories in Brazil and looking at africa.)
http://chinainvests.org/2011/02/18/w...g-geese-style/

If you look at the labor rate charts, the Phillipines is right there in china range. What they lack is the raw numbers of workers.
Which is where Africa comes in.

And, in a few decades the ticking demographic time bomb in the islamic lands will go off.

Yes, they are starting to move out of China. But don't forget that all the major alternatives combined don't have half the population of China. And it is not just a big factory that has to move. The whole industry, including suppliers, has to move to recreate the efficiencies that exist in China.

[fjtorres]

Originally Posted by HansTWN

Yes, they are starting to move out of China. But don't forget that all the major alternatives combined don't have half the population of China. And it is not just a big factory that has to move. The whole industry, including suppliers, has to move to recreate the efficiencies that exist in China.

Quite so.
But let's not forget that entire infrastructure was not always there; it came there from elsewhere and it can just as easily, over time, move elsewhere.

Plus there are other regions that could arguably ramp up comparable supply chains and achieve competitive economics for at least some products.
One area that comes to mind is northern africa, which has seen a boost of "dirty industry" because the european carbon tax system benefits companies that outsource energy-intensive operations outside their home borders. Similarly, the eastern european countries have been ramping up their economies by providing low-cost manufacturing for western european companies.
Closer to the US, Mexico and Latin America can and do link up to offer up a full mix of labor classes and facilities.
Brazil alone has both high-tech and low cost labor within its borders.
So does India. (If they ever de-bureaucratize they would be an even more formidable player than they are.)

We're not looking at a zero-sum game here; one country/region's gain doesn't have to come at others' expense. But there are certain types of economic activity that will continue to migrate from region to region. That is why China, like Japan and S.Korea before them, are looking to move up the value-add scale, after all. They can see the day when the supply of cheap, skilled labor dries up and certain segments of manufacturing move on.

China, Inc is getting a good run and it probably won't be too soon (there is still room to move inland) but sooner or later things will start to balance out. Nothing lasts forever.

The only certainty is change and it usually comes faster than most people expect.

[kacir]

Well, I think that gadgets are waaaaay too expensive at their current price point. You see, I live in Europe in former Socialistic country. I earn fraction of money what an engineer at my position would earn in USA or Germany or Austria. (And several-fold what a Chinese or Indian worker does, so I am not really complaining, just stating facts.)
I still can't justify spending those ungodly sums of money that a tablet costs for the functionality it would provide me with. My first e-ink reader - Sony PRS500 - was a major budget buster for me. Even my current one was very expensive from my point of view.

I am, however, willing to pay premium for certain products. My dishwasher and washing machine are made by Siemens in Germany. My refrigerator is made by Liebherr.

I am willing to pay for "brand" tools. When I buy a chisel for carving wood, or tools for metalworking lathe, for example, I a willing to pay 500% premium for Czech made one. In fact, for such tools I am willing to pay for a second-hand tool 200% of what I would pay for a new one made in China or India or Indonesia or ... . I have paid 400% premium for some hand-held electrical tools I own. Like an angle grinder or a drill. This is where the difference in quality is really obvious. But you have to differentiate. For some jobs a Chinese made junk tool(*) is good enough. For a tool you are going to use very seldom, even non-brand would do. For a tool you wish to use often and for long periods of time, it is worth to invest into Proxxon, Metabo, Makita or at least a "blue" [professional line] Bosch.

(*) Disclaimer, not all tools made in China or India are junk, but you pay premium for ones with guaranteed good quality as well. Many "brand" manufacturers have their factories located God-knows-where. When talking about junk tools I mean those super-cheapo ones sold in Tesco or other big chains.

[wizwor]

This is not a zero-sum game.

First, wages are not the only consideration in choosing a manufacturing location. Regulations matter. Operational costs (energy, taxes, etc.) are considered. Market access counts. Electronics manufacturing creates regulated wastes and use hazardous materials. Getting approval to put an electronics factory in your backyard is not trivial. The cost of heating, lighting, and operating a factory vary from location to location. Even within the a country, taxes can vary or be waived. China and India are examples of countries that will only allow products to be sold in their country if some of the value is added domestically.

Second, the value of wages is relative. 'Pennies per day' represents a good living in some parts of the world. Minimum wage is scoffed at in Detroit. Putting a labor intense operation in a poor country raises the standard of living in that country while creating less expensive product in the country of consumption.

Finally, manufacturing in developed countries often leads to lost jobs. If the cost of labor is high enough, automation is implemented. In fact, that is happening in the US right now. Increasing cost of transportation, wages, and benefits is eroding the value of offshoring compared to local manufacturing with automation.

It's OK to Buy American or whatever, but it's important to understand that doing so doesn't necessarily make things better for anyone. Personally, I think that making inexpensive tablets in developing countries can be a win-win situation. On the one hand, it creates jobs and develops skills for poor people while reducing the cost of a tool that could be used to improve education and development in richer countries.

That doesn't mean businesses should not improve working conditions in developing countries. If some credible organization were to put a 'good housekeeping seal of approval' on products produced humanely, I would prefer these.

I'm not sure the representation of working conditions is accurate. I'm not convinced factory jobs are driving workers to suicide. I think I read that the rate of suicide among Foxconn employees was lower than the general population. Maybe political, social, economic, and environmental conditions are affecting people.

I don't have any answers, but I'm reluctant to buy crappy products at higher prices just because they are made in Detroit.

[fjtorres]

Originally Posted by kacir

I am willing to pay for "brand" tools. When I buy a chisel for carving wood, or tools for metalworking lathe, for example, I a willing to pay 500% premium for Czech made one. In fact, for such tools I am willing to pay for a second-hand tool 200% of what I would pay for a new one made in China or India or Indonesia or ... . I have paid 400% premium for some hand-held electrical tools I own. Like an angle grinder or a drill. This is where the difference in quality is really obvious. But you have to differentiate. For some jobs a Chinese made junk tool(*) is good enough.

Yup!
When it comes to tools I know I'll only use once or twice I'll happily go for the cheapest of the cheap at a Dollar Store. For tools I'll be keeping and using repeatedly I'll go with a Brand-name product I can research first. It's the engineering ethic at work, not parsimoney.

It's all about fitting the tool to the task or the situation.
There is room for everybody.
It comes down to knowing what you are doing and why.
Problems really only arise when you work blindly.

[ichbindasauge]

Originally Posted by HansTWN

I have visited perhaps a 1000 factories in China over more than 20 years. Not Foxconn or other electronics companies, but factories producing other items.

I must say that those reports are way overblown. Workers have to work hard, but they are paid very well by local standards and minimum working hours are being implemented (the customers of the factories check that very thoroughly, as well as safety standards and general working conditions).

Workers in China have their pick of places to work at these days, so treating them well and paying well is a necessity. The workers have come a long long way very quickly. If one factory works people too hard or don't pay enough they just go next door, where they will be welcomed with open arms.

The only factories that still do mistreat workers are small, locally owned and locally run, selling extremely cheap products (we are talking those 75 $ Android tablets and $5 shoes here). If you want to make good products you need good workers who stay at your company. And that means good pay and a good working environment.

Of course, these are factories, you can't goof off at an assembly line. But the workers choose to go to Foxconn, they could easily go to work at many other places. That alone proves that they don't feel mistreated.

Well said, Hans. I also think that the reports are overblown and do not take everything into considerations.

Have a look at this:
http://www.forbes.com/sites/timworst...manufacturing/

And here for a summary:
http://www.forbes.com/sites/timworst...lly-explained/

(I live in China, but I haven't visited any factories nor am I involved in business or manufacturing at all, but I do know a little bit about local salaries, living conditions, etc.)

[HansTWN]

Originally Posted by ichbindasauge

Well said, Hans. I also think that the reports are overblown and do not take everything into considerations.

Have a look at this:
http://www.forbes.com/sites/timworst...manufacturing/

And here for a summary:
http://www.forbes.com/sites/timworst...lly-explained/

(I live in China, but I haven't visited any factories nor am I involved in business or manufacturing at all, but I do know a little bit about local salaries, living conditions, etc.)

About a year ago they had those reports about the suicides. And in the end the figures showed that suicide rates at many European companies (Air France was an example) are several times higher than at Foxconn.

[carpetmojo]

How realistic is this "easy" choice of where to work thing though ?
Even if true, it may be for another job in the same situation, or in a worse set of conditions, or simply a horrible job.
It's usually possible anywhere to get some kind of a job - but will it be a job you might want to do, be safe to do, or with decent working conditions and standards ?
The " there's no problem, 'they' can always get another job" mantra doesn't work with me I'm afraid - especially in these straitened times.