Apple reluctant to ban suppliers guilty of labor violations; can take years to do so

A new report today claims that Apple is reluctant to ban suppliers found guilty of labor violations, and can take years to do so, even in the most serious of cases.

In one case, it says, Apple took three years to stop using a Chinese supplier that was repeatedly found to use child labor…

The Information carries the report:

Seven years ago, Apple made a staggering discovery: Among the employees at a factory in China that made most of the computer ports used in its MacBooks were two 15-year-olds. Apple told the manufacturer, Suyin Electronics, that it wouldn’t get any new business until it improved employee screening to ensure no more people under 16 years of age got hired.

Suyin pledged to do so, but an audit by Apple three months later found three more underage workers, including a 14-year-old. Apple, which has promised to ban suppliers that repeatedly use underage workers, stopped giving Suyin new business because of the violations. But it took Apple more than three years to fully cut its ties with Suyin, which continued to make HDMI, USB, and other ports for older MacBooks under previous contracts.

Apple claims to have zero tolerance for such abuses, but multiple sources accuse Apple of dragging its feet when it has no alternative supplier ready to plug a gap.

Apple faces problems in immediately removing suppliers who consistently breach these rules: Most obviously, there aren’t many alternative manufacturers that can easily pick up the slack. New suppliers can take years to meet Apple’s exacting standards for quality and volume. In the case of Suyin, Apple’s procurement team was reluctant to abruptly shift orders to other suppliers because it would have created delays and incurred higher costs, said a former employee.

In interviews, 10 former members of Apple’s supplier responsibility team — the unit in charge of monitoring manufacturing partners for violations of labor, environmental, and safety rules — claimed that Apple avoided or delayed cutting ties with offenders when doing so would hurt its business. For example, the former team members said, Apple continued working with some suppliers that refused to implement safety suggestions or that consistently violated labor laws.

An Apple response seen twice recently is to ban an offending supplier from winning new contracts, but allow it to continue working on current ones.

This is the action the Cupertino company took in response to Pegatron allowing students to work nights and overtime, in breach of Apple’s code of conduct, despite the fact that the supplier went to “extraordinary lengths” to hide what it was doing – meaning that future audits might well prove unreliable. Apple took the exact same line with Wistron in India, where workers were confirmed to have been underpaid.

Given that companies are allowed to continue working for Apple throughout, and to win new business once they fix the problem, it’s unclear how much of an incentive it is for suppliers to stick to the rules.

It’s not the first time that former Apple staff have accused Apple of being complicit in labor law violations. A former Apple senior manager familiar with the company’s Chinese operations said earlier this month that the company would fail to act if penalizing a supplier would result in production delays.

The need to take a tougher line on such abuses was one of the few criticisms I made of the company in my 2020 Apple report card.

Photo: Qilai Shen/Bloomberg

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