Foxconn apologizes for wage-related errors at its iPhone factory in China following worker unrest

  • Foxconn says it is working with staff to resolve disputes
  • Large iPhone factory rocked by protests over wages and conditions
  • Apple says it has a team on site in Zhengzhou

TAIPEI/SHANGHAI, Nov 24 (Reuters) – Foxconn (2317.TW) said on Thursday there was a wage-related “technical error” in hiring new recruits at a COVID-hit iPhone factory in China and apologized to workers after the company was rocked by new labor unrest.

Men smashed surveillance cameras and clashed with security personnel as hundreds of workers protested outside the world’s largest iPhone factory in Zhengzhou city on Wednesday, in rare scenes of open dissent in China fueled by claims of back wages and frustration over severe COVID-19 -limits.

Employees said on videos circulated on social media that they had been informed that Apple Inc’s supplier (AAPL.O) was planning to defer bonus payments. Some workers also complained that they were forced to share dormitories with colleagues who had tested positive for COVID.

“Our team investigated the matter and discovered that a technical error occurred during the onboarding process,” Foxconn said in a statement, referring to the hiring of new employees.

“We apologize for an input error in the computer system and guarantee that the actual wage is the same as agreed and the official recruitment posters.” It didn’t address the error.

The apology was a reversal from a day earlier when Foxconn said it had honored its payment contracts.

The turmoil comes as China is recording a record number of COVID-19 infections and grappling with increasing lockdowns that have led to frustration among citizens across the country. But it has also revealed communication problems and mistrust of Foxconn management among some employees.

The largest protests had died down and the company was communicating with employees involved in smaller protests, a Foxconn source familiar with the matter told Reuters on Thursday.

The person said the company had reached “initial agreements” with employees to resolve the dispute and production at the plant was continuing.

Growing employee discontent over COVID outbreaks, strict quarantine rules and food shortages has caused many workers to flee the sealed factory campus since October after management implemented a so-called closed-loop system that isolated the factory from the rest of the world.

Many of the new recruits had been hired to replace the runaway workers – estimated by some former employees in the thousands.

The Taiwanese company said it would respect the wishes of new recruits who wanted to resign and leave the factory campus, and would offer them “care grants”. The Foxconn source said the subsidies amounted to 10,000 yuan ($1,400) per worker.

APPLE RISKS

The Foxconn factory in Zhengzhou, which employs more than 200,000 workers, has dormitories, restaurants, basketball courts and a soccer field spread throughout the sprawling, approximately 1.4 million square foot facility.

The factory makes Apple devices, including the iPhone 14 Pro and Pro Max, and accounts for 70% of iPhone shipments worldwide.

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Apple said it had staff at the factory and was “working closely with Foxconn to ensure their employees’ concerns are addressed.”

Several shareholder activists told Reuters the protests highlighted the risks Apple faces from its reliance on manufacturing in China.

“Due to Apple’s extreme reliance on China, both as a (consumer) market and as a place of primary manufacturing, we see that as a very risky situation,” said Christina O’Connell, a senior manager of SumOfUs, a nonprofit corporate accountability group. .

Reuters reported last month that production of iPhones at the Zhengzhou plant could fall by as much as 30% in November, and that Foxconn was aiming to resume full production there by the second half of the month.

The Foxconn source familiar with the matter said it was not immediately clear how much of an impact the worker protests could have on production for November and it could take a few days to work that out, citing the large scale from the factory.

A separate source has said the unrest had made it certain they would not be able to resume full production by the end of the month.

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Apple has warned it expects fewer deliveries of premium iPhone 14 models than previously expected.

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($1 = 7.1353 Chinese Yuan)

Reporting by Yimou Lee in Taipei and Brenda Goh in Shanghai; Additional reporting by Ross Kerber in Boston, Beijing Newsroom and Yew Lun Tian; Edited by Anne Marie Roantree, Stephen Coates and Edwina Gibbs

Our Standards: The Thomson Reuters Principles of Trust.

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