We’ve learned a lot in the last few weeks about the inhumane treatment suffered by the workers who polish, assemble and build Apple’s iPhones and iPads. Troubled consumers have generously offered to pay more for those products to offset the cost to Apple should it choose to treat its workers fairly, but there’s really no need.
George Takei (yes, that George Takei) is the latest public figure with his heart in the right place to make such a gesture: “Apple can do better, and it should. Even if it means we all pay a bit more for our iPhones and iPads,” he wrote on his blog.
Here’s why Apple can do better without the need for us to pay more for our iPhones: While it pressures suppliers and manufacturers to keep costs to a minimum, Apple has more money than it knows what to do with. The company disclosed in late October that it is sitting on more than $80 billion in cash. And because consumers are willing to pay a premium to own its products, Apple makes huge profit margins on its devices. One firm looked at the materials cost of the iPhone 4s (the latest model), excluding shipping and marketing, and estimated a profit margin somewhere in the 70 percent range, or $546 for every 32GB iPhone 4s sold.
Apple doesn’t directly employ its Chinese workers, but contracts with suppliers and assemblers, like Foxconn, also known as Hon Hai Precision Industry Co. It is Foxconn, with Apple’s tacit consent (Apple claims to have higher standards, but we wouldn’t be talking about this if such standards were implemented), that exploits its workers to the point of driving them to suicide. However Foxconn, which operates in a cutthroat industry and in the last five years has seen profits decline while Apple has doubled it earnings, is motivated by the demands of its best customer. To put things in perspective, Bloomberg estimates Apple’s overall operating margins at 30 percent and Hon Hai/Foxconn’s at 1.5 percent.
How much would Apple lose per iPhone if it paid Foxconn a little more and ordered the manufacturer to let its employees rest after an eight-hour shift, as opposed to working them for 30 straight? Surely not so much that we consumers have to make up the difference. If one of the wealthiest companies in the world can’t be bothered to do the right thing, people of conscience should not bail them out—they should boycott.
—Peter Z. Scheer
AP / Kin Cheung
Chinese university students, dressed as Foxconn workers, hold mock iPads with a skeleton print outside an Apple shop in Hong Kong.