Apple supplier Foxconn sees profits drop due to higher employee costs

Score one for human rights, zero for an Apple supplier’s bottom line. Foxconn parent company Hon Hai Precision Industry posted lower profits than usual in the first quarter of 2012 due to higher employee costs.

These costs are directly related to fair labor audits prompted by Apple. The manufacturer’s profit margin, while still robust, slid from 7.25 percent in 2011 to 4 percent in 2012.

At the beginning of the year, a bombshell report revealed Apple’s suppliers were engaging in wildly unfair labor practices, up to and including child labor and even slave labor. Other issues included non-payment or late payment of workers, environmental hazards, and worse.

At that time, Apple CEO Tim Cook sent an email to all Apple employees, saying, “We are taking a big step today toward greater transparency and independent oversight of our supply chain by joining the Fair Labor Association… We are the first technology company they’ve approved for membership. The FLA’s auditing team will have direct access to our supply chain and they will report their findings independently.”

In those follow-up audits, the FLA found Foxconn workers were putting in an illegal number of hours at various factories. Also, many workers were not being paid enough to meet their basic needs, even though they were working 60 hours per week.

As a result of increasing workers’ pay, reducing their hours, and hiring new workers to handle the constant demand from Apple and Apple-buying consumers, Foxconn’s parent company took a small but significant ding this quarter.

While iPad, iPhone, and iPod fans are eager to protest these inhumane working conditions, we wonder how many of them would relish a higher pricetag on Apple’s iconic devices — the obvious endgame when workers must be paid fairly around the globe.

via Cnet