By Philip Elmer-DeWitt
January 13, 2012

An addendum discloses for the first time the names of 156 Apple suppliers

Apple’s (AAPL) sixth annual “supplier responsibility” report is sure to be closely read by both critics and competitors.

For one thing an addendum to the report lists for the first time the names of Apple’s major subcontractors — 156 companies, many in the Far East, representing 97% of the company’s supply chain. The list is available here for anyone to read.

For another, the report enumerates the violations discovered — and Apple’s responses — in the company’s 2011 audit of those suppliers. Although most electronics manufacturers rely on the same labor force to make their products, Apple tends to get singled for criticism when abuses come to light.

The report issued this week is surprisingly frank about the nature of those abuses. In its audit, Apple discovered (I quote):

  • 18 facilities screened job candidates or current workers for hepatitis B, and 52 facilities lacked policies and procedures that prohibit discrimination based on results of medical tests.
  • 24 facilities conducted pregnancy tests, and 56 facilities did not have policies and procedures that prohibit discriminatory practices based on pregnancy.
  • 93 facilities had records that indicated more than 50 percent of their workers exceeded weekly working hour limits of 60 in at least  1 week out of the 12 sample period.
  • At 90 facilities, more than half of the records we reviewed indicated that workers had worked more than 6 consecutive days at least once per month, and 37 facilities lacked an adequate working day control system to ensure that workers took at least 1 day off in every 7 days.
  • 42 facilities had payment practice violations, including delayed payment for employees’ wages and no pay slips provided to employees.
  • 68 facilities did not provide employees adequate benefits as required by laws and regulations, such as social insurance and free physical examinations. 49 facilities did not provide employees with paid leaves or vacations.
  • 67 facilities used deductions from wages as a disciplinary measure.
  • 108 facilities did not pay proper overtime wages as required by laws and regulations. For example, they did not provide sufficient overtime pay for holidays.

Apple separately listed what it called “core violations” of labor and human rights:

  • In 15 facilities it discovered foreign contract workers who had paid excessive recruitment fees to labor agencies.
  • In 5 facilities it discovered a total of 6 active and 13 historical cases of underage labor. In each case, the facility had insufficient controls to verify age or detect false documentation. Apple insists, however, that it found “no instances of intentional hiring of underage labor.”

Although most of Apple’s suppliers were discovered to be in violation of one rule or another — nearly 70%, for example, failed to pay proper overtime — Apple severed relations with only one of them: an unnamed “repeat offender.” There was a second repeat offender, but Apple claims to be “correcting” its practices.

The audit is unlikely to satisfy critics like monologist Mike Daisey — who reports that suppliers are routinely forewarned of Apple’s inspections in time to hide their underage workers — but the fact remains that the company is the only American electronics manufacturer we know of that bothers to conduct these yearly checks.

UPDATE: A copy of CEO Tim Cook’s letter to the staff addressing the contents of the Supplier Responsibility Report has surfaced through the French site MacGeneration. Cook announces that Apple has joined the Fair Labor Association and says, among other things,

“Thanks to our supplier responsibility program, we’ve seen dramatic improvements in hiring practices by our suppliers. To prevent the use of underage labor, our team interviews workers, checks employment records and audits the age verification systems our suppliers use. These efforts have been very successful and, as a result, cases of underage labor were down sharply from last year. We found no underage workers at our final assembly suppliers, and we will not rest until the number is zero everywhere.”

Full text here.

UPDATE 2: This American Life, which aired an excerpted version last week of The Agony and Ecstasy of Steve Jobs, Mike Daisey’s one-man show about working conditions in Apple’s supply chain, asked Daisey to comment on Apple’s latest progress report. Here’s what he had to say:

Apple has released a list of its suppliers, but it still hides the companies it audited with anonymity. This makes it impossible to learn anything new about what is going on in Apple’s supply chain, to verify anything, or hold anyone responsible. The FLA will audit a tiny percentage of Apple’s factories, and also won’t make public which factories they audit.

If Apple would spend less energy finessing its public image, and instead apply its efforts to real transparency and accountability, it could be a true leader for the electronics industry. Apple today is still saying what it said yesterday: trust us, we know best, there’s nothing to worry about. They have not earned the trust they are asking for.

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