Steve Jobs and The Maker

Steve Jobs has been unceasingly steadfast in his defense of Apple’s operations in China – despite recent public uproar over factory conditions.

After the recent spate of suicides at Foxconn, Apple CEO Steve Jobs was asked about working conditions at Apple’s largest contract manufacturer. Foxconn, said Jobs, is “not a sweatshop.” Jobs went on to add that, “Apple does one of the best jobs of any company understanding the working conditions of our supply chain.” In a personal e-mail exchange, Jobs claimed that the company does, “more than any other company on the planet,” in terms of ensuring that manufacturers like Foxconn are responsible.

“Although every suicide is tragic, Foxconn’s suicide rate is well below the China average,” Jobs said in this e-mail exchange. “We are all over this,” he added.

Jobs seems to have the attitude that Apple can do no wrong and that its loyal customers will trust it to do what’s best. But in a time of heightened distrust toward corporations, Apple and other high-profile Foxconn customers like Dell and Hewlett-Packard are going to need to act with more awareness.

What if American consumers decided that Apple was partly to blame for the deaths? Or what if Chinese consumers decided that conditions at Foxconn, though perhaps not unusually miserable by Chinese standards, weren’t up to what they expected from the world’s hottest consumer electronics company?

It’s happened before. Nike was the world’s most fashionable sports shoe maker in the early 1990s. But then consumers focused on its factories in Indonesia and Vietnam. Technically, of course, they weren’t Nike’s factories. Like Nike, Apple doesn’t actually make anything itself but relies on contract manufacturers.

First, Nike distanced itself from the factories. Nike maintained that because that it didn’t own the factories and these were independent companies, they could not be held responsible. Technically this was true, but in reality, as a major customer Nike could have a big say in how the factory was run.

Then Nike retreated to a refrain we are hearing today: Conditions in the factories weren’t really so bad. U.S. consumers needed to understand the reality of life in these developing countries. The alternative to factory work, one Nike executive infamously suggested, was “harvesting coconut meat in the tropical sun.”

Nike founder and chairman Phil Knight was hostile to any sort of worker’s movement. He once told me that American labor unions were behind the agitation. When conditions at Nike’s China factories came under attack, he claimed that workers earned more than university professors in the country. Knight was hostile to dealing with legitimate worker concerns. His attitude was mirrored throughout the company.

Nike and Knight toughed it out through much of the 1990s. But then U.S. consumers decided that it wasn’t cool to buy expensive shoes that they believed were made in sweatshop conditions. Nike’s brand identity was about excellence, about breaking limits. “Just do it!” screamed Nike’s advertising. That was at odds with workers toiling for a pittance.

Nike’s sales started take a hit. University students organized boycotts. Pulitzer Prize-winning U.S. cartoonist Gary Trudeau mocked Nike’s sweatshops in his popular nationwide Doonesbury cartoon. Corporate gadfly Michael Moore attacked Knight in his 1996 book, Downsize This! In the late 1990s, Nike capitulated by signing an agreement brokered with the Clinton White House and labor rights groups to improve conditions at its factories. The fact that the White House needed to get involved signifies how serious the issue had become.

Nike’s factories probably weren’t any more of a sweatshop than Apple’s are. They weren’t sweatshops of the sort that Marx and Engels wrote about, the “dark satanic mills” of 19th century England. They weren’t sweatshops with lots of child workers and starvation wages. But no one will deny that these are tough places, factories of the sort that are suited to an early stage of industrialization. Workers come there to work and to save – if the only way they can save is to work huge amounts of overtime, then there is probably something wrong.

Most countries move beyond low-wage, low-value-added manufacturing as they climb the development ladder. Korea and Singapore have both done this in the past 25 years. Korea saw a dramatic turning point in the summer of 1987 when greater political openness led to an upsurge in labor activity that saw a wave of strikes and a dramatic increase in wages. Around the same time, Singapore saw a big increase in wages and a move toward more highly-paid jobs not as the result of greater political openness but as a result of government edict. The politics were different but the result was similar.

Consumers around the world love Apple’s products now. They loved Nike’s, too. But what if serious rivals emerged and consumers decided they didn’t agree with Steve Jobs’ assessment of Foxconn factories? The U.S. blogosphere has already begun heaping contempt on those claims. Here is a post from Daniel Lyons, who writes the Fake Steve blog:

“Consider this. Wal-Mart has 1.4 million employees in the United States. Can you remember a time when 10 or 15 Wal-Mart workers jumped to their deaths from the roofs of Wal-Mart stores over the course of a few months? Have you ever heard of Wal-Mart asking employees to sign a no-suicide contract, or putting safety nets up on all of its buildings? If this did happen, would you think maybe something is going on at Wal-Mart? Or would you just say, well, 10 or 15 people out of 1.4 million is still way below the national average?”

Apple might be right to brush aside these sorts of concerns. After all, American consumers are a fickle bunch. Apple is riding high on a string of hit products.  But the company’s many stakeholders had better hope that conditions at Foxconn are being taken seriously at Apple.

Originally published in Caixin. Can be accessed at