When a report from AppleInsider revealed that Apple has offered to buy German luxury television manufacturer Loewe. “What a great fit,” the world said. Indeed, Loewe’s beautiful television sets and translucent concepts fall into Apple’s design and innovate nature.
Loewe denies AppleInsider’s report, which claims that Apple has offered a 48% premium on the company’s stock price and a deal will be reached by May 18.
While I had previously speculated that iTV will not happen anytime soon (if at all), talk of Loewe’s sale to Apple reinforces rumors that Apple will use their enormous cash bulk to purchase exclusive broadcast rights for popular TV shows and sports to support a television set they manufacture.
Two weeks ago, “This American Life” retracted an episode of its show that contained a report by Mike Daisey. “The Agony and Ecstasy of Steve Jobs,” Daisey’s report regarding the now well-known Foxconn factory in Shenzen, China, was one of many reports by news outlets covering the factory’s controversial working conditions.
Foxconn and its relationship with Apple’s production line have been in the news for years due to a string of suicides at the factory and evidence of horrid conditions.
Coincidently or not, Apple CEO Tim Cook visited China earlier this week. Cook met with Chinese business moguls and officials to resolve an issue with the iPad trademark as well as reach an agreement with Baidu, a popular Chinese search engine. Additionally, Apple’s CEO visited a Foxconn factory where iPhone and iPad units are manufactured.
Just days after Cook’s visit, the Fair Labor Association published a report claiming Foxconn was violating China labor laws, including overtime and hourly workloads. The report was Apple-commissioned.
Apple and Foxconn appear to be cooperating fully with the report. “We are committed to work with Apple to carry out the remediation program, developed by both our companies, that has been presented along with the FLA audit findings and we will continue to support Apple’s initiatives to ensure that its business partners are in compliance with all relevant China laws and regulations and the FLA’s Workplace Code of Conduct,” Foxconn said today.
The FLA report stated that 14 percent of workers have not received all of their overtime pay due to 30-minute increments. For example, those who worked 45 minutes would only receive pay for 30 minutes, receiving only 66% of their earned compensation. Additionally, the FLA cited blocked exits, hazardous working areas, and corrupt management.
Controversy regarding the Foxconn factories has been stirring since June 2007, when a worker hanged herself in a bathroom. Since then, 22 suicides have occurred at Foxconn factories. Apple has faced increased pressure from the public and media as the story becomes more popular. Apple has yet to comment on the FLA’s report, but the company has been very public about its supplier responsibility, specifically with regards to Foxconn, documenting its efforts on a dedicated web page.
While Foxconn’s compliance with the FLA will improve conditions and hopefully combat the suicides, it has factory workers and investors worried.
The FLA report states that the overtime limit at Foxconn factories will be lowered from 64 hours a month to 36 hours a month. Reuters reports that Foxconn workers are up in arms. One worker told Reuters that “we are here to work and not to play, so our income is very important.”
Sanford Bernstein analyst Alberto Moel says the FLA’s current examination of Foxconn will inevitably mean higher costs for Apple. However, consumers should not feel the effects of the FLA’s findings.
Nomura’s Peter Liao told MarketWatch that rising labor costs have already been budgeted by Apple. Liao also said that Apple has already raised iPhone prices with small-scale harm to its market share.
The FLA’s findings are most likely to hurt other customers of Foxconn, which Samsung, Dell, Amazon, Nokia, Microsoft, HP, and Sony. These companies have smaller profit margins than Apple and may experience a bit of karma since they have largely avoided the PR mess that is Foxconn, while Apple, the largest of the companies, bears most of the blame.
Ultimately, the FLA’s findings raise more questions than they answer. How long will changes to Apple’s suppliers, like Foxconn, take to implement? Who will pay the price for fair labor at Apple’s suppliers? Will Apple strengthen its diversification of labor to Brazil from China? Given that Apple has commissioned the FLA to investigate Apple’s 134 other suppliers, such as Pegatron, Qualcomm, and Wintek, what will the FLA find? Will other technology industry leaders follow Apple’s example and commission their own supplier examinations?
It’s better for everyone, including Apple, that people be taken care of. A resolution to Apple’s supplier mess will add even more value to Apple’s brand. As an Apple stockholder, I am certainly willing to pay an extra $50 for the next iPhone. I’ve made money from Apple and would be glad to see workers benefit as well.
With legal and ethical supplier flaws, in addition to stockholders’ recent demands, Apple is learning the hard way what problems may stem from a high profile earned by creating cherished products and earning tremendous profits.
Wonderful move to add Iger to the board, after the bond Jobs and he shared. Levinson is experienced and has been with Apple for many years. It seems that matching creativity and experience in Jobs’ absence has become the norm at Apple - smart.
Katie Cotton, Apple Press Info:
Levinson is chairman of Genentech, Inc. and a member of the Roche Board of Directors. He joined Genentech as a research scientist in 1980, and served as Genentech’s Chief Executive Officer from 1995 to 2009. He is also a director of Amyris, NGM Biopharmaceuticals, Inc., and the Broad Institute of MIT and Harvard. Levinson currently serves on the Board of Scientific Consultants of the Memorial Sloan-Kettering Cancer Center and the Advisory Council for the Lewis-Sigler Institute for Integrative Genomics. He has authored or co-authored more than 80 scientific articles and has been a named inventor on 11 United States patents. In 2008, he was elected to the American Academy of Arts & Sciences. Levinson received his Bachelor of Science degree from the University of Washington and earned a doctorate in Biochemical Sciences from Princeton University.
Iger is the steward of the world’s largest media company and some of the most respected and beloved brands around the globe. He has built on Disney’s rich history of unforgettable storytelling, with the acquisition of Pixar (2006) and Marvel (2009), two of the entertainment industry’s greatest storytellers. Always one to embrace new technology, Iger has made Disney an industry leader at the forefront of offering its creative content across new and multiple platforms. He is a member of the board of directors for the National September 11 Memorial & Museum and Lincoln Center for the Performing Arts, Inc. He became a board member of the US-China Business Council in June 2011. In June 2010, President Barack Obama appointed him to the President’s Export Council, which advises the president on how to promote US exports, jobs and growth. He is also a member of the Partnership for a New American Economy, a coalition of mayors and business leaders from across the United States that support comprehensive immigration reform. Iger is a graduate of Ithaca College.
Assorted Slices is an editorial-based publication covering Apple Inc. and similar topics.
