You don’t have to search very hard on Apple.com to find the 2010 Supplier Responsibility Report, the company’s internal audit of how workers are treated on the assembly lines at the overseas third-party companies making its Macs, iPhones and iPods.
“Read about Apple’s continuing commitment to social responsibility” says the link on the lower right-hand corner of the home page. Click on that, and you are treated to a multi-color, photo and chart-laden PDF detailing its investigation of 102 suppliers in eight countries.
The link might as well say, “We’ve seen how child labor scandals torpedoed Nike and Kathie Lee Gifford, and we have no intention of letting that happen to us.”
So Apple’s weekend revelation that it found 17 core violations at those supply plants — including those involving underage labor, noncertified hazardous waste disposal and falsified records — have been duly recorded and largely dismissed by the tech blogosphere and mainstream business media. Of course, it helps that the technosphere is populated largely by charter members of the Apple Cult of Personality.
However, Cupertino’s transparency and the steps it’s taken to address the problems have helped it navigate what can be some very treacherous terrain for any company. As one blogger put it, “Apple looked into and took care of the problem. Please move along.”
It just makes me wish Apple would take the same upfront approach with things like Steve Jobs’ health, or the treacherous terrain developers have to navigate if they want to join the App Store. Nevertheless, Apple scores Vancouver-style points for dropping the dime on itself with a supplier compliance report that it’s published for everyone to see since 2007.
“We insist that our suppliers provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes,” the report’s executive summary states. “We evaluate compliance through a rigorous auditing program and work proactively with our suppliers to drive change.”
Apple also wants to make sure any violations disappear for the next report.
“We have also created extensive training programs to educate workers about their right to a safe and respectful work environment,” Apple spokesperson Steve Dowling told TechNewsWorld.
Apple has to remain vigilant, because as more smartphones and mobile devices fly off assembly lines in places like China, Thailand, Singapore and the Czech Republic, the temptations for some suppliers to push the boundaries will only get stronger. Plus, not everybody who’s read the 2010 report is singing from the same iTunes songbook.
Apple’s front-and-center stance about what it found in its audit is indeed impressive, said Reid Maki, director of social responsibility and fair labor standards for the National Consumers League — but why protect the offending supply partners?
“I wish they had named the suppliers where they found the kids working,” Maki told TechNewsWorld. “I think it’s troubling that they didn’t name those names. I think it would be easier for folks like you to report on the stories if you know who owned the factories.”
Some of the specific violations are also bothersome, said Maki, whose group also cochairs the Child Labor Coalition. At 60 facilities, workers exceeded weekly work hour limits more than 50 percent of the time; at 48 facilities, overtime wages had been incorrectly calculated; and at 57, worker benefits were deficient.
When you look at the total of 102 companies audited, “that seems like a lot,” remarked Maki.
Also, one company that Apple found had falsified records in 2008 did it again in 2009.
“I’m wondering why you would want to give a company a second chance,” Maki said. “That seems to be a pretty flagrant violation.”
It also raises the question of what kinds of bullets are being dodged here by Apple as its partners churn out more iPhones and iPod touches: What if those falsified records, longer work hours and younger employees produce more defective products? Should we be focusing on any increases in customer service complaints? What if those shortcuts result in worker injuries — or worse?
It speaks to the rise in popularity of all consumer electronics devices, and to tech companies other than Apple, said Scott Reynolds, an associate professor of business ethics at the University of Washington’s Foster School of Business. It will necessitate more rigorous inspections.
“Everybody’s expecting these incidents,” Reynolds told TechNewsWorld. “When you’re an institutional investor, you want to see these sorts of reports, so you can have confidence where your money is going. The other dynamic is that you have a sub-industry that helps companies and supports them as they try to do this — auditing and consulting groups that are willing to go in and help a company like Apple and set up reporting procedures.”
Apple’s report is largely a positive one, in Reynolds view, and the violations are few and far between.
“The majority of the suppliers are doing things the way they’re supposed to be doing them,” he said. “They (Apple) find a few mistakes and work with the supplier to correct those mistakes. In one or two instances, they’ve identified problems here before, the supplier’s just not getting it, and so they terminated the contract with them. As an investor, or as someone who uses an iPod, you want to see that the procedure is working, and when you catch them doing something wrong repeatedly, that Apple’s patience has limits.”
The PR Angle
Don’t look for Apple to “get it” when it comes to issues like Jobs’ health problems, the App Store or others where Cupertino’s past tendencies have been to clam up.
“One thing we know about Apple is that they’re very strategic,” noted Reynolds.
“They view information as a critical part of their business — and when they choose to reveal information, it’s on a strategic basis. The examples you alluded to earlier — Jobs’ health — they believe it’s in their strategic interest to keep things quiet. But suppliers? It’s best to reveal information,” he said.
“Thin sad-eyed waifs working 14-hour days while supporting 27 separate family members is always a PR nightmare,” commented Rick Chapman, managing editor/publisher of Softletter and author of In Search of Stupidity: Over 20 Years of High-Tech Marketing Disasters.
“When it comes to child labor or abuse, there is only one way for a high-tech company to handle this,” he continued — “complete disclosure, vigilant supervision of the manufacturers, follow-up to ensure this type of situation does not arise again.”
Apple is likely to make those moves, but it needs to make sure that the level of complaints decrease in next year’s report, according to Chapman. “It took Nike years to recover from their experience, and everyone still remembers what happened.”
However, Nike didn’t have a largely compliant press/blogosphere on its side, helping to mitigate any bad news that comes out of these reports.
“A report like this — is the glass half-empty, or half-full?” asked Reynolds. “Apple benefits from a great brand and a cult that is very forgiving. They see a report like this, and they say the glass is half-full. If Microsoft puts this out, then the glass if half-empty.”