Apple and their labour practices

On Friday the US market was on the up yet Apple fell 1.7%. Of late this is almost unheard of. Apple have been extremely resilient regardless of any economic data. Apple was down on company specific news this time as worker demands in China hit the spotlight. This is not a new phenomena, Apple have faced criticism about the condition of the workers who assemble their products for years.

This forced Apple to allow an outside audit of its Chinese factories which found a whole host of breaches. For the record the factories are not actually owned by Apple but outsourced to a company called Foxconn. When you are on top however everyone wants to bring you down and Apple are facing the brunt.

Following the report certain recommendations were made to improve working conditions. This includes less working hours per week and increased compensation. Interestingly The FLA (Fair Labor Association) who are doing the audit are headed by a South African fellow with a long Pony tail called Auret van Heerden.

I'm pretty sure by now that you know how I would feel about such an organisation. Getting involved in labour practices of countries around the world sounds very noble but in my opinion it does more harm than good. China is already starting to lose some of its competitiveness because of pressures on wage increases. Yes, people have rights and deserve to be happy but if Apple had not chosen China to manufacture their products, none of these people would have jobs. Taking a job is a choice. You sacrifice your time for the money you get. If, according to your own subjective choice, it is not worth it then you may quit.

I am well aware it is a very sensitive issue and situations may arise where large corporate companies may take advantage of the individual and regulation is required. But an NGO which is not even domiciled in China getting involved does not slide with me. Regardless, Apple have a very important reputation to uphold and are dealing with the audit very diplomatically.

As an investor I would not be too worried, rising costs is a challenge faced by everyone and Apple are no exception. They have the margins to absorbs this in the short term. I just hope they do not decide to cost cut and lay off thousands of workers. I doubt this because their demand is still so strong. However companies like HP, Dell and Nokia who may not be in such a strong position, also have production plants in China and are all expecting audits from the FLA.