For the last few years, investigators have kept an eye on Foxconn Technology Co Ltd (which trades on the TPE
under stock symbol 2354), the allegedly poor working conditions and employee suicides of which have raised red flags among Chinese
rights activists.
Based on mounting charges against the Taiwanese iPhone manufacturer, some have called
for Apple Inc. (NASDAQ: AAPL) to shift its
manufacturing operations stateside.
It seems the request has been heard.
On Sunday, Foxconn
executives announced a potential plan to bring a $7-billion display-making plant — and between 30,000 and 50,000 jobs — to the
United States.
But corporate is accustomed to paying much lower wages than the United States would allow, and an American employee payroll may
put a dent in the company’s budget. If Foxconn manufacturing costs rise, this may translate into higher payments for Apple
consumers.
American Versus Foreign Labor Costs
As of July, the average monthly pay of Chinese factory workers was $424, according to a New York Times report.
In the United States, with a national minimum wage of $7.25, Foxconn workers would earn the monthly wage of a Chinese
counterpart in just three and a half days.
The low-end promise of 30,000 jobs would cost the company about $452.4 million in American wages, while the same number of
Chinese employees would cost about $152.6 million.
And that’s if Americans worked at the minimum pay rate instead of the
$14 average for electronics assembly, and if Foxconn paid Chinese workers their average national rate.
But the true disparity could be more jarring. Foxconn’s foreign employee wages vary by report, with some estimates mere
fractions of the average pay.
One Wall Street Journal article
from August 2016 reported wages of $205 after expenses were deducted for food and housing. Forbes
reported annual earnings of $6,500 for work weeks far longer than those of the standard American laborer.
Foxconn’s Transition From Human Resources
The move to create jobs would be a shift from Foxconn’s recent focus on automation.
In May, the company announced that it had replaced 60,000 workers with
robots in one Chinese factory.
The cutting of laborers transferred about $305 million from payroll to the automation project, which cost an estimated $20,000
to $25,000 per robot based on 2014
reports.
It is unclear whether the potential American factory would incorporate robotic manufacturers alongside human employees.
Image Credit: By Rico Shen, CC BY-SA 3.0, via Wikimedia
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