Tim CookSource: Apple

What you need to know

  • A new report has revealed how Apple has struggled to break ground on its manufacturing expansion in India.
  • According to The Information, one potential manufacturer fell foul of several glaring health and safety violations.
  • Whilst labor in the country is significantly cheaper, these costs are offset by import costs and limits on worker overtime.

A new report from The Information has highlighted some of the struggles Apple faces in bringing the manufacturing of its products to India.

The introduction to the report states:

Several years ago, employees at Apple investigated whether components for the iPhone could be made in India. The results weren't encouraging. While the employees found some companies that could make power adapters or packaging, none could make phone speakers, headphones or small mechanical parts. Many Indian suppliers weren't able to meet Apple's environmental, health and safety standards. Apple contractors visited one potential factory in the southern Indian state of Karnataka, only to find that its workers were on strike. Some of Apple's existing suppliers said they weren't interested in manufacturing in India because of the investment required, The Information has learned.

The report notes that whilst a Chinese worker at a Wistron factory could make $700 a month, an Indian worker doing the same job would only make a quarter of this. However, cheap labor costs are offset by the fact that Apple has to import all of its components into the country for assembly, triggering heavy customs duties as well as shipping and storage costs. Indian labor laws also prevent workers from taking on more overtime compared to Chinese workers.

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The report highlighted how Apple visited on supplier named Superpacks in 2018:

Apple sent auditors to assess whether its supplier responsibility practices were up to Apple's standards. The audits revealed dozens of violations. The site had no safety measures for storing chemicals, lacked monitoring for noise and wastewater, and didn't have several environmental and construction permits. It didn't properly test drinking water for workers and the site lacked a fire hydrant system, according to a person close to Apple.

After months of pushing, the company stopped giving updates and failed to fix the violations. As you can imagine, it did not get the contract. The report also claims that suppliers are reluctant to improve standards because order sizes from Apple are so small compared to China's orders.

You can read the full report here.

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