Workers sleep in the cafeteria at Catcher's manufacturing complex in Suqian. Photo / China Labor Watch
Every year, we trawl through the archives and republish a few of the standout business stories from the last year. This is essentially a mix of the most popular, topical or insightful pieces published in 2018. Here's one that made the cut.
At a Catcher Technology manufacturing complex in the Chinese industrial city of Suqian, about a six-hour drive from Shanghai, workers stand for up to 10 hours a day in hot workshops slicing and blasting iPhone casings for Apple, handling noxious chemicals sometimes without proper gloves or masks.
These conditions - some described in a report Tuesday by advocacy group China Labor Watch, others in Bloomberg News interviews with Catcher workers - show the downside of a high-tech boom buoying the world's second-largest economy. Chinese recruiters play up the chance to build advanced consumer electronics to attract the millions of typically impoverished, uneducated labourers without whom the production of iPhones and other digital gadgets would be impossible.
Earplugs and goggles are not always available, a problem when some factory machines are noisy and spray tiny metallic particles or coolant, according to Bloomberg interviews with workers. CLW said the noise was about 80 decibels or more - roughly equivalent to an average factory or a garbage disposal, according to industrial noise-control specialist IAC Acoustics.
Hundreds of employees throng a workshop where the main door opens only about 12 inches. Off-duty, they return to debris-strewn dorms without showers or hot water. Many go without washing for days at a time, workers told Bloomberg.
"My hands turned bloodless white after a day of work," said one worker who makes a little over 4,000 yuan a month (just over $2 an hour) in her first job outside her home province of Henan. She turned to Catcher because her husband's home-decorating business was struggling. "I only tell good things to my family and keep the sufferings like this for myself."
All workers who spoke with Bloomberg asked not to be identified out of fear of recrimination.
Apple spent years upbraiding manufacturers after a rash of suicides in 2010 at its main partner, Foxconn Technology, provoked outrage over the harsh working environments in which its upscale gadgets were made. Foxconn hired psychological counsellors, set up a 24-hour care centre and attached large nets to factory buildings to prevent impulsive suicides, according to a 2011 Apple progress report. Soon after, Apple developed standards and started audits of the hundreds of companies that produce components for its devices, threatening to pull business from those who flout labour laws.
But the sheer scale of Apple's supply chain, as well as less quantifiable variables such as living standards and sanitation, make monitoring and enforcement of those standards difficult. Apple sells more than 200 million iPhones annually, up from 40 million in its 2010 fiscal year. It outsources manufacturing, boosting profitability. Late last year, the company released two new iPhone models for the first time, pressuring suppliers to churn out millions of handsets before the holiday shopping season.
Catcher, which gets almost two-thirds of its sales from Apple, said in a statement that its investigation found nothing to suggest it had breached its client's code of conduct.
An Apple spokeswoman said the company has its own employees at Catcher facilities but sent an additional team to audit the complex upon hearing of the CLW's impending report. After interviewing 150 people, the Apple team found no evidence of violations of its standards, she said.
"We know our work is never done and we investigate each and every allegation that's made. We remain dedicated to doing all we can to protect the workers in our supply chain," the spokeswoman said.
In its supplier-responsibility report covering 2016, Apple said it conducted a record 705 comprehensive site audits. The number of high-performing supplier locations increased by 59 percent, while low-performing sites decreased by 31 percent, the company reported.
In a probe spanning roughly three months involving an undercover investigator and about 50 worker interviews, CLW said it found "major issues" with occupational health and safety, pollution and work schedules at the Suqian factory complex run by Catcher, which works with Apple and other companies and makes parts including iPhone and MacBook casings.
The advocacy group alleged that wages for resigning workers are not settled the day they quit, which it said Catcher is legally required to do in China. Hiring agencies sometimes refuse to let contract employees quit, withholding their full salaries if they insist on leaving, according to the CLW and Bloomberg. Other findings violated Apple's supplier code of conduct, didn't meet Catcher's stated standards or simply highlighted harsh conditions at the facilities, accordlabouro CLW. The group found no incidents of child labor during its recent investigation.
It's the second critique in less than two months involving a major Apple supplier. Late last year, Apple said it found that interns at a factory operated by Hon Hai Precision Industry, part of Foxconn, were working illegal overtime on iPhone X assembly lines. Foxconn confirmed that some interns worked overtime in violation of its policy, and said it would review the program to ensure similar incidents wouldn't happen again. Apple previously has cut ties with other factories for violating overtime and child labor laws. Hon Hai Precision is still one of Apple's largest suppliers, data compiled by Bloomberg show.
Catcher facilities were the subject of scrutiny in 2013 and 2014, when another investigation by CLW and Green America found 22 issues, including forced, unpaid overtime and improper handling of hazardous materials. At the time, Apple dispatched a team to investigate, and reiterated its commitment to "ensuring safe and fair working conditions for everyone in our supply chain." The Cupertino, California-based company continued to work with Catcher, according to its annual supplier lists.
Catcher started out as a magnesium components specialist in 1984. It expanded into other metal components for electrical devices and built a client base including Apple, Lenovo Group, HP, Samsung Electronics and LG Electronics. Videos that Apple often shows of machines milling single-body aluminum MacBooks replicate the processes Catcher performs. Since its 1999 initial public offering, Catcher's market value has soared more than twentyfold to more than $8 billion.
Catcher's manufacturing complex in Suqian is an isolated site on the city's western outskirts ringed by electrified and barbwire fences. It groups multistory workshops housing the computer-numerical-control machines that cut aluminum alloy plates into iPhone frames, as well as sand-blasting facilities that give the iPhone a brushed-metal look. It also makes components for other Apple devices, including MacBooks.
In all, the facilities violated 14 of Apple's supplier-responsibility standards, according to CLW, ranging from a failure to communicate the risk of handling hazardous chemicals to forcing probationary workers to pay for uniforms.
"Supplier shall provide and maintain a safe work environment and integrate sound health and safety management practices into its business," Apple's supplier code of conduct states. "Workers must be treated with the utmost dignity and respect," it adds. "Workers shall have the right to refuse unsafe work and to report unhealthy working conditions."
Catcher's factory-floor staff are mainly low-skilled labourers recruited through hiring agencies from rural areas across China. They travel to the coast in time for peak-season production -- usually three months in the second half of the year -- before making the long return trip. That stint at a plant, particularly one affiliated with Apple, often yields much more than they could hope to earn back home. As seasonal workers far away from their families, they may be reluctant to complain about conditions for fear of losing shifts.
One production line is required to crank out about 1,450 units during a 12-hour shift, which includes breaks for meals, according to CLW. In interviews with Bloomberg, workers expressed concern about safety issues and a lack of training about the materials they come into contact with. Some must switch quickly between at least four machines, increasing the risk of accidents, the workers said.
"One has to constantly work without stopping," said one worker, a 25 year-old father of two.
CLW's investigation found training for new staff lasted about four hours, vs. Catcher's official 24-hour requirement for the factory. As workers fill out required tests after training, an instructor reads out the answers, CLW said. Some workers told Bloomberg they were asked to sign forms confirming they completed the full training when they hadn't.
Catcher doesn't properly outline standard procedures, meaning workers aren't always aware of the best ways to protect themselves in a hazardous environment, employees told Bloomberg.
The workers Bloomberg interviewed said they got headaches from the noise. Catcher didn't distribute earplugs to new recruits until well into their first month, according to two of the employees. "I asked for the earplugs many times but they didn't have any. The loud noise of 'zah-zah' made my head ache and dizzy," one of those employees said.
Apple's supplier code of conduct says suppliers should "identify, control, monitor, and reduce noise generated by the facility that affects" noise levels at the boundary of factories.
Catcher provides one active carbon face mask daily to employees in the sand-blasting workshop to protect against fumes and dust. But some workers told Bloomberg that the masks can quickly clog up. Supervisors hand out thicker 3M-branded face masks only when they expect an inspection, one worker told Bloomberg, adding that high temperatures in the workshops make wearing those masks unbearable.
Rubber gloves designed to shield hands from external fluids are also in short supply and often don't last an entire shift, workers told Bloomberg. Some employees said they buy flimsy disposable plastic gloves -- the type used in the kitchen -- to protect themselves.
"After a few hours, the gloves swell and get soft, like they've been corroded. The fingers would be exposed," one worker said. CLW reported irritated and peeling skin on workers' hands.
Workers also complained about the odour in interviews with Bloomberg. Air filters are installed on cutting machines to clear vapors produced by the process, but workers said the system doesn't work fast enough: The filters clear the air when workers slice metal about once every 20 seconds, but that's too slow to meet production quotas so, the workers said, they cut more quickly despite the fumes.
"In the first few days of work, when I opened the cabinet, the smell made me nauseous," one worker from Shanxi province said.
Apple's supplier code of conduct says suppliers should "identify, evaluate, and manage occupational health and safety hazards through a prioritized process of hazard elimination, substitution, engineering controls, administrative controls, and/or personal protective equipment."
The end of the shift brings new challenges. Up to eight workers share a cramped dorm room with about four bunk beds. When Bloomberg visited in January, outside temperatures were often near freezing and workers kept all windows shut to preserve heat. That created a humid atmosphere in which odours of sweat, cigarettes, feet and unwashed clothing mixed freely. Workers living in about 20 rooms per floor share one wash space with 14 cold-water taps, a big public toilet -- but no shower. Taking a proper bath required walking to an adjacent facility.
Apple's code of conduct says worker dormitories provided by suppliers or a third-party should "be clean and safe and provide reasonable living space." Catcher said the rooms meet local standards, but it is about to buy land near the factory area and build new dorms for use next year.
Workers said one of the few sources of entertainment outside of factory hours is playing with their smartphones.
- Bloomberg
The S&P/NZX 50 Index closed down 0.10%, falling to 12,627.32.