Apple, Hewlett-Packard and Dell are investigating working conditions at Taiwan's Hon Hai Group after a mounting number of suicides at the contract manufacturer.
Apple is "saddened and upset" by the suicides and has a team evaluating Hon Hai's countermeasures, said Steve Dowling, an apple spokesman. HP said it's investigating Hon Hai's practices and Dell said it's examining reports on the world's largest contract manufacturer, also known as Foxconn Technology Group.
The probes add to the pressure on billionaire chairman Terry Gou, who last week opened Hon Hai's biggest Chinese production site to the media to defend working conditions that some labour-rights groups describe as a "sweatshop". The fallout threatens to disrupt a $40bn-a-year operation that builds everything from iPhones to desktop computers and televisions.
"Hon Hai needs to resolve the issue because the situation is also negative for Apple and HP," said Allen Pu, an analyst at Fubon Securities in Taipei. "Clients may reallocate some orders to other manufacturers, though I still see Hon Hai keeping its role as the main supplier because no one else has such sizeable operations."
The chairman's opening of the manufacturing facilities highlights the scrutiny the company is facing, according to UBS analyst Arthur Hsieh. "This has never been seen before. It's really unusual times," said Hsieh. "It's crisis control."
There were nine suicides and two attempts at the Chinese operations this year, a Hon Hai official said last week, declining to be identified. At least four of the deaths occurred this month.
"We're in direct contact with Foxconn senior management," Apple's Dowling said. "Apple is deeply committed to ensuring that conditions throughout our supply chain are safe and workers are treated with respect and dignity."
HP is investigating "the Foxconn practices that may be associated with these tragic events," the company said in an email.
"Any reports of poor working conditions in Dell's supply chain are investigated," Jess Blackburn, a spokesman for Dell, said in an email. "We expect our suppliers to employ the same high standards we do."
Most of the problems involve new workers, said Chen Zhonglei, who manages 200 workers who assemble printers.
"These young workers coming in now are not as ready to take on hardship as much as I was when I arrived," said Chen, who's worked at Hon Hai for a decade. "Psychologically they're more fragile. When I started I didn't think about so many things."
Foxconn is a sweatshop that "tramples" workers' personal values for the sake of efficiency, Li Qiang, executive director of New York-based China Labour Watch, wrote in a statement this month.
Suicides among Chinese factory workers have more than doubled in the industrial south this year compared with all of 2009, Li wrote in a report last week, citing a survey of 201 workers. The survey excludes the deaths at Hon Hai.
"Foxconn may not be a sweatshop in the sense that it physically abuses its employees or forces them to work extra hours," the China Daily newspaper wrote in an editorial last week. "That does not mean it is showing enough humanitarian concern for its employees. And, neither does it imply that it is doing enough to foster a corporate culture that helps employees strike a healthier work-life balance."
Students and Scholars Against Corporate Misbehaviour, a Hong Kong-based organisation that monitors corporations, said last week it will ask consumers to boycott the next iPhone as Apple should share the blame because it hires contract manufacturers such as Hon Hai to make its products.
Gou said he plans to increase psychological testing to help prevent more suicides.
"I offer my sincerest apologies to society, the entire public, all our employees and their families because we had no way of preventing these things from happening," Gou said as he bowed at a press conference last week. "Will it happen again? From a logical, scientific standpoint, I don't have a grasp on that."