Foxconn founder Terry Gou might be regarded as Henry Ford reincarnated if only a dozen of his workers hadn't killed themselves this year. An exclusive look inside a postmodern industrial empire.
On a crushingly hot mid-August day at Foxconn's Longhua factory campus in Shenzhen—where a dutiful army of 300,000 employees eats, sleeps, and churns out iPhones, Sony (SNE) PlayStations, and Dell (DELL) computers—workers indulged in a rare moment of celebration. First, there was a parade, an Alice in Wonderland spectacle of floats, blaring vuvuzelas, and workers dressed up as Victorian ladies, geishas, cheerleaders, and Spider-Men. This was followed by a two-hour rally inside a vast sports stadium featuring acrobats, musical performances, fireworks, and life-affirming testimonials punctuated by chants of "treasure your life" and "care for each other to build a wonderful future."
It was hardly a spontaneous outpouring. Rather, it was a joint production of employee unions and management at Hon Hai Precision Industry, the flagship of Foxconn Technology Group, as part of an effort to mend the collective psyche of a Chinese workforce that numbers more than 920,000 across more than 20 mainland factories. The need to do so became apparent after 11 Foxconn employees committed suicide earlier this year, most of them by leaping from company-owned high-rise dormitories. The publicity-averse Taipei-based company and its 59-year-old founder and chairman, Terry Gou, were thrown into the spotlight, subjected to unfamiliar scrutiny by customers, labor activists, reporters, academics, and the Chinese government.
The suicides introduced Foxconn to much of the world in the worst terms imaginable—as an industrial monster that treats its workers like machines, leveraging masses of cheap labor, mainly 18-to-25-year-olds from rural areas, to make products like the iPhone at seemingly impossible prices. For Western consumers, the lost lives were an invitation to consider the real cost of their electronic playthings. For the image-conscious companies with which Foxconn does business, including IBM (IBM), Cisco (CSCO), Microsoft (MSFT), Nokia (NOK), Sony, Hewlett-Packard (HPQ), and Apple (AAPL), the suicides were a public-relations nightmare and a challenge to offshoring strategies essential to their bottom lines.
Foxconn made matters worse with a slow and initially clumsy response. In an exclusive interview with Bloomberg Businessweek, Gou conceded that he didn't immediately grasp the significance of the suicides. "I should be honest with you," he says. "The first one, second one, and third one, I did not see this as a serious problem. We had around 800,000 employees, and here [in Longhua] we are about 2.1 square kilometers. At the moment, I'm feeling guilty. But at that moment, I didn't think I should be taking full responsibility." After the fifth suicide, in March, Gou says, "I decided to do something different."
It actually wasn't until late May, after the ninth Foxconn employee had leaped to his death, that Foxconn went into full crisis management mode, stringing more than 3 million square meters of yellow-mesh netting around its buildings to catch jumpers and setting up a 24-hour counseling center staffed by 100 trained workers. Management increased wages for factory workers in Shenzhen by 30 percent, to 1,200 renminbi ($176) per month, and promised a second raise in October. Finally, Gou's company hired the New York firm Burson-Marsteller to help devise a formal public-relations strategy, its first in more than 35 years of existence.
It was hardly a spontaneous outpouring. Rather, it was a joint production of employee unions and management at Hon Hai Precision Industry, the flagship of Foxconn Technology Group, as part of an effort to mend the collective psyche of a Chinese workforce that numbers more than 920,000 across more than 20 mainland factories. The need to do so became apparent after 11 Foxconn employees committed suicide earlier this year, most of them by leaping from company-owned high-rise dormitories. The publicity-averse Taipei-based company and its 59-year-old founder and chairman, Terry Gou, were thrown into the spotlight, subjected to unfamiliar scrutiny by customers, labor activists, reporters, academics, and the Chinese government.
The suicides introduced Foxconn to much of the world in the worst terms imaginable—as an industrial monster that treats its workers like machines, leveraging masses of cheap labor, mainly 18-to-25-year-olds from rural areas, to make products like the iPhone at seemingly impossible prices. For Western consumers, the lost lives were an invitation to consider the real cost of their electronic playthings. For the image-conscious companies with which Foxconn does business, including IBM (IBM), Cisco (CSCO), Microsoft (MSFT), Nokia (NOK), Sony, Hewlett-Packard (HPQ), and Apple (AAPL), the suicides were a public-relations nightmare and a challenge to offshoring strategies essential to their bottom lines.
Foxconn made matters worse with a slow and initially clumsy response. In an exclusive interview with Bloomberg Businessweek, Gou conceded that he didn't immediately grasp the significance of the suicides. "I should be honest with you," he says. "The first one, second one, and third one, I did not see this as a serious problem. We had around 800,000 employees, and here [in Longhua] we are about 2.1 square kilometers. At the moment, I'm feeling guilty. But at that moment, I didn't think I should be taking full responsibility." After the fifth suicide, in March, Gou says, "I decided to do something different."
It actually wasn't until late May, after the ninth Foxconn employee had leaped to his death, that Foxconn went into full crisis management mode, stringing more than 3 million square meters of yellow-mesh netting around its buildings to catch jumpers and setting up a 24-hour counseling center staffed by 100 trained workers. Management increased wages for factory workers in Shenzhen by 30 percent, to 1,200 renminbi ($176) per month, and promised a second raise in October. Finally, Gou's company hired the New York firm Burson-Marsteller to help devise a formal public-relations strategy, its first in more than 35 years of existence.
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