Foxconn apologizes for wage-related error at China’s iPhone factory after labor unrest

TAIPEI/SHANGHAI, Nov 24 (Reuters) – Foxconn ( 2317.TW ) said on Thursday a wage-related “technical error” occurred in the hiring of new recruits at a COVID-hit iPhone factory in China and apologized to workers after that the company was shaken by recent labor unrest.

Men smashed surveillance cameras and clashed with security personnel as hundreds of workers protested at the world’s largest iPhone factory in the city of Zhengzhou on Wednesday, in rare scenes of open dissent in China sparked by claims of unpaid wages and frustration over severe COVID-19 restrictions.

Workers said in videos circulated on social media that they had been informed that the Apple Inc ( AAPL.O ) supplier intended to delay bonus payments. Some workers also complained that they were forced to share dormitories with colleagues who had tested positive for COVID.

“Our team has looked into the matter and discovered that a technical error occurred during the induction process,” Foxconn said in a statement, referring to the hiring of new workers.

“We apologize for an entry error in the computer system and guarantee that the actual salary is the same as agreed and the official recruitment posters.” It did not elaborate on the error.

The apology was a reversal from a day earlier when Foxconn said it had fulfilled its payment contracts.

The unrest comes at a time when China is logging a record number of COVID-19 infections and grappling with more and more lockdowns that have led to frustration among residents across the country. But it has also revealed communication problems and distrust of Foxconn’s management among some employees.

The largest protests had died down and the company was communicating with employees engaged in smaller protests, a Foxconn source familiar with the matter told Reuters on Thursday.

The person said the company had reached “initial agreements” with employees to resolve the dispute and production at the plant was continuing.

Growing worker discontent over covid outbreaks, strict quarantine rules and food shortages had led many employees to flee the closed factory campus since October after management implemented a so-called closed-loop system that isolated the plant from the wider world.

Many of the new recruits had been hired to replace the workers who had fled – estimated by some former employees to be in the thousands.

The Taiwanese company said it would respect the wishes of new recruits who wanted to retire and leave the factory campus, and would offer them “nurturing subsidies”. The Foxconn source said the subsidies amounted to 10,000 yuan ($1,400) per worker.

APPLE RISKS

Home to over 200,000 workers, Foxconn’s Zhengzhou facility has dormitories, restaurants, basketball courts and a soccer field across the sprawling 1.4 million square meter facility.

The factory produces Apple devices, including the iPhone 14 Pro and Pro Max, and accounts for 70% of iPhone shipments globally.

Apple said it had employees at the factory and was “working closely with Foxconn to ensure employee concerns are addressed”.

Several shareholder activists told Reuters the protests showed the risks Apple faces through its reliance on manufacturing in China.

“The extreme dependence of Apple on China, both as a (consumer) market and as its place of primary production, we see it as a very risky situation,” said Christina O’Connell, senior director of SumOfUs, a nonprofit corporate responsibility group.

Reuters reported last month that iPhone production at the Zhengzhou factory could fall by as much as 30% in November, and that Foxconn aimed to resume full production there by the second half of the month.

The Foxconn source familiar with the matter said it was not immediately clear how much of an impact the worker protests might have on production for November and that it could take a few days to determine, citing the large size of the factory.

A separate source has said that the unrest had made it certain that they would not be able to resume full production by the end of the month.

Apple has warned that it expects lower shipments of premium iPhone 14 models than previously expected.

($1 = 7.1353 Chinese Yuan)

Reporting by Yimou Lee in Taipei and Brenda Goh in Shanghai; Additional reporting by Ross Kerber in Boston, Beijing Newsroom and Yew Lun Tian; Editing by Anne Marie Roantree, Stephen Coates and Edwina Gibbs

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