We learn that the Foxconn factory has decided to freeze hiring, and this is rich in lessons and consequences ... for us here.
First and foremost, to understand the extent to which Foxconn's news is a key marker of global economic activity, it is perhaps useful to recall who this Taiwanese (not Chinese, even though its main production centres are in China) manufacturing giant is.
Foxconn is the world's largest electronics supplier, not only in telephony, and not only for Apple, contrary to what the numerous contents that cite this customer-supplier binomial may lead one to believe. Foxconn supplies a great deal of computer hardware and electronics in the broadest sense for all the familiar brands that have invaded our everyday spaces.
Regardless of its sector of activity, it is also important to realise that it is one of the world's largest companies as an employer. Indeed, if we put aside the US Department of Defense (the world's largest employer with 3.2 million people) or the Chinese military (2.3 million) or the British health service (1.7 million people) to focus on companies, here is the ranking:
1/ Walmart, the US retailer, is the world's largest private employer, with 2.1 million employees,
2/ McDonald's is in second place with 1.8 million people
3/ China National Petroleum Corporation (the Chinese oil company, the Chinese Total): 1.7 million people
4/ Then comes the Chinese EDF: State Grid Corporation of China, with 1.6 million employees
5/ In 5ème position we move on to India with the Indian Railways, which employs 1.4 million people
6/ Foxconn: since 2012, Foxconn, officially named "Hon Hai Precision Industry", has been ranked 6th in the world.ème position, with 1.2 million employees, having overtaken China Post Group (7th) which employs 900,000 people.
Indeed, according to several studies and rankings, the Taiwanese manufacturer has grown from 800,000 employees in 2009 to 1.2 million today, in particular to absorb the launch of the iPhone 5, which positions the Taiwanese subcontractor as the 6ème global company by number of employees ... and the 3ème private employer worldwide!
The evolution of Foxconn's activity, due to the weight of the company, but also the markets for which it works, is therefore an interesting indicator. But it is an indicator from which one should not draw too hasty conclusions. Indeed, the hiring freeze at Foxconn can be explained, as some have suggested, by the lesser success of the iPhone5. The Wall Street Journal had already mentioned this in January, explaining in particular a drop in orders for certain parts (and not only at Foxconn, but also at Sharp for the screens). Many comments have been made about a lesser enthusiasm for the latest Apple product, strong competition from Samsung's Galaxy products, the expectation of a new breath of innovation since the death of Steve Jobs, etc. Things may not be that simple and the brand equity remains extremely strong. Indeed, if we refer to the latest statistics from "Strategy Analytics", and taken up by the brand, we see that the iPhone 5 and iPhone 4S are the two best-selling smartphones in the last quarter of 2012 (respectively 27.4 million + 17.4 million, ahead of the Galazy S3 at 15.4 million units).
In reality, we should not look exclusively at Apple to analyse this news. Firstly, because of the company's weight, as mentioned above, this hiring freeze is also an indicator of the global macroeconomic situation, particularly in the major Western consumer zones, with the jolts of the US recovery (2.2% in 2012, but with a 0.1 drop in GDP in the fourth quarter, the worst performance since 2009; US consumer sentiment at half-mast; public debt above 100% of GDP), Brussels' predictions of a Eurozone in recession again in 2013, record unemployment rates, a contraction in household purchasing power, etc. China is also part of the world and of globalisation!
Secondly, it is interesting to note that Foxconn explains this hiring freeze above all as the result of a positive trend: a reduction in turnover, with workers returning to work more after the holiday period. This result is explained, according to the company and obviously by some observers, by less bad working conditions. On this point, it should be remembered that Foxconn is starting from a very low base, with factories considered as "suicide factories" whose execrable working conditions have been "revealed" and commented on many times over the past year, and which have even experienced (for the first time), social movements recently. This was notably the case during the strike movement in early October 2012. Foxconn is also part of the digitalized and mediatized world in which everything comes to light. From this point of view, the 3ème The world's largest private employer can no longer hide behind its borders, can no longer ignore the reputational risks it runs, and above all will have to take into account the social "demands" of a Chinese working class that wants to get out of the capitalist slavery in which the world's leading communist country is trying to keep it. Moreover (another first), Foxconn has just announced the organisation of trade union elections!
What is undoubtedly a positive trend for Chinese workers is also a positive trend for us as the inevitable increase in the standard of living in China and the cost of labour will gradually reduce China's competitive advantage. Even if, of course, the differential is still very much in favour of the world's factory, it will narrow. Combined with the rise in transport costs (energy inflation), the development of economic patriotism of "made in my country", the questioning of long circuits for sanitary and ecological reasons, and the reputational issues linked to denunciations of working conditions, China will also experience its transformation and the pressure of globalisation.
Foxconn is therefore an essential sensor of the economic situation, to be followed like other traditional indicators. Foxconn's news actually provides us with two indices: an index on the global economy, of which it is one of the trend indicators, and a social index on working conditions in China and the emergence of demands from the Chinese working class.
I don't know if Maurice Taylor has a view on trade unionism in China or on the productivity of Chinese workers, but let's admit that the difficulties of a factory in China have a comforting side. It seems to us desirable and justified that the working conditions in China should improve, we have an interest in it, and even if we wish them a positive and constructive trade unionism, we also undoubtedly savour this CGTisation of Chinese factories as a revenge and wish them good luck!
The article on atlantico.fr:
Foxconn freezes hiring, Apple orders: what's going on in the iPhone kingdom?
other articles:
When the world's factory rebels
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