Overall, when you add everything, each iPhone costs Apple a little over $200. Since they sell the cheapest unsubsidized model for $649 (or €680 in Europe), you can guess their margin.
Recently, a Chinese journalist went undercover to work at Foxconn, the company that manufactures iPhones to check out how the living and working conditions were. You might have heard of Foxconn through a series of suicides that took place in the last three years.
The journalist worked for ten days at Foxconn. Getting hired was easy. All he needed was his citizenship card and he had to answer a series of health questions. Most of these were centered around his mental stability (for obvious reasons). After a short bus trip he was shown to the dorm. This is how he described it:
The first night sleeping at Foxconn dormitory is a nightmare. The whole dormitory smells like garbage when I walked in. It’s a mixed of overnight garbage smell plus dirty sweat and foam smell. Outside every room was fully piled up with uncleared trash. When I opened my wardrobe, lots of cockroaches crawl out from inside and the bedsheets that are being distributed to every new workers are full of dirts and ashes.
Before he could get to the factory floor, he had to undergo intensive training for seven days for his high-tech job with high-skill content:
During the whole conference, we are being highly emphasized on one point: “When you leave the lab, there’s no advanced technology, you only need to obey instructions.” We are being distributed with a checklist with only 13 rewards policies but over 70 penalties policies. The instructor said: “You might feel uncomfortable of how we treat you, but this is all for your own good.” (...) During the suicide topic discussion, someone has voiced out that the bad living environment will sure lead to more suicides. Also I have noticed that all the windows in the dormitory has been framed behind bars.Everybody knows that the best remedy for suicides is not to change the conditions that lead to them but to put bars to reduce their numbers. It is cheaper. Besides, given the razor-thin margin Apple has on each phone, they can hardly be faulted for not spending more on better living and working conditions. Are they made of money?
After the training, the journalist discovered that his job was to mark the back of iPhone 5 with an oil pen.
Each plate has to have 4 points marked, and they have to be accurate within 5mm of the target placement. He was repeatedly reprimanded for either marking the points too low or using too much oil.That's before overtime (which they were routinely forced to do after the ten hour shift). What is interesting in all that is the fact that, the task described by the journalist is best done by computer controlled machines or robots. But in this instance, the pay is so low that it is cheaper for Foxconn to employ people to do it.
Accuracy is something that comes with experience, and the journalist had to learn fast. He was expected to do a minimum of 5 back plates every minute. So that’s an accurately placed oil pen mark every 3 seconds, with his shift lasting 10 hours without a break. That’s a minimum of 3,000 back plates per shift.
The oil pen task could be carried out much more quickly and accurately by a robot, yet Foxconn chooses to employ 48 people working intensively to churn out tens of thousands of these back plates every day. And that’s just one part of the iPhone 5.Wait, can you guess the gender of those 48 workers?
Another interesting point he makes is the back plate work he was assigned is usually given to female workers as they are seen as more nimble.Right.
A few days after the iPhone was released Foxconn workers went on strike to protest against the terrible working and living conditions and low pay. There were confrontations with security forces, up to 40 people had to be hospitalized, many workers were arrested and the factory was shut down for three days.
Which was tragic, because, as a result of the selfish outburst of these spoiled workers, many people in North America and Europe had to wait for more than a week to get their shiny new iPhones.
And they had been lining up outside Apple stores for hours under very difficult conditions, sometimes with no Starbucks in sight.
Life is so unfair sometimes.
Apple has just removed from its APP Store an iPhone game based on Foxconn suicides.
Benjamin Poynter's In A Permanent Save State is a surreal and visually striking interactive narrative that the creator says imagines the spiritual afterlife of seven overworked laborers who have committed suicide, alluding to real-life events at Foxconn's electronics manufacturing plants in 2010. But the game was quietly removed from the App Store less than an hour after it went live earlier today.Apple had no comments.