Foxconn Worker-Relocation Strategy Raises Questions

Foxconn Technology Group apparently is trying to save some money now that its promised to hike wages for some workers in its main factory in China.

Foxconn, the company that manufactures Apple products such as the iPhone, as well as Dell, Nokia, Sony and HP gear, has taken a bad publicity hit this year for a rash of employee suicides. As a result, Foxconn has pledged to increase pay in the Shenzen factory. The catch is, over the next two months, Foxconn plans to move hundreds of thousands of workers except those who work on the iPhone into the Chinese hinterlands. And its unknown how much money those employees will make.

China Daily reported on Tuesday (Wednesday in China) that researchers who support HP servers will move to northern China; related production lines will be included in that relocation. Other business groups also will migrate to less expensive cities in China, including Tianjin, Yantai and Wuhan, the newspaper said.

Suspicious minds could infer that Foxconn wants to find places with less-intense media coverage and more people willing to work long hours for little compensation. But Tianjin, China counted more than 12 million residents at the end of last year; Yantai, China had 6.5 million people by the end of 2008; and Wuhan, China numbered 9.7 million people by year-end 2007. With any luck, those areas have media outlets willing to scrutinize Foxconns treatment of workers.

Meanwhile, Foxconns relocation strategy raises eyebrows because the company already decided to pass on the expense of the wage increases to customers such as Apple. So why does it need to move workers if the costs will be passed through? (And will it reimburse the employees having to uproot their homes?)