Foxconn apologizes for payment error at Chinese iPhone factory after worker unrest

  • Foxconn says it is working with workers to resolve disputes
  • A major iPhone factory has been rocked by protests over pay and conditions
  • Apple says it has a team on site in Zhengzhou

TAIPEI/SHANGHAI, Nov 24 (Reuters) – Foxconn ( 2317.TW ) said on Thursday there was a “technical error” related to pay while hiring new recruits at a COVID-hit iPhone factory in China and apologized to employees after , which shook the company. fresh labor unrest.

Men smashed surveillance cameras and clashed with security staff 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 delayed wages and frustration over tight COVID-19 restrictions.

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

“Our team looked into this matter and found that there was a technical error during the onboarding process,” Foxconn said in a statement, referring to the hiring of new workers.

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

The apology was saddened by the day before, when Foxconn said it had fulfilled its payment agreements.

The unrest comes as China sees record numbers of COVID-19 infections and grapples with more and more lockdowns that are fueling frustration among citizens across the country. But it also revealed communication problems and mistrust of Foxconn’s leadership among some employees.

The largest protests have died down and the company has been communicating with employees involved in smaller protests, a Foxconn source familiar with the matter told Reuters on Thursday.

The person said the company has reached “initial agreements” with workers to resolve the dispute and production at the plant is continuing.

Growing employee discontent over the COVID outbreak, strict quarantine rules and food shortages have prompted many workers to flee the closed factory site since October after management implemented a so-called closed-loop system that isolated the plant from the outside world.

Many new recruits were hired to replace the workers who had fled – some former employees estimated there were thousands.

The Taiwanese company said it would respect the wishes of new recruits who want to resign and leave the factory site and offer them “care subsidies”. A Foxconn source said the subsidies were 10,000 yuan ($1,400) per worker.

THE RISKS OF THE APPLE

Foxconn’s Zhengzhou plant is home to more than 200,000 employees and has dormitories, restaurants, basketball courts and soccer fields covering an area of ​​about 1.4 million square meters.

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

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Apple said it has employees at the factory and is “working closely with Foxconn to ensure their employee concerns are resolved.”

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

“Apple’s extreme reliance on China, both as a (consumer) market and as a primary manufacturing location, we see it as a very risky situation,” said Christina O’Connell, a senior manager at SumOfUs, the nonprofit corporate group responsible for the company. .

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

A Foxconn source familiar with the matter said it was not immediately clear how much of an impact the worker protests might have on November production and that it could take several days to resolve, citing the factory’s large size.

A separate source said the unrest had ensured they would not be able to resume full production by the end of the month.

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Apple has warned that it expects lower shipments of premium iPhone 14 models than originally thought.

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($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

Our standards: Thomson Reuters Trust Principles.

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