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Intensive working takes its toll at Foxconn.

Intensive working takes its toll at Foxconn

At least a dozen people jumped to their death last year at the factory that makes some of the world's most sought-after technology products.

The deaths were by employees throwing themselves off high buildings at Foxconn Technology Group's Longhua factory campus in Shenzhen, China, where some 300,000 people eat, sleep, drink - and turn out such world-beating products as the Apple iPhone, the Sony PlayStation and the Dell personal computer.

Many aspects of life on the campus are good. Workers get free meals, accommodation, bus travel around the site and laundry. There are free sport facilities, with clubs for activities ranging from calligraphy to mountain climbing. Wages and benefits are good and the company's training is sought-after. But much of the work is intensive and repetitive.

In the September 2010 edition of Bloomberg Business Week, Balfour and Culpan interview Terry Gou (pronounced 'Go'), founder and chairman of the company that began 30 years ago by making knobs for television sets. Normally dividing his time between Foxconn's headquarters in Taipei and China, he began living in a room behind his office in Longhua to deal with the aftermath of the suicides.

One solution, already adopted, is to string nets between the dormitory buildings from which most of the suicides have taken place. Doors to roofs and balconies have also been locked. In addition, the company has set up a 24-hour counselling centre staffed by 100 experts, a 'Campus Loving Heart' website, big-brother and big-sister programmes in staff dormitories and training to attune managers to employees' emotional needs. Finally, Foxconn has hired WPP plc's Burson-Marsteller to help to draw up a public-relations strategy to combat bad publicity from the suicides.

Many of the suicides at Longhua are among young employees who have moved east from rural China to benefit from the comparatively high wages available in manufacturing. Now Foxconn plans to build more factories in western China, so workers can be closer to home and so have family members to turn to when problems arise.

In another interesting development, Foxconn plans to move additional production to the USA to be closer to some of its main markets. Balfour and Culpan report: 'The company currently employs about 1,000 workers in a Houston, Texas, plant that makes specialised high-end servers for corporate clients...Gou envisions a fully automated plant to produce components within five years.'

In Volume 259 Issue 9 of Industry Week, published in September 2010, Cable reports that a growing number of Chinese manufacturers are setting up in the USA. They include Hong Kong-based Mamtek International, which has installed a new manufacturing plant at Moberly, Missouri, to produce a no-calorie sugar substitute. The plant is expected to create more than 600 jobs and to pump $46 million into the local economy, where unemployment is around 10%.

Labour costs are obviously higher in the USA than in China, but land prices can be lower, infrastructure such as electricity supplies is generally more robust (electricity is also cheaper in the USA than in China) and generous support packages are on offer.

According to Cable, the US Bureau of Economic Analysis has estimated that China's cumulative manufacturing investment in the USA in 2009 was $994 million - up from $116 million six years earlier. A report by the Vale Columbia Center on Sustainable International Investment and the US-Chinese Services Group of Deloitte LLP forecasts that Chinese foreign direct investment in the USA in the next few years could mirror Japan's push into America in the 1980s. But Balfour and Culpan cite Gou as highlighting one factor that could check Chinese entrepreneurs' enthusiasm for the USA. 'America has too many lawyers,' he says. 'I don't want to spend time having people sue me every day.'