Foxconn apologizes for payroll error at Chinese iPhone factory after workplace unrest

  • Foxconn says it is working with staff to resolve disputes
  • Major iPhone factory rocked by protests over wages and conditions
  • Apple says it has a team on the ground in Zhengzhou

TAIPEI/SHANGHAI, Nov 24 (Reuters) – Foxconn (2317.TW) said on Thursday that a payroll-related “technical error” occurred when hiring new hires at a coronavirus-hit iPhone factory. COVID in China and apologized to workers after the company was rocked by renewed labor unrest.

Men smashed surveillance cameras and clashed with security personnel 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 triggered by allegations of late payment and frustration with harsh COVID-19 restrictions.

Workers said in videos posted on social media that they had been informed that the supplier to Apple Inc (AAPL.O) intended to delay payment of bonuses. Some workers have also complained of being forced to share sleeping quarters with colleagues who have tested positive for COVID.

“Our team has investigated the matter and discovered that a technical error occurred during the onboarding process,” Foxconn said in a statement, referring to the hiring of new workers.

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

The apology was an about-face from a day earlier when Foxconn said it had fulfilled its payment contracts.

The unrest comes at a time when China is seeing record numbers of COVID-19 infections and grappling with growing lockdowns that have fueled frustration among citizens across the country. But it also revealed miscommunication and distrust of Foxconn management among some staff.

Larger protests had died down and the company was communicating with employees engaged in smaller protests, a Foxconn source familiar with the matter told Reuters on Thursday.

The person said the company had reached “initial agreements” with employees to resolve the dispute and that production at the plant was continuing.

Growing worker discontent over COVID outbreaks, strict quarantine rules and food shortages had seen many employees flee the factory campus which has been closed since October after management implemented a so-called system in closed loop that isolated the factory from the rest of the world.

Many new recruits had been hired to replace workers who had fled – estimated by some former staff at thousands.

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

APPLE RISKS

Home to more than 200,000 workers, the Foxconn factory in Zhengzhou has dormitories, restaurants, basketball courts and a soccer field on its sprawling facility of around 1.4 million square meters.

The factory manufactures 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 staff at the factory and is “working closely with Foxconn to ensure their employees’ concerns are addressed.”

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

“Apple’s extreme reliance on China, both as a (consumer) market and as a primary manufacturing location, tells us that this is a very risky,” said Christina O’Connell, senior director of SumOfUs, a nonprofit corporate responsibility group. .

Reuters reported last month that iPhone production at the Zhengzhou plant could drop 30% in November and that Foxconn intended to resume full production by the second half of the month.

The Foxconn source familiar with the matter said it was not immediately clear what impact the worker protests might have on production for November and that it could take a few days to resolve, citing the large size of the factory.

A separate source said the unrest had made it certain 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 high-end iPhone 14 models than previously expected.

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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: The Thomson Reuters Trust Principles.

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