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Deep dive into the iPhone 5 supply chain returns a story of shoddy recruiting, debt and starvation

Posted: , by Daniel P.

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Deep dive into the iPhone 5 supply chain returns a story of shoddy recruiting, debt and starvation
In a fascinating read that takes for example Apple's supply chain ins and outs, Businessweek traces a journey from packing milk crates in Kathmandu through testing iPhone 5 camera modules, to becoming broke and in debt at the end.

Bibek Dhong, a 27-year-old at the time Nepalese, perhaps wishes now he had stayed in the milk logistics business, as working for one of Apple's myriad suppliers and subcontractors didn't pan out as he imagined. When he got a call from an agency offering him to work for Apple, he didn't hesitate, as these are jobs that people actually pay to get there.

Ramping up production before a new iPhone launch at Flextronics, a supplier tasked with the iPhone 5 camera units, means tapping a vast network of recruiters and local hirers from neighboring Indonesia, Cambodia, Myanmar, Vietnam, and apparently going as far as Nepal. Faced with an immense pressure to find many thousands of workers as fast as possible, the agencies basically ring every able-bodied man or woman they could think of, cutting corners with work permits and the like to get them at the Flextronics plant in Kuala Lumpur as fast as possible.

Deep dive into the iPhone 5 supply chain returns a story of shoddy recruiting, debt and starvation
After having his farm destroyed by floods, Bibek Dhong moved to the city with his wife and daughter, and filed at several local recruiters which quickly found him for the Apple job when the time called for it. From here on out, it became a journey of misery and starvation, with Mr Dhong having to pay each recruiter he was transferred through, so when he landed at the factory he was already a grand in debt, and interest was accumulating - a huge amount for the local standards. 

Needless to say, as in any good Hollywood movie, his passport was taken by Flextronics, he was soon fired, the local tavern that served workers food cut him off when it learned he was fired, and the whole shebang ended in misery when he went home broke and in debt after months of being an exile at Flextronics. 

Except that this wasn't a movie, and he wasn't making the cameras for the iPhone 5, just testing them, while the machines rejected 7 out of 10 units due to shoddy manufacturing. A fascinating story that deserves some thinking how the constant pressure for margins and quarterly results affects everyone down the chain as far as spiritual Nepal now.

source: Bloomberg

29 Comments
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posted on 08 Nov 2013, 02:35 6

1. alexfiran (Posts: 40; Member since: 13 Jun 2013)


my Good..look at what we turned out into..

posted on 08 Nov 2013, 07:03 4

16. jaytai0106 (Posts: 1272; Member since: 30 Mar 2011)


monsters... In order for big company to make money, they have to enslave people with the lowest pay possible... Buy American product, people...

posted on 09 Nov 2013, 11:24

29. lyndon420 (Posts: 1733; Member since: 11 Jul 2012)


Yup I agree. My next phone will be the MotoX...made in the USA.

posted on 08 Nov 2013, 03:04 8

2. ScottSchneider (Posts: 316; Member since: 06 Dec 2011)


Apple Suxx Big time...!!! The same goes to their Suppliers... o_0

posted on 08 Nov 2013, 03:17 3

4. alterecho (Posts: 1080; Member since: 23 Feb 2012)


Apple doesn't own Flextronics or is it their doing. They should cut off business with such companies though.
So, please stop trying to seed your hate even in articles on sensitive subjects.

posted on 08 Nov 2013, 03:40 6

6. orca99 (Posts: 87; Member since: 05 Oct 2013)


The reality is 9 out of 10 companies in Chinese OEMs operate in a similar manner. And Apple is fully aware of their vendors' inadequate treatment towards the employees. Does Apple care? Absolutely not as long as they get what they ordered on time. Apple's employees are at the vendors' sites most of the time making sure everything is done correctly as far as manufacturing is concerned but much care less about how they are treated. How do I know? I've worked for a company providng parts to Apple (also to LG, Samsung and Nokia) and we had manufacturing facilities in China. I don't work for them anymore but nothing has changed since then. By the way, Flextronics is one of the largest OEMs for Apple. You stop doing business with them and you would end up waiting months before you get your hands on a shiny Apple phone.

posted on 08 Nov 2013, 04:05 2

7. alterecho (Posts: 1080; Member since: 23 Feb 2012)


Is it only Apple, which contracts these companies or do others do too (Samsung, LG, Nokia, etc...) ?

posted on 08 Nov 2013, 05:28

14. bibekpachhai (unregistered)


You think this is bad? Look up AP's report on migrant workers working in Qatar for world cup.

posted on 08 Nov 2013, 07:04

17. jaytai0106 (Posts: 1272; Member since: 30 Mar 2011)


Everyone is doing it... it's sad... and that's how we can buy a phone at such low price otherwise we might be paying $400 for a phone with contract.

posted on 08 Nov 2013, 20:04

24. 14545 (Posts: 1106; Member since: 22 Nov 2011)


No we wouldn't. The price of the phone is what the market will pay. The things that will change are apple's, and others, ungodly profit margins. The only way that will change though is if consumers demand it.

posted on 08 Nov 2013, 04:59 1

11. BillyG (Posts: 305; Member since: 24 Sep 2012)


does apple care? they need to buy apple care protection plan first...

posted on 08 Nov 2013, 03:14 1

3. alterecho (Posts: 1080; Member since: 23 Feb 2012)


I feel sorry for him and others such as him. Everyone should cease business with Flextronics and such companies.

posted on 08 Nov 2013, 03:18

5. joey_sfb (Posts: 2898; Member since: 29 Mar 2012)


Thanks for bring us this coverage. I wonder what could be done to avoid such exploitation.

Also why is he fired?

posted on 08 Nov 2013, 05:04 7

12. Droid_X_Doug (Posts: 5737; Member since: 22 Dec 2010)


"I wonder what could be done to avoid such exploitation."

Don't buy Apple products. And send a letter to Tim Cook stating your decision. If enough people don't buy Apple products, Apple will clean up their supply chain.

posted on 08 Nov 2013, 10:41 1

20. downphoenix (Posts: 2304; Member since: 19 Jun 2010)


That is only part of the problem though, other manufacturers like Samsung also have this problem with parts suppliers. This is just terrible, but apparently this is how these companies get these parts so cheap, so that they can get these big profit margins. Only way to put a stop to it is to not buy this crap in the first place.

posted on 08 Nov 2013, 04:42

8. JMartin22 (limited) (Posts: 973; Member since: 30 Apr 2013)


If anyone took time to read this article, this former workers story is quite sad

posted on 08 Nov 2013, 04:49

9. CX3NT3_713 (Posts: 1833; Member since: 18 Apr 2011)


.... Smh... Not surprise..apple

posted on 08 Nov 2013, 04:53 3

10. Twistyone (Posts: 1; Member since: 08 Nov 2013)


I have just become a member of this side so that i can comment on what a one sided and badly written / researched article this is!

For the most part i agree with 'alterecho's comments'. There is very little reason for Apple to appear in this article unless it is a smeer campaign. Most larger asian companies work like this, so we would have to blame the larger part of all Western companies wanting cheep labour.

Plus, he didn't leave his home for Apple as 'implied' in the article. He was already in the city due to floods etc.

There is no background justification whatsoever. Even i f we do feel sorry for him (and we do) he had made most of these decisions himself.

posted on 08 Nov 2013, 05:40 3

15. orca99 (Posts: 87; Member since: 05 Oct 2013)


Most Asian companies work like this? Have you ever worked for an Asian company? I worked for a company that dealt with Samsung, LG, Pantech, Panasonic, NEC, Hitachi, Sharp and their 1st tier vendors. They are all Asian but none of them work like this. The problem is Apple is heavily dependent on OEMs in China that continue to ignore and turn their blind eyes on the exploitation of hiring/firing procedures. People are hired/fired at will without any adequate compensation depending on the severe fluctuations in manufacturing capacity requirement. Other Asian companies I've mentioned above mainly have their own manufacturing facilities in China and their treatments towards employees are a class above that of Apple's OEMs. I am not saying the article is accurate or justified in any way but you shouldn't go around making stereotype statement about Asian companies without really know what is going on.

posted on 08 Nov 2013, 09:43 1

19. joaolx (Posts: 353; Member since: 16 Aug 2011)


Exactly. When Apple does this, everyone goes crazy, when Samsung does it it's no problem and then who's the real she*p?(why can't I post sh**p, it's offensive?, when it was Android trashing iOS users it wasn't a problem.)
This happens everywhere, with everyone, it's not just an Apple problem. This suppliers work for everyone, not just Apple and Apple is the one investigating this problems cause no one else will.

posted on 08 Nov 2013, 05:09

13. ArtSim98 (limited) (Posts: 2738; Member since: 21 Dec 2012)


Don't worry its's just innovation.

posted on 08 Nov 2013, 09:38

18. joaolx (Posts: 353; Member since: 16 Aug 2011)


Interesting that all of this articles are about Apple when everyone does this and yet Apple is the only one that is investigating and changing how their suppleirs work.

posted on 08 Nov 2013, 11:26 1

21. mcshank (Posts: 47; Member since: 24 Apr 2013)


They are the only ones coming of Light recently. And Of course they say they are investigating and "changing" their suppliers work.... Its just a way of saying, "We're sorry, we promise it wont happen again" and what do they let happen again? The same thing. Apple is a POS, other Companies do the same sure, but its not making news due to not having bad press elsewhere. Apple is one of the largest companies around, so they need to make double the efforts of anyone else to keep this under wraps OR articles like this pop up. Samsung is larger then apple due to all of its hundreds / thousands of products worldwide and not just phones but they keep alot of their problems under the radar so you dont see much of it. This is not a bash article against apple, its a little recap story of a migrant worker in a impoverished country trying to make a living by going to work for apple *Its contractors are STILL considered apple as THEY ARE MAKING APPLE products which is Representing the Main company* And getting bullied and abused and left with even less then when he started.

posted on 08 Nov 2013, 11:56

22. mike2959 (Posts: 225; Member since: 08 Oct 2011)


If the IPhone was made by us Americans... It would cost easily over 2K each. The MARKET (us) says no way in hell are we going to pay for 2K for a phone, so.. What does ANY manufacturer do? Find a way to manufact WHAT WE WANT, FOR A PRICE WE WANT TO PAY. The automobile manufacturer industry is another great example. Does anyone think the pay, benefits, working environment at the KIA plant in Korea is better than the Ford plant in Detroit?

posted on 08 Nov 2013, 20:30

25. roscuthiii (Posts: 1791; Member since: 18 Jul 2010)


You realize that your statement is counterintuitive. If the market says no way are we going to pay $2k, then no, the phone would not cost $2k. It's true no company should be partnering with suppliers like this, but they do. Just about all of them. When Apple (or any other company for that matter) makes public statements about championing human rights (and they do), but then contracts with companies like this... It's pretty hypocritical.
Considering what Apple just went through with Foxconn, you'd think they'd have learned a lesson.

posted on 08 Nov 2013, 12:06

23. mike2959 (Posts: 225; Member since: 08 Oct 2011)


Oh don't forget Apple or any company would go from paying 2% in taxes in those countries, to paying the 35% in the US. Which again would drive the cost through the roof. It's a sad story no doubt, but don't point fingers, nobody has a better idea.

posted on 08 Nov 2013, 20:48 1

27. squallz506 (banned) (Posts: 1075; Member since: 19 Oct 2011)


Moto x is now free on T-Mobile. Assembled in the usa.

posted on 08 Nov 2013, 20:47 1

26. squallz506 (banned) (Posts: 1075; Member since: 19 Oct 2011)


And apple claims they are a force for good in the world. At least Sammy isn't bold faced lying.

posted on 09 Nov 2013, 05:40

28. Leo_MC (Posts: 517; Member since: 02 Dec 2011)


"the machines rejected 7 out of 10 units due to shoddy manufacturing"
Every business that does a shoddy job shoud go bankrupt.

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