Global Electronics Industry: Poster Child of 21st Century Sweatshops and Despoiler of the Environment?

Unfortunately, the reasons for continuing sweatshop conditions in electronics are the same as those for ongoing sweatshops in other global industries:

• A schizophrenic and fatally-flawed business model in which nominal CSR codes always are trumped on the factory floor by the “iron triangle” of ever-lower prices to suppliers, same high benchmark for quality, and often shortened delivery times; and

• The lack of any meaningful participation by workers in plant-level occupational safety and health programs.

OUTSOURCING

The electronics industry has followed other consumer product sectors in out-sourcing almost all of its production. Now, 75 percent of computer products are made by “contract manufacturers” (CMs) rather than by their “original equipment manufacturers” (OEMs). Several of the CMs, such as Hon Hai/Foxconn or Flextronics, totally are unknown to consumers, but generate billions in sales to the OEMs and their ultimate retailers, with hundreds of thousands of workers throughout Asia.

So the pattern is set by the OEMs' inherently contradictory business model that on the one hand, demands the lowest possible production costs and ever-declining payments to contractors, while on the other hand, demands contractors comply with the corporate code of conduct, all national laws and many international standards. The contractors are supposed to do the same with their own sub-contractors and suppliers — all without the higher levels providing adequate resources to the lower levels of the supply chain.

The end result is a system where code compliance is routinely “gamed” by contractors who generate multiple sets of (falsified) books for wages and hours to meet the requirements of clients' codes of conduct. It is a system where unmarked, uninspected shadow factories produce the bulk of goods while code monitors are taken to clean, calm and well-lit trophy factories around the corner. It is a system where workers routinely are coached how to answer auditors' questions or, less politely, bribed or intimidated or threatened to give the right answers about hours of work, pay and working conditions.

All the details of how this done in global supply chains can be found in Alexandra Harney's 2008 book, The China Price: The True Cost of Chinese Competitive Advantage, and T.A. Frank's article in the April 2008 Washington Monthly, “Confessions of a Sweatshop Inspector.”

Compared to the garment, toy and sports shoe sectors the electronics industry has the same sort of unilaterally developed code of conduct, the same ineffective and non-transparent code monitoring systems and the same contradictory business model and command-and-control, management systems approach.

NO INPUT FROM WORKERS

The electronics industry added its own special twist to sweatshop manufacturing — the introduction of mass, temporary-help agency work forces, the most precarious and least-paid form of employment. This kind of low-cost production is hailed as the wave of the future.

The Mexican electronics industry centered in Guadalajara now consists of 55 percent to 60 percent temporary help agency employees, or some 240,000 workers employed by 60 different temporary agencies. These “perma-temp” workers have low pay and virtually no benefits, and, of course, do not work for any of the global electronics giants whose products they make.

The second CSR fatal flaw is shared by both the electronics industry and the previously recognized sweatshop sectors — the lack of any meaningful participation by production workers in plant health and safety programs.

The only way to have effective workplace health and safety programs in the giant electronics supplier factories is to integrate informed, empowered and active plant floor workers into critical EHS activities such as facility inspections, accident investigations, hazard corrections and peer training.

This has been recognized by leading global manufacturers for some time. Back in 2002, Doug Kahn, then CSR director for Reebok, told the London Financial Times: “We have inspections of factories, both announced and un-announced. But we just don't have the assurance that things will be the same the next day. Factories in China are incredibly sophisticated at finding ways to fool us. The best monitors are the workers themselves.”

Despite this history, the electronics industry has not integrated workers into any aspect of their CSR programs or their elaborate, top-down code monitoring systems. The industry has learned, at least, to talk about “capacity-building” of suppliers and “encouraging supplier ownership” of CSR programs.

“We recognize that auditing is not the goal itself,” EICC's 2008 annual report declares, “it is the first step in a process of learning and collaboration … that will allow us, and our suppliers, to work together to create sustained, long-tem improvement in conditions in the supply chain.”

However, this heralded collaboration does not extend to plant workers who are committed to improving working conditions, who are on site all day, who know the problems and can suggest possible fixes and who can verify if corrective actions actually work, and if the code monitoring is being gamed.

Here, the electronics industry is in the same boat as almost all other global supply chain operators. It's a shame, though, that such a cutting edge industry lags behind others that have recognized that changing purchasing practices, integrating CSR and sourcing policies and genuinely empowering workers are the road forward to ending sweatshops.

MINING PRACTICES JEOPARDIZE WORKERS

Sweatshop manufacturing practices are not the only problem the global electronics industry faces. The massively destructive mining industry producing essential metals for electronic goods increasingly is seen as a responsibility of the brand name electronics retailers as well. Mining's impact on the natural environment — and the people who live it — is now something that HP, Dell, Apple and Nokia cannot avoid.

Then there is the other end of the use cycle — the dumping of hazardous e-waste in the developing world — is another “can't avoid” responsibility for electronics producers. There are now 1 billion personal computers in use in the world, and that number is expected to double by 2015. Preventing sweatshop recycling of discarded computers in dangerous, polluting operations will be essential, not to mention the recapturing all the raw materials that went into these computers in the first place.