Timothy Cook of Apple Inc. (Nasdaq: AAPL) is having a sweet and sour moment.
Apple posted the best quarterly financial performance in its history in the same week an article in The New York Times charged the company with turning a blind eye to violations of employee rights at its suppliers' manufacturing plants in China.
The New York Times did not get a response to its request for comments from Apple; the company is notorious for not responding to interview requests. However, Cook certainly read the article (and an earlier unflattering story in which Steve Jobs is quoted as telling President Obama, “Those jobs aren’t coming back”) and responded to some of the more serious allegations against the company in a message to employees. Cook rallied his team, telling them the company cares about every member of its supply chain. Further, Apple is opening up its operations to outside parties for monitoring, he said in the email.
Should Apple have responded to the interview requests? I think so, but Apple operates a public relations machinery quite unlike those of many of its peers. In some ways, Apple executives may be conditioned to believe they don't need to respond to allegations appearing in the press. Company executives are not often quoted in the press except for carefully scripted announcements. That's the Apple way, but the NYT articles obviously shook the company, and I expect it to be more responsive on this issue in future. Here's the full text of Cook's memo as published by 9to5mac.com:
As a company and as individuals, we are defined by our values. Unfortunately some people are questioning Apple's values today, and I'd like to address this with you directly. We care about every worker in our worldwide supply chain. Any accident is deeply troubling, and any issue with working conditions is cause for concern. Any suggestion that we don't care is patently false and offensive to us. As you know better than anyone, accusations like these are contrary to our values. It's not who we are.
For the many hundreds of you who are based at our suppliers' manufacturing sites around the world, or spend long stretches working there away from your families, I know you are as outraged by this as I am. For the people who aren't as close to the supply chain, you have a right to know the facts.
Every year we inspect more factories, raising the bar for our partners and going deeper into the supply chain. As we reported earlier this month, we've made a great deal of progress and improved conditions for hundreds of thousands of workers. We know of no one in our industry doing as much as we are, in as many places, touching as many people.
At the same time, no one has been more up front about the challenges we face. We are attacking problems aggressively with the help of the world's foremost authorities on safety, the environment, and fair labor. It would be easy to look for problems in fewer places and report prettier results, but those would not be the actions of a leader.
Earlier this month we opened our supply chain for independent evaluations by the Fair Labor Association. Apple was in a unique position to lead the industry by taking this step, and we did it without hesitation. This will lead to more frequent and more transparent reporting on our supply chain, which we welcome. These are the kinds of actions our customers expect from Apple, and we will take more of them in the future.
We are focused on educating workers about their rights, so they are empowered to speak up when they see unsafe conditions or unfair treatment. As you know, more than a million people have been trained by our program.
We will continue to dig deeper, and we will undoubtedly find more issues. What we will not do -- and never have done -- is stand still or turn a blind eye to problems in our supply chain. On this you have my word. You can follow our progress at apple.com/supplierresponsibility.
To those within Apple who are tackling these issues every day, you have our thanks and admiration. Your work is significant and it is changing people's lives. We are all proud to work alongside you.
I'm ok with Apple naming its price, thats perfectly fine. What I'm saying is that if they are charging a lot of money for their product, they can afford to pay the people making it, more. They are making a lot more money than they can spend.
If that's the case then one should compare the working conditions at other Chinese manufacturers as well to get an idea of how similar the environment is to Foxconn's. If there isn't much difference in terms of labor treatment, then it's safe to assume that labor exploitation and mistreatment is a norm in China.
Yes, Bolaji, I saw your point when reading your blog.
I am inclined to thinking that Apple prefers to first solve its issues in private, or as private as possible before. It makes sense to me, especially when the issue in question is concerning an accusation.
On the other hand, Apple's way in this case may lead to speculation and make a snow ball that could be not easy to stop.
A company like Apple is probably aware of this, though.
You are missing the point of 'cheap'; Apple is just one VERY BIG example of how we as a consumer nation have become increasingly dependent upon low cost goods being produced primarily in CHINA and exported to the US. Apple produces a fine product that the world has come to love and cannot do without ......so it seems. As far as your comment about 'share the wealth' that sort of idea scares the heck out of me....................Apple is entitled to reap whatever they shall sow......for better or worse.........sharing wealth will ultimately squash innovation. I just wish Apple and other company's that no longer produce in the USA would reconsider bringing it back here.........but that will not happen until the US gvt levels the tax playing field and makes it eenticing for company's to bring it back.
Well, it's not like Apple is selling cheap products... someone in between is keeping the profit (based on the amount of money Apple is sitting on, I'm going to guess they are not paying enough to Foxconn). Should they continue to make so much profit? or share the wealth?
Barbara, You are right. Cook is a master at supply chain and his involvement has been instrumental in getting Apple to where it is today. But he is as ignorant of the dangers of inept public relations as Apple's former CEO. The company's reputation and future is at stake here but it seems Apple believes it can continue winning by rallying its troop and ignoring the wider public.
Apple enjoys tremendous public goodwill but it is likely to fritter this away if it doesn't mount a strong public relations offensive. All Apple has to do is have its executives openly discuss these issues, admit faults where relevant and spell out what they are doing to counter these problems. As you noted in your recent blog, Apple isn't the only culprit here. It just happens to be the most visible.
Cook is in the best possible position to make these statements--he is intimate with Apple's supply chain. I'd be inclined to take his statements more seriously than an executive with less direct experience (no offense to past Apple CEOs.) It is clear he understands the nature of the challenge the company faces and is realistic about how much of a difference one company can make. Apple can use its considerable clout in the supply chain to improve conditions for many.
I agree, Bolaji. It is good to see this memo from Apple's CEO, however they still have a long way to go. Another question is, how much has Apple been keeping secret?
By moving to the core of the industry and offerings services that keep the system humming, a group within the electronics market has rendered irrelevant the question of ownership and control of the supply chain.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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