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Amazon to increase the pay of over 500,000 workers amid union battles
Amazon will give workers a pay rise of between 50 cents and $3 as part of an early wage review, the retailer said on Wednesday.
Amazon increases its minimum wage to $15
Amazon has announced that it will increase its minimum wage to $15 for all of its employees, starting November 1st. The company says that the move will benefit 250,000 staffers, as well as up to 100,000 part-time, temporary and agency workers hired during busy periods. Wage increases will also be implemented at Amazon's subsidiary businesses, including Whole Foods and Zappos. Other, stock-based compensations are being withdrawn to offset the changes, but 401k matching and healthcare benefits are unchanged.
Hon Hai sees profit fall nine percent in Q3, pins hopes on new Chinese factories
Hon Hai Precision Holdings has just released its Q3 earnings report, and it probably did so with a whimper. That's because net profits fell to NT$19.2 billion (about $614 million) this quarter, marking an 8.6 percent decline from Q3 2010, when Hon Hai (aka Foxconn) reported a net income of NT$21 billion (around $702 million). The company blamed the decline on a slow economic recovery and its ongoing expansion in China, where new factories are being constructed across inland areas like Chengdu, Wuhan and Zhengzhou. These costs are still taking a toll on Hon Hai's bottom line, though analysts say the expansion could pay off in the long-run, thanks to the lower wages that Hon Hai will have to pay to maintain operations in these less affluent regions. Some are also hopeful that the iPhone 4S will help spur production heading into Q4 of this year, though its ultimate effect, of course, remains to be seen. Hit up the links below for more details and analysis.
Foxconn discussing the possibility of price hikes to offset wage increases
We'd already heard that Foxconn was looking to recoup some of the additional costs spurred on by wage increases by moving some production to Vietnam or Taiwan (as well as to a new facility in China's Henan province), and it now looks like the company might be taking some additional measures as well. According to The Wall Street Journal, Foxconn (also known as Hon Hai) says it will discuss the "possibility" of raising product prices with its clients to further offset the wage increases -- which, of course, were prompted by the recent spate of suicides at the manufacturing giant, and are set to go into effect this October. Details on those potential price increases are still light beyond that, however, with Foxconn only saying that they would "vary depending on the client and product."
Chinese government to make Foxconn suicide findings public
We've been struggling to wrap our heads 'round this whole Foxconn imbroglio since the beginning, and while we're pretty skeptical about any official reports we'd be remiss if we didn't mention that the Human Resources and Social Security Ministry in China was looking into the thing, and that they'll be releasing the findings somewhat soonish. According to Vice Minister Zhang Xiaojian, recent strikes at various factories including Brother and Honda (strikes seemingly sparked by the Foxconn incidents) do not constitute "a 'wave' of unrest." Well, that's good -- for business owners, at least. And while the families of the Foxconn suicides maintain that long hours, low pay, and harsh management are to be blamed, Zhang added that "the psychological problems of the workers" can be added to the list. Psychological problems caused by low pay, long hours, and harsh management, perhaps? [Thanks, Xinh]
Foxconn axes suicide compensation, relocating some production to Vietnam or Taiwan
At yesterday's annual shareholder meeting, Foxconn revealed that it'll no longer be compensating families of dead employees as a move to discourage further suicides. CEO Terry Gou reasoned by exhibiting evidence that showed the money -- an amount almost equivalent to ten years' worth of salary -- was a major motivation for the suicides. One such exhibit was a man's suicide letter that contained the following message for his parents: "...now I'm going to jump off Foxconn, really leaving now, but you don't have to be sad, because Foxconn will pay a bit of money, this is all your son can repay you now." Gou also blamed a possible "Werther Effect" created by the news coverage, which might have led to six of the twelve suicides all taking place in May. Consequently, the company will be handing over its welfare management work to the local Chinese government, as it's unable to deal with too many social responsibilities. In the same meeting, the company made an unsurprising announcement that it's looking to relocate some manufacturing work, amid a worsened earnings forecast due to increased wages -- basic salary has gone up from ¥900 ($132) to ¥1,200 ($176), rising to as much as ¥2,000 ($293) for those who meet new performance criteria. This will involve setting up a fully automated facility in either Taiwan or Vietnam, while the existing Vietnamese plant will be receiving more orders. Chairman Samuel Chen also said that Foxconn will be working with its clients to share the load -- no further details on this, but we suspect Apple's rumored direct subsidies are part of the plan.
Rising labor costs in China may lead to pricier electronics, manufacturing relocation
You might recall that Foxconn, faced with the searing spotlight of the world's attention on its working conditions, recently announced not one but two wage increases for its employees, which is now looking like part of a larger trend in China toward higher pay. The city of Beijing has said it'll be raising its minimum wage by 20 percent, to 960 Yuan ($140) a month, and is expected to be followed by others. The New York Times pins this on numerous factors, including growing competition for workers, state authorities insisting on higher standards, and a national policy effort to ease the gap between rich and poor. All good news, you might think, but these worker-friendly measures are taking their toll on manufacturing costs, and now there's talk of companies relocating production to cheaper locales. Vietnam, India and Indonesia are the prime suspects for taking production duties away from China, with some companies also apparently contemplating shifting to poorer regions within the nation. These changes are unlikely to perturb high-end electronics manufacturing in the short term, due to its more sophisticated infrastructure and supply chain, but the end consumer might still feel their effect in the form of higher prices. Inflation within China and a projected increase in its currency value are likely to drive up the cost of exports, so we'd advise buying what you need sooner rather than later. [Thanks, Daniel]
