For the first time, Apple (Nasdaq: AAPL) will allow independent observers into its suppliers' factories around the world to monitor working conditions. Why now, and what does it mean for the company?
The high cost of cheap labor
Apple has always been famously secretive about its suppliers. But now The Telegraph is reporting that Apple has joined the Fair Labor Association, a group set up in 1999 to monitor workplace conditions around the globe. It's the first technology company to do so.
For several years now, Apple has conducted its own survey of its suppliers. The company recently released its sixth-annual supplier responsibility report, detailing audit results of factories throughout its supply chain. And for the first time, this report lists the firm's major suppliers, more than 156 in all.
Like most of today's major technology companies, Apple manufactures many of its products at overseas companies like Foxconn, a Taiwan-based company that employs over a million people in factories across the mainland, and a company that's come under severe scrutiny in recent years. In 2010, 12 Foxconn workers committed suicide, and just days ago some 150 workers at a Foxconn factory in Wuhan threatened mass suicide if they were moved to a new production line.
Suicide is bad for PR
The Foxconn employees recently threatening mass suicide were, in fact, involved in producing Microsoft's (Nasdaq: MSFT) Xbox, a flagship product the company is placing big bets on to stay connected, and relevant, to the next generation -- a generation that, with the current pace of innovation, may never use Windows or even MS Office.
Speaking of flagship technology products on which companies are placing big bets, Foxconn also manufacturers the Kindle for Amazon.com (Nasdaq: AMZN). Foxconn is rumored to be producing the Kindle Fire 2 right now for an early 2012 launch. The giant online retailer is placing a massive bet on the product line driving substantial portions of future growth, and the company needs this new product launch to go well, undistracted by public relations disasters like the threat of mass suicide.
Way to go, Apple
No company, even industry chiefs like Apple, Microsoft, or Amazon, need the kind of bad press that can come with situations like the one at Foxconn. Consumers are becoming more and more socially conscious, and want the goods and services they use to measure up. In truth, it doesn't take much. A simple action that costs a company very little or even nothing at all can make a real difference in the mind of the consumer.
Apple has recognized this truth, has bravely joined the Fair Labor Board, and, this Fool thinks, will no doubt benefit from it, both perceptually and financially. In this day and age, the two go together. Are any companies perfect in this regard? No, but to paraphrase Voltaire, it's important to never let the quest for the perfect drive out the good. Read about two more Motley Fool favorites that are healthy, wealthy, and making a difference in their own ways in this special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." Get your copy while it's still available by clicking here.
