Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

'Think Fair' Could Become The New 'Green' - Secretive Apple Opens Its Supply Chain To Inspectors

Posted by Tom Foremski - February 13, 2012

(Image by Damien Van Achter)

Nick Wingfield and Charles Duhigg reported in today's New York Times' Bits blog:

Apple said Monday that it had asked an outside organization to conduct special audits of working conditions inside Chinese factories where iPhones, iPads and other Apple products are manufactured. And in a significant about-face for the company that has the potential to affect the electronics industry, Apple asked the organization to identify particular facilities where abuses are discovered.

Apple said the group, the Fair Labor Association, started its first inspections Monday at a factory in Shenzhen, China, known as Foxconn City, one of the largest plants in China, with more than 230,000 workers.


Apple Asks Outside Group to Inspect Factories - NYTimes.com

The fact that Tim Cook, CEO, agreed to reveal the identity of Apple's supply chain is a huge move for a company with such an intense culture of secrecy.

It's also a reaction to critics. Apple has become a focus for people protesting harsh working conditions in the electronics industry. It's a good target because it has large brand identity and the criticism is hitting home.

In an email to employees earlier this year, Mr Cook addressed accusations about Apple's ambivalent indifference to working conditions at suppliers, saying:

"Any suggestion that we don't care is patently false and offensive to us."

He gave his word that, "What we will not do - and never have done - is stand still or turn a blind eye to problems in our supply chain."

Clearly, there is a strong emotional issue in how Apple sees itself and that is now motivating Mr Cook to show that Apple is aware of its social responsibilities -- an aspect of the company that was rarely stated under Steve Jobs.

Apple has set in motion a process that will enable it to become the first "Fair Trade electronics" company -- the first electronics company able to show that its products are made according to accepted principles of fair use of labor, in conditions of safety, and fair salary. And certified by an independent organization -- not by its own audit.

There's a powerful message here and a natural progression for Apple.

- "Think Fair" would provide an additional cache for Apple products that would easily justify their higher prices.

- "Think Fair" would sell a lot of Apple gear and it's a considerable barrier to competitors.

Apple has high margins in the 40% plus range, so it can easily absorb a couple of points or more in higher supply chain costs. But if you are Dell, or Hewlett-Packard, or Amazon your operating margins are already in the single digits, so it's not going to be easy to follow Apple.

I advocated for Apple to become the first "Fair Trade Electronics" company back in May, 2010. I also did a couple of radio interviews on the subject. It seemed inevitable.

My argument was simple: After all the publicity about suicides and deaths at Apple suppliers, "Think Fair" is the better kind of killer marketing.

The downside is that Apple fanbois would become even more annoying -- flaunting with even greater vigor, their Fair Trade iPhones, iPads, and MacBook Airs. Self-rightousness is a horrible accessory.






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