There have been mass resignations of iPhone workers following the recent unrest at the plant, caused by Foxconn failing to pay the promised recruitment bonuses, and growing fears about the COVID-19 outbreak within the plant. More than 20,000 new hires are said to have left.
An internal estimate reportedly says that more than 30% of production could be lost, with iPhone 14 production already falling way behind demand in the crucial run up to the holidays …
The mess began when there was a COVID-19 outbreak inside Foxconn’s biggest iPhone assembly plant in Zhengzhou – also known locally as iPhone City.
At the time, the company claimed that the situation was under control, though this meant already-tough closed-loop production rules were made even tighter. This included closing canteens, and very tight control of where workers were allowed to go within the facility.
It wasn’t long before workers complained that infections were continuing to spread within the plant, and that there wasn’t enough food and medication. Significant numbers chose to break out of the plant, and return to their home towns.
Foxconn initially offered bonuses to persuade workers to stay, and then increased them up to ten-fold when this didn’t work. Infections continued to spread, and the plant was placed on an even more stringent lockdown.
Newly recruited workers complained that they were not being paid the promised bonuses, leading to protests that turned violent. Foxconn later admitted that it had made a “technical error” over bonuses, and promised to correct it.
Mass resignations of iPhone workers
With many new recruits still angry at Foxconn, the company offered an exit payment equivalent to one to two months’ salary for anyone who wanted to leave. A Reuters report suggests that more than 20,000 workers have taken advantage of this, and resigned.
Foxconn apologised for a pay-related “technical error” when hiring on Thursday, and later offered 10,000 yuan ($1,400) to protesting new recruits who agreed to resign and leave.
The source said more than 20,000 workers, mostly new hires not yet working on production lines, took the money and left. Videos posted on Chinese social media on Friday showed crowds and long lines of luggage-laden workers queuing for buses.
30% of production may be lost
There are conflicting reports on the impact of the exodus on iPhone 14 production.
One employee claimed that “the incident has a big impact on our public image but little on our (current) capacity.” The rationale given was that none of the new hires had yet reached the production line. However, that seems something of a technicality – current capacity may be unaffected, but it has to have a major impact on planned capacity.
Indeed, one source within the company cited an internal estimate that more than 30% of planned November production could be lost.
Apple had already taken the unusual step of warning that iPhone 14 Pro availability would be “very constrained” during the crucial holiday sales period, with Foxconn similarly warning that revenue growth would be reversed. The latest development is likely to make things very much worse.