Now here's something I hadn't thought about: could the pressure on Apple, thus Foxconn, to raise manufacturing wages in China be utilised as a competitive advantage by Apple against competitors such as HP and Dell?
I've written enough here about how I'm certain that those rising wages are just part and parcel of the normal economic development of the place. As productivity rises, as there are fewer migrant workers who don't have a factory job but would like one, then obviously wages are going to rise.
However, there is also pressure on Apple in the US: those petitions, the monologue, the calls for a boycott. I've said before that they're not what's driving the changes in China. I've said it several times in fact. But even so, there is a possibility that Apple could use this very public pressure upon themselves to improve their own competitive position.
From this report we can see that Foxconn's not having any problems hiring labour:
On a smoggy day in a gritty industrial suburb of Shenzhen, thousands of job seekers, many migrant workers from the countryside, massed outside the north gate of Foxconn's gargantuan factory at Longhua, taking part in an epic recruitment drive to supply factory hands to meet relentless production quotas for iPhones and iPads globally.
As police sealed off roads in the area, recruiters lined up the young men in ranks, peppering them with questions before shepherding small groups into a building to register and undergo physical and psychometric tests.
"As you can see, everyone wants a job here," said Wang Jintao, a 19-year-old from central Hubei province. "I've been coming here every day for two weeks now. Perhaps today will be my lucky day."
The thousands of migrants now flocking daily to Foxconn's recruitment center at Longhua is a sharp contrast to other smaller factories in southern China that have competed viciously to find workers since the Lunar New Year holidays in late January.
That Foxconn, as it always has, pays higher than the average local wages would be my explanation of these lines. However, if we look at this report we can see the beginnings of what might become that competitive advantage:
Hewlett-Packard and Dell Inc are keeping a close eye on a big jump in wages for workers that assemble Apple Inc's iPhone in China, and could be forced to nudge up prices for their own products if labor costs keep rising.
It's not that the factories which assemble the Dell and HP products can't get labour while the Apple ones can. It's that they're, to a large extent, the same factories. Foxconn assembles for just about everyone. So Apple has an opportunity here. If they put pressure on Foxconn to raise wages, well, I think we probably would see those wages rise, at least a little. Yet margins at Apple are much fatter than they are at the other companies that manufacture in the same plants. Indeed, it's possible that Apple could cause margins to shrink enough to force those other manufacturers to raise their prices, thus closing the gap with Apple's prices. Or closing some of that gap perhaps.
Now what amuses me about this is that the call is upon Apple to act ethically. That ethical behaviour seemingly including raising wages for the workers in China. But given Apple's weight, this would mean raising the costs of its competitors. Indeed, a trivial narrowing of Apple's margins could lead to the near disappearance of the margins of those competitors. So, if Apple were to act in the ethical manner that is being urged upon the company one of the major effects would be to screw over their competitors.
Which might be very nice for both Apple and the Chinese manufacturing workers who still have jobs and really rather bad for those who lose them as Dell and HP presumably sell less or move manufacturing elsewhere and certainly would be bad for everyone else who works in Dell, HP and the rest as the companies faced those higher costs.
The question then being, well, would raising wages in order to damage your competitors be described as acting ethically?
