Apple blames the worst abuses on companies that rely on a daisy chain of payment-demanding brokers and recruiters that reaches “all the way back [to] the worker’s home village,” as Apple put it in its 2010 supplier report.
Because these problems are widespread in the industry, Apple in 2009 tried barring suppliers from using workers who had been charged more than one month’s net factory wages. But by Apple’s own accounting, the problem got worse. Last year the company’s audits turned up $6.4 million in fees paid by workers beyond the company’s prescribed limit—compared with $6.7 million in the previous four years combined. And Apple audited fewer plants last year than it did in 2011. The company orders its suppliers to refund workers charged beyond its limit.
One plant where auditors found excessive fees last year was the Bukit Raja Flextronics plant south of Kuala Lumpur, where Dhong and his compatriots ended up working. Flextronics is one of Apple’s top 10 suppliers, Bloomberg Industries estimates show, employing about 150,000 workers in 30 countries. Apple’s iPhone may be the best-known product some of them work on, but they also build components for Lockheed Martin (LMT), Ford Motor (F), and more than 1,000 other customers in almost every line of business. “There’s almost no customer in the electronics chain, and many outside of the electronics chain, that we don’t touch,” CEO Michael McNamara said at a presentation in New York on May 30. “We want to be the supply chain of everything.”
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