Foxconn struggles with Covid chaos at iPhone factory in China


HONG KONG—Foxconn Technology 2354 -0.76%

The group has been struggling to contain a week-long Covid-19 outbreak at an iPhone factory in central China, trying to calm scared and frustrated workers during a crucial period for smartphone orders.

At Foxconn’s main Zhengzhou facility, the world’s largest assembly site for Apple Inc

AAPL 7.56%

iPhones, hundreds of thousands of employees, have been placed under a closed-circuit system for almost two weeks. They are mostly closed to the outside world, only allowed to move between their dormitories or homes and the production lines.

Many said they were stuck in their neighborhoods for days and the distribution of food and other essentials was chaotic. Many say they are too afraid to continue working because of the risk of infection.

Foxconn on Wednesday denied online rumors that 20,000 cases had been detected at the site and said it was providing necessary supplies for “a small number of workers affected by the pandemic.”

“A sudden event has disrupted our normal life,” Foxconn said in a post to employees on WeChat on Friday.,

is a social media platform. “Both orderly progress in containing the pandemic and its aftermath depends on the efforts of all employees,” he said. He announced plans to provide adequate food supplies and mental wellbeing support and promised to respond to workers’ concerns.

Foxconn did not respond to questions from workers about the details of the situation at the site. When asked about the situation earlier, the company referred to a statement it issued on Wednesday, as well as a Friday post on WeChat.

Covid-19 lockdowns, anti-corruption crackdowns and more have put China’s economy on a potential crash course. WSJ’s Dion Rabouin explains how China’s economic downturn could hurt the US and the rest of the world. Illustration by David Fang

“It’s very dangerous to go to work,” a 21-year-old worker confined to his dormitory told The Wall Street Journal that he was skeptical of the company’s claim that infections at the plant were low. .

The disruption at Foxconn is the latest example of the economic and social damage from China’s draconian pandemic control policies — which include rapid and widespread lockdowns, mass testing and mandatory quarantines to crush the virus when it appears. Although Beijing says the virus is too strong to allow any relaxation of the zero-Covid policy, businesses must reassure workers that there is little risk of coming to work with symptoms of the outbreak.

Zhengzhou’s outbreak – with 95 cases recorded in the city in the past four days – began in early October after people returned from a week-long national holiday in other parts of the country. At the first signs of Covid in the city, officials locked down some districts and began mass testing to eradicate the virus before it took hold among Zhengzhou’s 12.7 million residents. As a major employer, Foxconn joined the campaign.

When more infections emerged in mid-month, Foxconn tried to keep production going by creating a “bubble” around its operations to reduce the risk of exposure, a common practice among major manufacturers in China to keep operations going during a local outbreak.

Foxconn says it employs up to 300,000 workers in Zhengzhou. Analysts estimate that the company makes half or more of Apple’s smartphones in the city, making iPhones crucial to consumers, including during the winter holiday season, when demand for the phones typically peaks.

Foxconn said in a statement on Wednesday that production at the site was “relatively stable” and that it was sticking to its operating outlook for the current quarter as the impact of the outbreak was manageable. It will announce its quarterly results on November 10.

Apple did not mention Foxconn’s Zhengzhou plant in Thursday’s quarterly earnings report. The CFO said that due to strong demand, the supply for the new iPhone 14 Pro models is limited.

Apple did not respond to requests for comment on the conditions at the Foxconn plant.

Some workers interviewed by the magazine said many of their colleagues refused to return to the production lines. Others said they simply left, sometimes throwing away their belongings.

On Sunday, a state-run newspaper in Henan published official notices from various parts of the province welcoming its people back, drawing up quarantine protocols.

Over the weekend, geotagged videos circulated on Chinese social media platforms near the Foxconn site, recording groups of people walking along highways or farm fields with suitcases and backpacks. Other footage showed makeshift stations offering bottles of water in front of hand-written signs by local residents in support of migrant Foxconn workers heading home.

Earlier on Friday, the company posted a video on WeChat urging people to return to work. “The company needs people,” said a woman’s voice over footage of workers getting off the bus. “How can a company function if no one comes to work?”

Another Foxconn employee said most of his dozen-strong night shift team were either taken to a quarantine facility or refused to return to work. According to him, workers dressed in protective clothing were seen every night by those waiting to be taken away by bus.

“I don’t know who is positive around me,” said the worker, who stayed in his dormitory for several days. “I’d better stay in the dorm.”

With so many people stuck in their neighborhoods, sent to quarantine centers or simply out of work, production has slowed on some assembly lines, two of the workers said.

Foxconn has created incentives to keep production going, according to a company announcement Friday.

Everyone who comes to work will receive free food and a daily bonus. Those who come to work every weekday from October 26 to November 11 will receive a reward of 1,500 yuan, or about $200.

Speaking to the Journal, the 21-year-old worker, who worked on an assembly line making an older version of the iPhone, said he had been in their apartment since Oct. 17, along with thousands of others.

In the days that followed, food deliveries were delayed and trash was left unattended in the hallways, with more piling up on the ground floor as dormitories closed, he said.

One worker’s daughter said her mother was placed in the same dormitory as some of the others who tested positive. Some other employees also made similar complaints.

About 300 workers at Foxconn suppliers were asked to leave their dormitories and sleep at the factory about 10 days ago, one of them said.

In the photos he shared with the magazine, people slept on bedding and pillows on metal bed frames, under white fluorescent lights hanging from the hangar-like roof. Hygiene has become a problem, he said. Still, he said that he should not leave the plant and that he had nowhere to go if he did.

“Where can I go? There are obstacles everywhere,” he said. “There are people at every checkpoint.”

Business and the Pandemic

write to Wenxin Fan at Wenxin.Fan@wsj.com and Selina Cheng at selina.cheng@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8



Source link