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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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  • Number of pages: 2

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Apple's biggest ethical problems stem from outsourcing, and by taking this risk of manufacturing overseas they put their reputation on the line. In 1976, two men, Steve Jobs and Steve Wozniak, had the ingenious idea to build personal computers for people to have in their houses and offices. They wanted something that someone with little technology experience could figure out. The first personal computer was designed and built in Jobs' garage called the Apple 1 in April of 1976. Apple built the first 50 personal computers in Jobs' garage, and so the computers were not assembled overseas at that time. The Apple 1 computer made Jobs and Wozniak realize they could make a lot of money selling personal computers and inventing new technology.

This sparked the invention of the Apple 2 which caused Apple's sales to jump from $7.8 million in 1978 to $117 million in 1980 (Richardson). Also, 1980 was the year the company went public. This was the beginning of their success and in 1980 Jobs created and shared his mission statement for Apple; the statement was “to make a contribution to the world by making tools for the mind that advance humankind” (“Mission Statement”). The selling and marketing of the first personal computer, Apple 2, created a platform for Apple's success selling 16 million units over 15 years (J.D.). As they started to grow they began to move their manufacturing overseas because of cheaper labor and product. Although it is inexpensive to outsource, it is unethical because through outsourcing companies like Apple exploit workers, are environmentally irresponsible, and potential American jobs and dollars are lost.

Today, Apple continues to be a popular, well-established company creating many well-liked and genius innovations like the MacBook Pro and the iPhone. The iPhone is ingenious and has the ability to search the internet, call, and message all on one device. The iPhone 6 and 6 plus were released in September of 2014 and by July 2016 they had a total of $1 billion in sales (Costello). Apple was taking up 60%-70% of the worldwide profit for smartphones in 2013 (Epstein). The company continues to thrive but sometimes forgets to think about the ethics of outsourcing and what effect it has on the people and the planet.

Apple did not always manufacture their products overseas. When they first started they were producing products out of Colorado, Texas, and California (Prince). When Apple was a small company based out of the Silicon Valley they were able to control their production in the U.S., but by 2004 most production was moved to China. Asian workers had the skills Apple wanted at a lower price and as chief executive officer, Tim Cook said, “Asian supply chains have surpassed what's in the U.S.” (Bradsher). However, the cheap labor and capital results in the US struggling to compete. To compete in a worldwide market, in 2016 Apple had 138 suppliers overseas (Apple Inc. 5). They were able to find cheap labor and inexpensive infrastructure. However, Apple did not consider the ethical issues that could come with moving overseas. The manufacturing of Apple products in the U.S. worked for a while but they felt they needed to transition to overseas to achieve better efficiency which resulted in unethical practices.

Many Americans take great pride in products that are made in the U.S. because today offshoring is common, and Americans want to support home workers and preserve the planet.  In 2011, Apple manufactured 70 million iPhones, 30 million Ipads and 59 million other Apple products overseas and it is not changing soon (Bradsher). Today, Apple designs their products in California but assembles them in China. As Elizabeth Brotherton-Bunch a writer for The Alliance of American Manufacturing explained, “of the 1.75 billion cell phones made in the world in 2012, zero were made in the United States”. As a result of the move to offshore manufacturing, nearly one-third of all manufacturing jobs have been relocated since 1998 (Mccormack). Apple's model of offshoring has managed to get them into ethical troubles because they only consider the benefits.

One way Apple is unethically producing goods is by working employees overtime in hazardous conditions while paying them low wages (Rose-Smith). The most talked about supplier for Apple is Foxconn, located in Shenzhen, China. This factory is known for not following the rules of the Fair Standard Labor Act. The Office of Financial Management says this was established in the United States and its purpose was to maintain a fair system for employees to earn money and work under safe and ethical conditions. An example where factories disobeyed this act was when there were multiple suicides at the Foxconn factory due to the poor working conditions for employees (Rose-Smith). Foxconn had not been paying their employees and so they went on strike and took their own lives fearing what their punishment would look like. It took Apple a while to realize that they needed to address this problem.

Tim Cook, CEO of Apple, has been setting goals to improve factories overseas and their labor conditions (“Ahead of iPhone 7…”). However, a non-profit called China Labor Watch stated that the conditions are only getting worse as of 2016 (“Ahead of iPhone 7…”). The organization found “the highest amount of overtime put in by a worker was 109 hours in March” (“Ahead of the iPhone 7…”). These workers at Foxconn are working 12 hour days, 6 days a week, and are paid less than $17 per day (Rawson). When Apple demands more in terms of quality, it means they must cut down on production costs (Clarke 116). This results in workers getting paid less and the conditions they work in being poor (Clarke 116). The factory owners purposely keep the wages low to incentivize workers to work overtime. This type of abuse would most likely be illegal if Apple moved their production to the US. The United States has strict labor laws under the Fair Labor Act. Some of the ethical issues Apple is getting away with overseas could easily tank their profits if they happened in the U.S. because Americans would think poorly of these practices and the company would be fully exposed.

Regarding Apple's issue with maintaining a safe environment for employees, the company also deals with issues involving lax environmental laws. Recently, Apple has made progress in its “environmental initiatives” but it is still leaving behind a large carbon footprint. Apple's carbon footprint remains at 72%, most from manufacturing in China (Freedman). The Foxconn factory runs on coal which is not a renewable energy source and is a “carbon-intensive fuel” (Freedman). This could change and they could rely on renewable energy sources like wind and solar. In 2015, they did start to use solar and wind power, however, it will continue to be difficult for them to remain sustainable. They continue to put out new products and tell consumers to upgrade so in order to be environmentally responsible they would need to reuse materials (Freedman). If people are tossing their phones in the trash, consumers and Apple contribute to electronic waste.

Along with electronic waste, they dispose of hazardous waste incorrectly. In 2011, the Institute of Public and Environmental Affairs found that most suppliers were not disposing of their hazardous waste correctly. They believe this was causing health problems for employees. However, at this time Apple was silent and did not share more information because they were following their code of conduct for “commercial confidentiality”; essentially, they lied. When the incident broke out about a factory using noxious chemicals to clean touch screens Apple was heavily criticized. Many workers died and no one knows the exact number of people that were injured and killed in this tragedy (White). Events like this happen frequently in China and are not illegal. It is a constant battle for environmentalists and activists who fight to stop pollution and the health consequences that electronic waste causes. Hazardous waste needs to stop because workers are having health issues or dying.

In addition to these issues, the most crucial ethical problem caused by outsourcing is the loss of jobs in America. In the United States, employment in manufacturing has dropped significantly from 18.9 million jobs to 12.2 million jobs since 1980 (Muro). Americans need manufacturing jobs because many are unemployed and the quality of life is decreasing for households. The loss of manufacturing jobs has led to household income dropping 4 percent between 2000 and 2009 (Bureau of Labor Statistics). If the US is giving jobs to people overseas but forgetting about domestic jobs, this is contributing to unemployment and is unethical. When comparing wages in the U.S. and China, the average manufacturing employee in the US is paid $20.93 per hour and in China is paid $17 per day. Bringing back jobs to the U.S. would mean a lower unemployment rate and higher paying jobs needing to be filled. If Apple continues to employ more people overseas, jobs will never come back to help the US economy.

To change the issues caused by outsourcing, the US must source domestically to higher standards of living and improve American unemployment. It is possible for Apple to use robots and automation to bring jobs home and achieve a better lifestyle for employees. A study done by two Ball State University professors found that 87% of jobs lost were due to automation and technology (Gillespie).  I think, if Apple and other electronics companies cut down on production overseas by approximately 50% (bring back 50% of those job to the U.S.) and have trained employees manufacture in the US they will begin to have a more ethical base. This will fix the ethical dilemma of jobs lost overseas. The designing, monitoring, and programming of robots would be higher paying. This would mean a decrease in unemployment, an increase in wages, therefore, equaling higher standards of living for Americans. The McKinsey Global Institute for Analysis found that 60% of the manufacturing industry in the US has the potential to be automated. Therefore, by January of 2020, Apple should have 60% of production done with robots and 100% of employees designing and programming the robots in the U.S.

Furthermore, if Apple continues to outsource they must set a policy for employees and work hours overseas. An overtime work limit needs to be established and followed. Factory employees overseas would only be allowed to work overtime 2 hours per day or 10 hours per week. This would help to maintain employees physical and emotional health as well as Apple's reputation. Apple would measure this by having routine audits every year to track if the factories are following the FLSA. This will measure how well Apple is achieving their goals of keeping healthy work conditions overseas. If the factories are not following the code of conduct then Apple would give them one warning and if they continued to disobey rules Apple would no longer work with them. This process will be to evaluate each factory and determine whether they are helping or hurting Apple achieve their mission.

To conclude, Apple must bring back jobs to the U.S. so that money is flowing through the US economy and making it stronger. Money going to Chinese employees and Chinese parts for products is not making the US economy stronger and is unethical. My recommendation for bringing back jobs is to slow down the trade deficit by domestically producing goods which would then bring a 25-30% output and job increase for manufacturing back to the U.S. (Moser). The reshoring of jobs and domestic production would show Apple is choosing to be ethical by having to follow fair labor and environment laws, improving unemployment, and raising standards of living. These recommendations for the dilemma of outsourcing will help continue Jobs' mission to “advance humankind” and remain ethical.

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