Can Cook Take the Heat? Print E-mail
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Written by Mike Buetow   
Friday, 27 January 2012 09:04

CEO Tim Cook has taken to the Apple airwaves, rebutting claims made by The New York Times and others that company indirectly contributes to worker abuse but not rejecting Foxconn as a supplier.

In a letter, published yesterday by 9to5mac, Cook wrote, "Every year we inspect more factories, raising the bar for our partners and going deeper into the supply chain. As we reported earlier this month, we’ve made a great deal of progress and improved conditions for hundreds of thousands of workers. We know of no one in our industry doing as much as we are, in as many places, touching as many people."

I'll address the second point first. It's true Apple has been singled out for bad corporate behavior toward Third World workers, while companies such as Dell and H-P are equally reliant on their supply chains (often the same suppliers), yet receive far less flak. It says here, though, that Apple is getting the brunt of bad publicity for good reason. The company has struck a wholly sanctimonious tone toward those who dared criticize its leadership. It has been strident in its support of Foxconn, the biggest (in size and in number of incidents) purveyor of recorded worker abuses. Apple on any given day is the largest (by market capitalization) company in the world. If a critic wants to make a point at a company's expense, who better than Apple? Frankly, HP and Dell have been so beset by internal management problems, attacking them for supply-chain problems seems somewhat quaint by comparison.

As for the first point ("Every year we inspect more factories, raising the bar for our partners and going deeper into the supply chain"), the truth is Apple does not visit every one of its suppliers every year. In 2011, Apple conducted 229 audits, 100 of which were first-time audits. According to the company, 97% of Apple's procurement expenses are from 156 vendors. Incredibly, by Apple's own admission, the logic says it audited many of its suppliers for the first time in 2011. (Either that, or the math isn't working out, unless Apple is churning its supply base -- composed primarily of well-known companies in their respective fields -- with great rapidity, or that supply base is adding new plants with even greater rapidity, because the number of first-time audits has been at or over 100 three years running.)

I commend Apple for bringing some degree of transparency to the issue. But the numbers don't quite add up. Nor does the nagging feeling that Apple, which perhaps has no parallel when it comes to leveraging a supply chain for competitive advantage, could effect positive change at places like Foxconn and Pegatron, if only it were willing to shoulder the financial risk.

When you have $100 billion* in the bank, you can afford to stop by each of your suppliers at least once a year. And when you're the biggest company in the world, and apparently comfortable lecturing anyone else on what they should think, then you'd better be able to handle the blowback. If Cook can't handle the heat, he should get out of the kitchen.


*Actually $97 billion.


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