China’s electronics manufacturing giant, Foxconn, has enacted a hiring freeze at most of its factories across the nation as production for Apple’s (NASDAQ:AAPL) iPhone 5 slows down.
According to the Financial Times, the world’s biggest contract electronics manufacturer and one of Apple’s main suppliers will suspend hiring new employees due to the lowered demand for Apple products. The last time Foxconn had a countrywide hiring freeze was in 2009, because the global financial crisis crushed demand. Now, an independent recruiter in Shandong province said Foxconn's new hires are as low as they were during the 2009 economic crisis.
The recruitment freeze comes during the peak hiring season in China, after the Spring Festival holiday, and human resources officials at the company are saying they do not plan on hiring again until the end of March at the earliest.
Independent recruiters for a facility in Zhengzhou, Foxconn’s second largest factory, are seeing the drastic hiring changes take place. “Last year at this time, the workers were busy all day and night and had to recruit more than 4,000 new people,” a staff member of a local employment center told Chinese business paper First Financial Daily. Now, recruiters are not seeing any job listings from the electronic manufacturer.
Liu Kun, a spokesperson at one of Foxconn’s largest facilities, a factory located in the southern city of Shenzhen that currently has more than 200,000 workers, told the Financial Times that “currently, none of the plants in mainland China have hiring plans.” Though some factories will be hiring some technicians, workers on production lines for the iPhone and iPad are not needed. Both of Foxconn’s biggest plants and iPhone suppliers in China in Shenzhen and Zhengzhou, each with roughly 200,000 employees, are freezing hiring.
Another factory in Taiyuan, which has an estimated 79,000 employees, has seen significantly fewer employees after the holiday season. According to the Global Times, this year, a significant portion of migrant workers did not return to their factory jobs because they were able to find work in their hometowns. Foxconn’s hiring freeze will not replace the jobs that have been vacated, reducing a significant part of the workforce.
The slowed production is a direct effect of the disappointing iPhone 5 sales in China at the end of last year.
“Apple’s flagship store in Beijing’s upscale Sanlitun shopping district began selling the iPhone 5 for the first time on Friday in what was arguably the least eventful launch of an Apple device in the company’s four-year history in the Chinese capital,” the Wall Street Journal reported.
But other reports are suggesting that the hiring freeze is also in part due to a shift in mechanical production lines at Foxconn factories. China’s online news site NetEase.com cited "insider" sources saying that in addition to adjusting production lines, the hiring freeze will also allow for more mechanized production to occur.
“This also indicates that Foxconn is preparing to rebalance the distribution of manual line production with mechanical production,” the NetEase report said.
In the past Foxconn has endured many labor-related woes as international media, labor rights groups and the general public all criticized the company for intolerable work conditions. And though Foxconn has made efforts to improve work-life balance, hours, compensation and benefits, a shift toward mechanized production could help prevent future labor scandals -- by replacing the workers.