Foxconn Offers Bonus For Employees Who Stay Amidst Disruption

Apple iPhone supplier Foxconn is offering up to £1,500 per month to employees who remain at its massive Zhengzhou facility, as it seeks to bolster production for the peak holiday season amidst staff disruption.

The company said over the weekend it would add up to 13,000 yuan (£1,500) per month in December and January for full-time workers who had joined at the start of November or earlier.

Last week Foxconn offered a similar payment of 10,000 yuan to new hires who had participated in violent protests if they would leave the campus.

Violent protests

Foxconn is trying to ramp production after a month of dealing with issues initially sparked by a Covid-19 outbreak in Zhengzhou that prompted strict containment measures and staff departures.

The company brought in new hires, but many last week engaged in protests that turned violent, saying they had been misled about compensation.

Staff were also uneasy about being forced to share dormitories with workers who had tested positive for Covid.

More than 20,000 new hires at the plant, which normally houses some 200,000 workers, are reported to have left following the protests.

Production slump

Foxconn apologised and said it had found a pay-related “technical error” when hiring.

The Zhengzhou factory makes the vast majority of the high-end iPhone 14 Pro and Pro Max handsets that are Apple’s most in-demand of the year, offsetting slumping demand for its standard range.

Apple has said it is working closely with Foxconn to restore operations and both companies said they are committed to ensuring worker safety.

Morgan Stanley earlier this month cut its iPhone Pro output estimates for the current quarter by 6 million units.

Diversification

In a worst-case scenario, if the Zhengzhou plant could produce nothing more this year, the situation could risk as much as 36 percent of Apple’s iPhone revenue or 20 percent of its overall sales for the quarter, the analyst firm estimated.

The end and beginning of the year are peak demand times due to the Christmas holiday in December and China’s Lunar New Year in January.

Asymmetric Advisors analyst Amir Anvarzadeh said the disruption should encourage Apple to shift production to alternative locations such as India or Vietnam.

“It will force Apple to accelerate the diversification of its production base,” Anvarzadeh said in a research note.