Foxconn’s woes will increasingly affect China’s giant iPhone factory as more workers leave – source

  • November deliveries to Foxconn’s Zhengzhou plant will further decline – source
  • Workers’ discontent at the plant escalated into protests this week
  • More than 20,000 workers, mostly new recruits, have left – a source

TAIPEI, Nov 25 (Reuters) – Foxconn’s ( 2317.TW ) flagship iPhone factory in China will see its November deliveries further cut by the latest bout of labor unrest this week, a source with direct knowledge of the matter said in Friday as thousands of employees walked off the site.

The company could now see more than 30 percent of the site’s production affected in November, down from an internal estimate of up to 30 percent when the factory worker problems began in late October, the source said.

The site, which is the only factory where Foxconn makes premium iPhone models, including the iPhone 14 Pro, is unlikely to resume full production until the end of this month, the source added.

Apple’s ( AAPL.O ) world’s largest iPhone factory is grappling with strict COVID-19 restrictions that have fueled discontent among workers and halted production ahead of Christmas and January’s Lunar New Year as many workers were placed in isolation or escaped plant.

That fueled concerns about Apple’s ability to deliver products for the busy holiday period.

On Wednesday, workers, most of them new recruits hired in recent weeks, clashed with security staff at the Zhengzhou plant in central China.

Many claimed they were misled about benefits at the factory, and others complained of sharing dormitories with co-workers who tested positive for COVID.

Foxconn apologized for a “technical error” related to pay in the hiring on Thursday and later offered 10,000 yuan ($1,400) to protesting recruits who agreed to resign and walk out.

The source said more than 20,000 workers, mostly new hires not yet on the production lines, took the money and left. Videos posted on Chinese social media on Friday showed crowds and long lines of luggage-laden workers queuing for buses.

“Time to go home,” one person posted.

Foxconn, formally known as Hon Hai Precision Industry Co, declined to comment. Apple, which said Thursday it had staff at the factory, did not immediately respond to a request for comment Friday.

The plant, before its problems began, employed more than 200,000 workers. It has dormitories, restaurants, basketball courts, and a football field in its sprawling facility of about 1.4 million square meters (15 million square feet).

Another Foxconn source familiar with the matter said some new employees have left the campus, but did not specify how many. This person said that because the people leaving had not yet been trained or started work, their departure would not cause further damage to ongoing production.

“The incident has a big impact on our public image, but little on our (current) capacity. Our current capacity is not affected,” the source said.

“Corporations can only do so much for pandemic prevention… This has been an issue for some time. It’s an issue everyone is facing,” the person said, pointing to other worker unrest sparked by strict COVID restrictions, including turmoil at another Apple supplier, Quanta ( 2382.TW ), in May.

Shares of Foxconn closed down 0.5 percent, underperforming the broader market ( .TWII ), which ended flat.

Hundreds of workers joined protests at Foxconn’s giant iPhone plant in China’s Zhengzhou this week, with some men smashing surveillance cameras and windows, footage posted on social media showed.

($1 = 7.1616 Chinese Yuan Renminbi)

Reporting by Yimou Lee; Additional reporting by Brenda Go; Editing by Ann Marie Roantree, William Mallard and Gerry Doyle

Our standards: The Thomson Reuters Trust Principles.

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