China recruits villagers to restore Foxconn’s iPhone production after employee brain drain

Chinese authorities are recruiting workers from villages and busing them to Foxconn’s iPhone assembly lines after the Apple partner suffered a workforce exodus from its central China factory last month during a Covid-19 outbreak.

Trouble at Foxconn’s Zhengzhou plant, caused by Beijing’s strict zero-Covid regime, forced Apple to slash estimates for high-end iPhone 14 shipments this month to keep investors ahead of the peak holiday sales season to warn.

Now local governments in Henan province, where the plant is located, are trying to restock iPhone production lines, with Chinese officials working to help Foxconn keep production going.

Businesses in China have been struggling with disruption from Covid outbreaks as Beijing eases some of its coronavirus restrictions in a bid to revive a slowing economy while trying to keep the virus under control.

Foxconn’s Zhengzhou plant typically employs more than 200,000 people and was responsible for about 60 percent of Henan’s exports in 2019, according to the latest available data.

“We dispatched over 300 workers in about a week,” said a labor official surnamed Han in Tangyin County, 200 kilometers north of the factory.

Han said the Tangyin local government quarantined workers in a hotel for three days before taking them directly to the Foxconn plant, where they would be quarantined for another three days before starting work.

Workers fled the Foxconn factory late last month during a Covid outbreak. They said the plant was in chaos as Foxconn attempted to use tough tactics to eradicate Covid cases while maintaining production. Some employees climbed fences and walked hundreds of kilometers home to escape the factory.

The Apple partner has since raised wages, added large bonuses of up to Rmb 7,600 ($1,000) and split the factory into two separate bubbles in a bid to divide the workforce and try to keep Covid cases down.

The Henan government ordered officials across the province to recruit new assembly line workers.

“People are definitely nervous,” said an official in Yichuan County, west of the plant that bused its first batch of 80 workers to Foxconn on Thursday. “We’re trying to make sure Covid is in control there, otherwise we might have to figure out how to bring our workers back” should the situation deteriorate, he said.

Analysts at Morgan Stanley on Monday lowered their estimates for iPhone shipments by 6 million units to 79 million for the fourth quarter, noting that the “resumption of iPhone supply at [the Zhengzhou factory] is the key”.

A village official in Baofeng District south of the factory said they were tasked with recruiting at least seven workers from their village to send to the factory.

“This is the first time I have received such a binding and specific regulatory order. In the past, it was just an incentive for local people to work outside the village,” the person said, noting that the widespread social media videos of fleeing workers made it difficult to meet the quota.

Henan’s local state media stepped in this week to change the narrative, releasing videos and articles showing happy new workers filing in a neat and clean campus.

“We hope that when you come to Yuhong, you will feel like part of our family [dorm]said a worker wearing a hazmat suit in a video produced by Henan’s state-owned Dahe Daily. “We work hard for this.”

Foxconn did not immediately respond to questions about its hiring practices. Last week, Foxconn chairman Liu Young-way told investors, “We are working with the government to return to normal production in the shortest possible time.”

With additional reporting by Nian Liu in Beijing

https://www.ft.com/content/60d2f7cf-a236-4315-9c07-18356a0ea66a China recruits villagers to restore Foxconn’s iPhone production after employee brain drain

Adam Bradshaw

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