Foxconn considering Taiwan production

Foxconn Technology Group, shaken by a spate of worker suicides at its mammoth industrial compound in southern China, said Thursday it could move some of its production lines back to Taiwan if the island offers attractive enough incentives, including cheaper costs for hiring foreign laborers.

Foxconn has come in for intensive criticism following 10 suicides this year at the factory complex in the Chinese city of Shenzhen, where it makes iPhones, iPads and other brand-name electronics for global corporations including Apple Inc. and Hewlett-Packard Co. Labor activists have linked the suicides to unduly harsh conditions at the plant, where more than 300,000 people are employed.

Responding to criticisms, Group Chairman Terry Gou told a shareholders meeting this week that Foxconn would move some factories to Taiwan if authorities offered attractive labor and other terms at the free trade zones they plan to set up.

Gou said Foxconn has built dormitories and recreational facilities at its China plants, forcing it to take over social service functions that ought to be reserved for local governments. He told shareholders that its existing China factory model may not be sustainable.

The new facilities in Taiwan would likely produce electronics components that require more precision work and have better profit margins, an official of Hon Hai Precision Industry Co., Foxconn’s parent firm, told The Associated Press Thursday.

“We set up production lines in China in the past because of the huge labor cost differences between the two places,” said the official, who requested anonymity because he was not authorized to speak to the press.

“If the labor costs are narrowed, we certainly would prefer Taiwan,” he said. Foxconn already operates a fully automated factory on the island to produce precision components with robotic arms, the official said.

Labor activists accuse Foxconn of having a rigid management style, an excessively fast assembly line and forced overwork. The company denies the allegations, but has recently announced two raises, more than doubling the basic worker pay to 2,000 yuan ($293) at its southern China compound.

Foreign companies that rely on China as a source of cheap labor are finding it harder to attract and keep workers, who are demanding better pay and working conditions.

For its part Taiwan is now making intensive efforts to increase its attractiveness to foreign investors, and to lure back companies like Foxconn, which have left the island in droves for the mainland.

Last month it cut business income tax from 25 percent to 17 percent. The government is also planning to set up several free trade zones for tariff-free imports.

Businesses have pressed the government to lower the basic wage for foreign laborers, now at nearly 18,000 New Taiwan dollars ($550) a month. Economic Ministry official Huang Hsien-lin said authorities are studying ways to cut production costs at the free trade zones, but declined to elaborate.

Associated Press