China seeks help from Communist party members to find workers willing to build iPhone units
As you might already know by now, Apple has already admitted shipments of the iPhone 14 Pro models for the current quarter will be reduced due to issues at Foxconn's Zhengzhou facility in China. A COVID lockdown in the region where Apple's largest iPhone assembler Foxconn has its busiest iPhone assembly lines led workers to flee the campus. Being stuck in the factory and working all day and night made many in the workforce angry enough to leave the facility.
The military and the Communist Party are recruiting for workers to man the iPhone assembly lines
This is usually the time of the year when Foxconn's Zhengzhou facility is working hard to produce as many iPhone units as possible with the holiday shopping season upon us. Now The New York Post is reporting that in an attempt to get as many hands on deck as possible, the Chinese government is asking military veterans and Communist party members to help recruit workers for Foxconn's Zhengzhou plant.
China might be worried that Apple is going to abandon the country
The military has handed out recruitment quotas to newly enlisted veterans and party members. The quota amounts are unknown as is the compensation that the recruiters will receive for every new worker signed up. China is telling these veterans and Communist party members to "respond to the government's call" and "aid in the resumption of production."
Almost two weeks ago Foxconn announced a new bonus designed to attract new workers. Workers who left Foxconn between October 10th and November 5th will receive a one-time bonus of 500 yuan ($69) if they return to the factory. New workers will be paid 30 yuan ($4) per hour. Those who returned by the middle of this month were promised an additional 3000 yuan ($420) if they make it through at least 30 days.
According to the Post, the Zhengzhou factory usually is responsible for the production of 50% of the world's iPhone units. Apple's admission about the shortfall in production earlier this month included the following statement: "We now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated and customers will experience longer wait times to receive their new products."
Apple is looking to lower its dependence on China
Apple has been looking to lower its dependence on China and Foxconn has announced that it is looking to quadruple the headcount at its factory in India that produces iPhone models from 17,000 to 70,000 over the next two years. Some of the actions described in this story that are being taken by the Chinese government might have something to do with a fear about Apple relocating.
Adam Segal, a Council on Foreign Relations member told The New York Times that "It’s a great irony. It’s clearly reflective of the sorry state of the economy and the worry that Apple and others may relocate." Li Qiang, founder and executive director of New York-based Chinese labor rights group China Labor Watch told the Times "It is quite rare to see a mass recruiting with such a large-scale use of the government’s power." Li points out that Foxconn pays a huge amount of taxes to the government and is a major employer.
A few days ago, we told you that UBS analyst David Vogt penned a note to clients in which he wrote that wait times for the iPhone 14 Pro and the iPhone 14 Pro Max had hit "extreme levels" in the United States and China. In the U.S., the average wait time for an iPhone 14 Pro model was 34 days. In China, the wait time for the same models has risen by 10 days to an average of 36 days.
The analyst went on to add that 35% to 40% of the holiday quarter's iPhone units are manufactured in December. If Foxconn can't get enough workers to man the iPhone assembly lines in Zhengzhou, shortages are going to be acute during the holiday season and the first calendar quarter of 2023.
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