The Betrayal of the American Dream (11 page)

About the same time, the Apple plant in Fountain went into production and soon became the company’s largest manufacturing facility, turning out 1 million PowerBook and desktop computers a year. It was a state-of-the-art facility that helped the Colorado Springs area attract other high-tech companies. The emergence of this new industry was a relief to the area, which had long been dependent on the ups and downs of defense contracts from Washington.

Apple seemed to be following the classic path of industrial development that Vise-Grip and scores of other domestic manufacturers had taken for years. A creative entrepreneur invents a product, builds plants to make it, and markets it to consumers, all the while employing ever more people to build the product. This is win-win innovation.

But Apple changed the rules, and the story diverged from the pattern that U.S. manufacturers had followed for decades. Rather than continue to open new plants in other U.S. cities and expand existing operations, the company, following the examples of other computer and electronics makers, moved production offshore, largely to China. Just twelve years after it opened, the Elk Grove plant was closed, “cutting out the core of what used to be one of the brightest stars in the region’s high-tech constellation,” as the
Sacramento Bee
put it. Apple sold the Fountain plant to an electronics firm in 1996. The new owners continued to manufacture Apple computers under contract for three years until production there also moved abroad. Today the 250,000-square-foot building sits vacant, a painful reminder of what was once a thriving tech industry.

As recently as 2000, Colorado Springs was riding a high-tech job boom. But since then, with the closure of the former Apple plant and other facilities, the area has lost more than 40 percent of its manufacturing and information technology jobs. More than 15,000 jobs—paying from $55,000 to $80,000 plus benefits—simply vanished, according to local economic development officials, sucking an estimated $500 million out of the local economy. In their place, jobs in call centers for insurance, finance, and cell phones were created—jobs that paid about half of what the IT jobs paid, according to local officials.

Bill Stamp was one of Apple’s first employees at Fountain. He was twenty-six years old when he joined the company in 1984 at its Fremont assembly plant, recording and keeping track of the myriad parts that went into each personal computer, from hard drives to screws. When the company offered him an opportunity to get in on the ground floor at its new assembly plant in Colorado, he jumped at the chance. His wife-to-be, Christy, also an Apple employee, landed a job at Fountain as well, and later he moved up to a supervisory position in shipping. Gregarious and down to earth, Stamp is the first to tell you he was never a computer geek. He was a “materials guy” whose job was to feed the production line: “My job was to get it to the line and make sure it was a quality product ready for the line to use.”

Apple instilled in him and his coworkers a quality control ethic that made them want to turn out the best possible product. “There was such a camaraderie,” he said. “When we got off work, all we could talk about was Apple, Apple, Apple. We’ve got to do this or that. And we had the freedom, a process, to bring that up, and these things would then often come about. It was phenomenal, one big family.” It was an exciting time. Stamp said the folks in the factory thought of themselves as responsible for helping to build the company. They were appreciated and well compensated, and they basked in the glow of working for Apple.

Stamp said that he and Christy moved into a comfortable bilevel house set on five acres near the Black Forest, an area of abundant ponderosa pines and natural beauty north of Colorado Springs. “We were living large,” he said. “We thought it would go on forever.”

But when earnings fell in 1996 and the moneymen on Wall Street decided Apple was not living up to their expectations, the company was forced to unload assets to raise cash. The Fountain plant was sold, just four years after it had opened. Fountain was profitable and well run, but Wall Street’s relentless focus on short-term earnings demanded results. An Alabama-based electronics vendor and outsourcing specialist, SCI Systems Inc., bought Fountain for $75 million with an agreement to continue manufacturing Apple computers on-site for three years.

The plant’s ownership wasn’t the only thing that changed. Stamp recalled that the new managers were “arrogant as hell,” dismissive of Apple veterans, and uninterested in feedback from employees. “What a culture shock that was,” he said. After having worked in a collaborative environment that encouraged ideas from the ground up, the essence of a continuously innovative culture, all he ever heard from the Alabama imports were relentless orders to “git ’er done.” When the contract to make Macs expired in 1998, Apple didn’t renew, and the manufacturing shifted offshore.

Discouraged about Fountain’s future, Stamp left in 2001. He tried his hand in real estate in Colorado and held a series of supervisory jobs at less pay in distribution and warehousing, first in Colorado and then in California. In 2008, when his job was shipped to Singapore, he hit a stone wall. Always before, he had been able at least to secure an interview that often led to a job—if only for a while. Now he would send out résumés listing his lengthy experience and wasn’t even getting a call.

As the months ticked by, Stamp and his wife drew down their savings and tapped into retirement accounts to fund the fruitless quest for work and to try to hold on to their home. As so often happens, in the end they lost the home. For family reasons, they moved back to California in 2003 and settled in Milpitas, near San Jose, where they rented a two-bedroom apartment. In the summer of 2011—at the age of fifty-three, after he’d been out of work for three years—Stamp found a temporary job working as an inventory control analyst for a company in the Bay Area. It was a step down from supervising, and the job did not come with benefits, but at least he was working again.

Stamp remembers reading an article years ago, when he was still with Apple, predicting that the average worker in the future would undergo four different career changes and hold as many as ten different jobs. And he had thought:
Not me. I’m staying right here.
Little did he know that would never be an option.

That’s because Congress, which writes the rules of employment, and Wall Street, which decides what rules it will permit, had other plans. The jobs that provided a good living for Stamp and thousands of other production workers in Fountain and Elk Grove are now in China. Almost every Apple product—Macs, iPods, iPhones, iPads—is made in China. Unlike in the past when companies manufactured in the United States for decades, Apple shipped its jobs offshore in less than a generation. So much for the benefits of American innovation to America.

Apple’s move to China came about quietly and was little noticed at the time because of the way the company went about creating its offshore presence. Rather than build plants that proudly displayed the Apple name, as it did in California and Colorado, the company turned to firms that partnered with the Chinese to establish Apple plants in mainland China that bore the name of their Chinese contractor even though inside they were making Apple products. This convenient buffering arrangement insulated Apple from oversight of its offshore workplaces.

Apple production workers in Fountain and Elk Grove bought homes, sent their kids to school, shopped locally, saved for their retirement, and, briefly, lived the American dream. That dream, or anything like it, has not been extended to their Chinese replacements.

In 2011, in a story for the Investigative Reporting Workshop, we told of how Apple’s good-paying manufacturing jobs in the United States had been shifted overseas “to laborers in sweatshops in China.” We contrasted the middle-class lifestyle and working conditions that Bill Stamp and other Apple production workers had enjoyed in the States with the grueling working and living conditions of workers making Apple products in China.

Prior to our story, reports had periodically surfaced in China about the exploitive and demeaning conditions that suppliers had imposed on these workers at various compounds where Apple products were made. Some of this reporting work was by a courageous Hong Kong–based human rights group called Students and Scholars Against Corporate Misbehavior (SACOM). Then, early in 2012, about two months after our investigation was published, the story went viral when the
New York Times
published lengthy accounts about worker abuse and harsh conditions.

The heart of Apple’s production in China is near Shenzhen, a throbbing megalopolis of 10 million, less than an hour north of Hong Kong. Just outside the city is a massive, fortresslike compound surrounded by walls and protected by tight security where guards stop each vehicle at the entrance and check the identities of occupants by using fingerprint-recognition scanners.

Within the walled city are numerous factories, dormitories, support businesses, and an on-site television network, all humming around the clock. This is the Longhua Science and Technology Park, one of the densest concentrations of high-tech manufacturing in the world. Owned by Taiwan-based Foxconn Technology Group, the largest manufacturer of electronics and computer components in the world, Longhua is home to as many as 300,000 workers.

The workers labor in enormous factories, row after row of them bent over workstations that seem to stretch endlessly into the distance. They assemble iPods, iPhones, iPads, and products for other electronics makers. Occasionally, photos surface showing workers, mostly young women, wearing spiffy white coats and caps, going about their work in what appear to be pleasant, well-lit surroundings, just as workers once did at Elk Grove and Fountain.

But that’s the only similarity with Apple’s former plants in the United States.

iSLAVES

Workers at Longhua and other Foxconn plants in China usually work from ten to twelve hours a day, sometimes for seven days straight without overtime pay. They’re not allowed to speak to each other on the job or to leave their workstations—not even to go to the bathroom—without permission from guards. Some of them perform repetitive tasks for up to ten hours at a time without a break. Supervisors berate workers with foul language and warn that if they fall behind on production they will be replaced. Some have reportedly been beaten for mistakes they allegedly made on the assembly line. For this, they earn little more than a dollar an hour at most.

SACOM, the Hong Kong human rights group, which has documented these practices in numerous reports, described working conditions at one Foxconn plant making iPhones: “Workers frequently endure excessive and forced overtime in order to gain a higher wage. If they cannot reach the production target, they have to skip dinner or work on unpaid overtime shifts.” SACOM calls Foxconn’s Apple workers “iSlaves.”

Most young workers live on-site in cramped high-rise dormitories near the factories, where as many as a dozen workers squeeze into small rooms with three tiers of bunk beds. Most of them are peasants in their late teens or early twenties who have been lured to the city in hopes of earning money for themselves and their families back home, only to find themselves yoked to brutal production schedules that can become unbearable.

Upwards of two dozen workers at Apple plants in China have become so desperate that they have taken their own lives, often by jumping to their death from their dormitories. The deaths were so common for a time that Chinese bloggers began referring to the Shenzhen plant as the “Foxconn Suicide Express.” In its investigation of conditions at Longhua and other plants making Apple products, SACOM concluded that many of those who committed suicide were exhausted, overworked, verbally and physically abused by supervisors, or publicly humiliated when they failed to meet their production quotas. SACOM reports tell the story of some of these young victims:

• Hou, a nineteen-year-old woman from Hunan province, hanged herself in the toilet of her dorm room on June 18, 2007, shortly after she had assured her parents that she would soon be coming home.

• Sun, a twenty-five-year-old college graduate from Yunnan province, jumped to his death from his twelfth-floor room on July 16, 2009, after he was allegedly blamed for losing a prototype for a new iPhone. According to SACOM, Sun was detained by security officers, placed in “solitary confinement,” subjected to “psychological pressures,” and allegedly beaten. In a final chat with friends shortly before he killed himself, he described the relief he felt in planning to take his own life: “Thinking that I won’t be bullied tomorrow, won’t have to be the scapegoat, I feel much better.”

• After Feng, a twenty-three-year-old college graduate, jumped to his death from his fourteenth-floor room on January 16, 2009, police found a suicide note: “Too much work pressure; unstable emotions.”

• Ma, a nineteen-year-old native of Henan province, was found dead near a stairway of his dormitory on January 23, 2010. An autopsy concluded that he had fallen to his death. His sisters later insisted that their brother died from a beating he had suffered after he accidentally damaged equipment at work.

After a rash of suicides at the Foxconn plant in early 2010, Foxconn took action: it strung nets around the dorms to catch any workers who might try to kill themselves by jumping. It also sealed balcony doors and barred access to roofs. Workers were reportedly urged to sign a statement promising not to kill themselves and to “treasure their lives.” Apple said later in a public report on “supplier responsibility” issued to shareholders that it was “disturbed and deeply saddened to learn that factory workers were taking their own lives” and pledged to take steps “to help prevent further tragedies.” The company launched a search “for the most knowledgeable suicide prevention specialists” and commissioned a study so as to better “support workers’ mental health in the future.” Apple also commended its contractor Foxconn for taking “quick action,” including “attaching large nets to the factory buildings to prevent impulsive suicides.”