Saturday, January 28, 2012

Lowell on the Yangtze

Apple employs 43,000 people in the U.S. and 20,000 overseas, all dwarfed by its virtual workforce of 700,000 employees of overseas contractors assembling the gadgets we have come to cherish.  Apple describes overseas manufacture as its only viable economic option, and I don't doubt that to be true.  

This information comes from a recent, excellent (oft-blogged) New York Times piece by Charles Duhigg and Keith Bradsher, “How the U.S. Lost Out on iPhone Work.” To make the point, Duhigg and Bradsher tell the story of how the foreman of a Chinese factory roused 8,000 workers inside the company dormitories around midnight, provided them with a biscuit and tea, and within a half hour had them launch into a 12-hour day to implement a last-minute redesign of the Apple iPhone screen.  Within 96 hours the plant was producing 10,000 iPhones a day.  

As one observer noted, that’s breathtaking.

Apple and others argue the overseas migration of jobs is permanent, a function of competitiveness and the need to generate profits to reinvest in innovation.   That’s the pleasant way of saying it.   A less pleasant way was offered by an Apple executive who claimed, “We don’t have an obligation to solve America’s problems.  Our only obligation is making the best product possible.”

Note that Apple has $97.7 billion in cash on its balance sheet.  Note also that Apple and other American companies have been dealing (or not) with complaints about working conditions in their supplier factories for years.  High suicide rates.  Underage labor.   Excessive overtime.  Crowded dorms.  Fires.  Explosions.  Hazardous waste.  Falsified records.  One Apple executive opined, “The system works for us.  Suppliers would change everything tomorrow if Apple told them they didn’t have another choice.”

Reinforcing where the real trouble lies, however, another noted, “Right now customers care more about a new iPhone than conditions in China.” Wall Street backed that rationale in August when Apple became the most valuable company in the world based on market cap.

Not so very far from my front door is the city of Lowell, considered the epitome of the early American industrial revolution with its large-scale, mechanized production and cheap labor.   By 1846 Lowell’s mills were producing almost one million yards of cloth a week; until the Civil War it was the largest concentration of industry in America.  For the 19th century, Lowell was breathtaking.

The workers were mostly young women recruited from nearby farms and housed in large, supervised boardinghouses.  They came to Lowell for independence, for cultural and religious opportunities, and for money.  Many only stayed a year but when they returned home could possess bank accounts of $25 or more.

In return, the women worked long hours every day except Sunday.  Summer days might last 14 hours, with the workers on their feet every minute.  The factory bells sent them to work at 4:50 a.m., rang them out at 7 p.m., and called curfew at 10 p.m.  One wrote that they worked “to the obedience of that ding-dong of the bell--just as though we were so many living machines.”

The mills also regulated conduct outside of the factory, expecting, among other requirements, regular church attendance.  Women who did not conform were blacklisted, never to work in a city mill again.

A decade after the first mill opened, protests began.  

In 1837, Sarah Bagley entered the Lowell mills and, gaining a full appreciation for the conditions, organized the Lowell Female Reform Association.  One of the Association’s primary struggles was to win a 10-hour day, eventually petitioning the Massachusetts state legislature.
We, the undersigned peaceable, industrious, hardworking men and women of Lowell. . .toiling from thirteen to fourteen hours per day, confined in unhealthy apartments, exposed to the poisonous contagion of air, vegetable, animal and mineral properties, debarred from proper Physical exercise, time for Mental discipline, and Mastication cruelly limited; and thereby hastening us on through pain, disease, and privation, down to a premature grave. . .seek a redress of those evils.  
In countering the argument that the girls of Lowell had voluntarily accepted a 12-hour day, Bagley wrote, “Is any one such a fool as to suppose that out of six thousand factory girls of Lowell, sixty would be there if they could help it?”

I wrote part of this post on an iPad, so I’m far, far from casting the first stone.  I understand that a CEO's and company's overwhelming priority is to build value for shareholders. I also have experience--and a particular fascination--with large, interconnected systems where, when everyone optimizes his or her own segment, lots of other people get hurt.

Think about the rise of the iPad and iPhone: Apple wins, investors win, consumers win, America wins, China wins, Apple's suppliers win and--like the farm girls seeking a better life in the Lowell mills--the Chinese workers win, too. Right?

Every segment wins and a whole bunch of good people suffer.

If the workers were slaves we'd be outraged. Yet, when a laborer is simply trapped, used and abused--and not owned--it's easier to overlook the inconvenient truth.

This I believe: When conditions involve loss of human dignity, eventually something gives.  We can hope it’s the emergence of enlightened management, sound government and maybe even a rising middle class.  We can hope it happens sooner rather than later, and we can sometimes even help make it happen.

But it’s hard to think that treating workers like production units--which might yield momentarily breathtaking results--constitutes anything like a long-term national competitive advantage.  It didn’t in Lowell.  I doubt it will in China, either.

(With thanks to friend Rupert for a good lunch--and helping push this idea along.)