Apple Supplier Freezes Hiring at Largest Plant

The National

February 22, 2013

Apple's manufacturing partner Foxconn Technology Group has frozen hiring at a Shenzhen plant that makes gadgets including the iPhone 5 and put the brakes on recruiting for other factories across China, but said the move was not linked to any single client.

Foxconn runs a network of factories across the world's second biggest economy that make products for technology companies from Hewlett Packard to Dell. It sought to pour cold water on a Financial Times report that it had imposed a hiring freeze while it slows production of Apple's latest smartphone.

"Due to an unprecedented rate of return of employees following the Chinese New Year holiday compared to years past, our company has decided to temporarily slow down our recruitment process," the company said in a statement.

"This action is not related to any single customer and any speculation to the contrary is false and inaccurate."

Like other Chinese contract manufacturers, Foxconn, the trading name of Taiwan's Hon Hai Precision Industry, relies on a large number of migrant laborers from across the country who journey home for the most important holiday of the year. Many do not make it back to work, but Foxconn spokesman Louis Woo said this year they saw as many as 97 per cent of employees return.

A Foxconn recruitment center in an industrial suburb of Shenzhen, where job-seekers register their names and mobile numbers, was closed on Thursday.

"I've waited here four days now and I've spent a lot," said Yang Jun, a hopeful migrant from Shanxi province, in northern China. "I'm not sure how long I can hold out. If they don't contact me soon I'll have to leave."

Apple sold a less-than-expected 47.8 million iPhones in the 2012 holiday quarter, fanning fears that its dominance of consumer electronics is on the decline as Samsung and other manufacturers that use Google's Android software gradually gain market share.

Apple watchers often take cues from its component suppliers and manufacturing partners. In January, Apple chief executive Tim Cook took the unusual step of warning investors that it is difficult to extrapolate from limited "data points".

RBC estimates that just 70-80% of Chinese workers return to factories it tracks.

"This year we believe the return rates have been closer to 90 percent, which may minimize the need to hire," RBC analyst Amit Daryanani wrote in a Wednesday research note.

"Given the timing of the freeze, it may have more to do with higher return rates of employees versus what was expected by Foxconn and other supply chain companies."