Apple reveals supply chain, details conditions

Fri Jan 13, 2012 6:12pm EST
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By Poornima Gupta

SAN FRANCISCO (Reuters) - Apple revealed its closely guarded list of global suppliers for the first time and vowed to deal with worker abuses, hoping to deflect criticism it was turning a blind eye to cases of poor working conditions in a mostly Asian supply chain.

The dramatic and unprecedented step -- unveiling the names of 156 companies that represent 97 percent of the company's supply chain -- was an unusual move in an industry that relies heavily on foreign component suppliers to drive margins.

It is rarer still for a notoriously secretive company, underscoring speculation that new Chief Executive Tim Cook has ushered in an era of greater transparency. Predecessor Steve Jobs, who died in October, kept an iron grip on the internal workings of the company he founded and turned into the world's largest technology company.

The tell-all on Friday surprised many in the industry and on Wall Street. Experts say rivals and investors pay consultants for exactly this type of valuable intelligence.

Apple's list is the culmination of internal probes into its supply chain, spanning hundreds of audits over years and high-profile firms from Foxconn or Hon Hai Precision Industry Co Ltd to Samsung. Foxconn in particular has dragged Apple into headlines after a spate of worker suicides raised questions about conditions at its Chinese plants.

Apple said it found six active and 13 historical cases of underage labor at some component suppliers, but none at its final-assembly partners.

"With every year, we expand our program, we go deeper in our supply chain, we make it harder to comply," Cook told Reuters in an interview. "All of this means that workers will be treated better and better with each passing year. It's not something we feel like we have done what we can do, much remains to be done."

The audit conducted by Apple of suppliers found a number of violations, among them breaches in pay, benefits and environmental practices in plants in China, which figured prominently throughout the 500-page report Apple issued.   Continued...