Inside a Chinese iPhone Plant, Foxconn Grapples With Covid Chaos

Hong Kong – Foxconn Technology 2354 -0.76%

The group is struggling to contain the weeks-long Covid-19 outbreak at an iPhone factory in central China, trying to reassure frightened and frustrated workers at a critical time for smartphone orders.

At Foxconn’s main factory in Zhengzhou, the world’s largest apple assembly plant the company’s

apple 7.56%

iPhone, hundreds of thousands of workers have been placed under a closed-loop system for nearly two weeks. They are largely cut off from the outside world, only allowed to move between dormitories or homes and production lines.

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Many said they had been locked up in their homes for days, and the distribution of food and other essentials had been chaotic. Many others said they were afraid to continue working because of the risk of infection.

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Foxconn on Wednesday denied what it said were online rumors, saying the site had identified 20,000 cases and said it was providing necessary supplies to a “small number of employees affected by the pandemic.”

“A sudden outbreak disrupted our normal life,” Foxconn said in a post to employees on WeChat on Friday.,

A social media platform. “The orderly progress of epidemic prevention and output depends on the efforts of all employees,” it said. It outlines plans to ensure adequate food supplies and mental health support, and pledges to respond to workers’ concerns.

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Foxconn did not respond when asked for details of the workers on the scene. Earlier, when asked about the situation, the company referred to Wednesday’s statement and Friday’s post on WeChat.

Covid-19 lockdowns, crackdowns on corruption and other measures have put China’s economy on a potential crash course. WSJ’s Dion Rabouin explains how China’s recession is hurting the US and the rest of the world.Illustration: David Fang

“It’s too dangerous to go to work,” a 21-year-old worker confined to a dormitory told The Wall Street Journal, skeptical of the company’s claim that the factory had a low infection rate.

Foxconn’s disruption is the latest example of the economic and social toll of China’s stringent epidemic control policies, which include swift and sweeping lockdowns, mass testing and mandatory quarantines to wipe out the virus when it emerges. While Beijing has said the virus is too powerful to relax its zero outbreak policy, companies must convince employees that there is little risk of going to work when there are signs of an outbreak.

The emergency in Zhengzhou — where 95 cases have been recorded in the city over the past four days — began in early October, when people returned from the rest of the country after a week-long national holiday. At the first signs of the coronavirus in the city, officials locked down some areas and began multiple rounds of mass testing to stamp out the virus before it took hold among Zhengzhou’s 12.7 million residents. As a major employer, Foxconn has joined the movement.

When Foxconn saw more infections in the middle of the month, the company tried to maintain production by creating “bubbles” around its operations to reduce exposure risk, a practice now common among major Chinese manufacturers to continue during the local outbreak. business.

Foxconn said it employs as many as 300,000 workers in Zhengzhou. Analysts estimate that half or more of the company’s Apple smartphones are made in the city, which is critical for delivering iPhones to consumers, including the upcoming winter holiday season, when demand for phones typically soars.

Foxconn said in Wednesday’s statement that production at the plant was “relatively stable” and that it would stick to its operating outlook for the current quarter as the impact of the outbreak is manageable. It will report quarterly results on November 10.

Apple made no mention of Foxconn’s Zhengzhou factory in its quarterly earnings report on Thursday. Supply of the new iPhone 14 Pro models is constrained by strong demand, its chief financial officer said.

Apple did not respond to a request for comment on the status of the Foxconn factory.

Some workers interviewed by The Wall Street Journal said many colleagues refused to return to the production line. Others simply left, sometimes losing their belongings, they said.

Another Foxconn employee said most of his team of a dozen night-shift workers were either sent to isolation facilities or refused to return to work. He said every night he sees workers in hazmat suits waiting to be taken away by the bus.

“I don’t know anyone around me who has positive cases,” said the worker, who has been locked up in a dormitory for several days. “It’s better for me to live in a dormitory.”

With so many people stuck in their dormitories, sent to isolation centers or not going to work at all, production at some assembly lines has slowed, two workers said.

Foxconn has created incentives to maintain production, according to a company notice on Friday.

Anyone who goes to work will receive a free meal and a daily bonus, it said. Those who show up every weekday from October 26 to November 11 will be rewarded with 1,500 yuan, or about $200.

The 21-year-old employee, who worked on an assembly line that makes older iPhone versions, said he and thousands of others have been confined to their residences since Oct. 17.

Over the next few days, he said, as more dorms were locked down, food deliveries were delayed, and rubbish in the hallways was left unattended, piling up on the ground floor.

The daughter of a worker said her mother lived in the same dormitory as some of those who tested positive. Some other workers have made similar complaints.

About 10 days ago, nearly 300 workers at Foxconn suppliers were asked to move out of their dormitories and sleep at the factory, one of the employees said.

In photos he shared with The Wall Street Journal, people slept on bedding and pillows on metal bed frames, under white fluorescent lights suspended from the hangar-like roof. Hygiene has become an issue, he said. Still, he said he shouldn’t have left the factory — and if he did, he’d have nowhere to go.

“Where can I go? Barriers are everywhere,” he said. “Every checkpoint is manned.”

Business and the Pandemic

write to Wenxin Fan’s [email protected] and Selina Cheng’s [email protected]

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