Apple revealed its once closely guarded list of global suppliers on Friday, taking a dramatic and unprecedented step in response to harsh criticism that it was turning a blind eye to dismal working conditions at partner factories.
The move, unusual in an industry that relies heavily on foreign component suppliers to drive margins but rarer still for an infamously secretive company, underscored some 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 made great.
"With every year, we expand our program, we go deeper in our supply chain, we make it harder to comply," Mr. 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 reamins to be done."
Apple said it conducted 229 audits last year, reperesenting an 80 per cent increase over 2010. From 2007-2010 the company only conducted 288 total audits. The company said it looked at all levels of its supply chain, including final assembly and component suppliers.
The audit 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. Other violations found in the audit included dumping wastewater onto a neighboring farm, using machines without safeguards, testing workers for pregnancy and falsifying pay records.
In all, the audits found 74 per cent of the suppliers to be in overall compliance with Apple's policies. Examples of violations included testing job candidates for Hepatitis B, conducting pregnancy tests and exceeding weekly limits of 60 working hours. Apple said 109 facilities it audited did not pay proper overtime wages.
Just 38 per cent of the suppliers observed Apple's working-hours policies, and 69 per cent followed its code for wages and benefits.
The report titled "Supplier responsibility progress report" also said it asked suppliers to repay workers after it found 67 facilities had docked worker pay as a disciplinary measure.
"I would like to make a significant improvement in the overtime area. I would like to totally eliminate every case of underage employment," said Mr. Cook. "We have done that in all of our final assembly. As we go deeper into the supply chain, we found that age verification system isn't sophisticated enough. This is something we feel very strongly about and we want to eliminate totally."
Apple said it found six active and 13 historical cases of underage labor at some component suppliers but said it did not find any underage workers at its final assembly suppliers.
Nearly all — 97 per cent — prohibit underage labour. But only 72 per cent had policies in place keep it from happening.
Apple found that 78 of the company's suppliers complied with antidiscrimination standards it has set for them. But only 61 per cent of them had systems in place to prevent discrimination from happening.
Apple said it will grant access to an independent auditing team from the Fair Labor Association in an effort to overcome criticism regarding working conditions at factories in its supply chain. It also terminated business with one supplier and was correcting the practices of another supplier. Both were repeat offenders, the report said.
Apple has made major efforts to improve and communicate its policies following high-profile labor problems at its foreign suppliers and manufacturers, including worker suicides at Foxconn facilities in China.
The report was issued a day after distraught workers who make Microsoft's Xbox video game consoles at Foxconn climbed to the top of a six-storey dormitory and threatened to jump to their deaths. No one did, but the incident highlights growing labour unrest in China. Foxconn is a unit of Taiwan's Hon Hai Precision Industry Co. that makes iPads and iPhones for Apple.
There was a rash of suicides at the massive Foxconn plant in 2010 in the city of Shenzhen. About 300,000 people work at the plant and industrial park. Plant managers installed nets to prevent more people from committing suicide by jumping from the roof.
The suicides at the plants associated with Apple cast a harsh spotlight on what critics dubbed a militaristic culture that pushed workers to the brink to meet unceasing demand for the company. In response, Apple stepped up the number of supplier facilities it audits, to ensure they meet its code of conduct.
With files from The Associated Press