By Star Chang, posted Feb 20, 2013 at 3:59 PM, 562 views,

Did Lesser Demand of iPhone 5 Cause Suspension in Hiring of Foxconn Workers ?

[UPDATE] According to Financial Times report, Foxconn has imposed a recruitment freeze this week across most of its factories in China. Human resources officials at Foxconn’s largest factories, local government officials and external recruiters working with the company said there had been internal notices to halt hiring until at least the end of March, in response to reduced orders for the iPhone 5. Recruiters said hiring has stopped for the iPhone and production lines in Shenzhen and Zhengzhou. Taiyuan, which makes iPhone parts, and Chengdu, which makes the iPad, were also putting a freeze on hiring. The suspension in hiring by Foxconn is the first such countrywide move since the 2009 downturn, prompted by the financial crisis. No large recruitment take place also give us a hint that there will be no Apple major new product coming soon …

Foxconn, the major assembler of gadgets for Apple and other electronics companies, has frozen the post-holiday hiring as it faces a maturing business and rising costs. The spokesman of the company has told WSJ, the reason of the freezing is because of a high employee return rate after the Lunar New Year holiday. The weeks after the lunar new holiday are typically when Chinese workers switch jobs. Chinese factories often scurry to replace workers who find jobs elsewhere or decide to stay home in regions far from the plants. This year more than 90 percent of workers returned to Foxconn after the Lunar New Year break. Foxconn denied that the move was related to customer orders and the company hasn’t set an expiration for the freeze. In the meantime, the Taiwan manufacturing giant would keep its total China workforce steady at above 1.4 million.

Last year January, there were thousands line up at Chinese labor agencies waiting to get a job at Foxconn, as the company ramps up its iPhone production at Zhengzhou plant. It is obvious that the hiring patterns has changed this year. Foxconn makes products for HP, SONY and Nokia as well, many of those companies have seen sales growth moderate or drop in recent quarters. And the weakening demand of Apple products are also the main reason for the recruitment freeze. According to WSJ, Apple reportedly sent word to suppliers that it would be reducing parts orders for the iPhone 5 on “weaker-than-expected” demand, with some orders being cut in half from original expectations. Foxconn now decided to postpone the expansion of capacity at a plant in Zhengzhou, China, where iPhones are assembled. The hiring halt may also reflect how Foxconn has been hit by Apple’s move toward using more assemblers. Foxconn is responsible for making the 9.7 inch iPad while the production of iPad Mini has to share it with rival’s Pegatron, which assembles about 40 percent of iPad Minis.

SOURCE: Financial Times, WSJ, Bloomberg
Photo Credit: AP