High Flying Apple Hits Turbulence In Brazil, Foxconn's Gou Calls Workers 'Animals'

After Foxconn owner Terry Gou called workers animals at a company meeting, unionized assemblers of Apple IPods at Foxconn's Jundai fab near Sao Paulo are complaining about a lack of food and water and cage-space working conditions and have threatend to go on strike if their grievances are not resolved.

In the wake of Gou's gaffe Foxconn retained New York public relations firm Burson-Marsteller to buzz up its advocacy of corporate social responsibility and minimize collateral damage to Apple, the world's most valuable corporation.

Apple uses Foxconn to continue the Steve Jobs strategy of outsourcing high wage assembly jobs from the United States that he learned from his old partner Ross Perot. Foxconn claims Gou's reference was misinterpreted by the media, resulting in unfair coverage.

Now, with the world tuned in, Foxconn's Brazil operations are becoming a stalking horse to measure how far the metallurgical workers union, which represents the Foxconn Jundai workers and was led by Lula prior to his being elected president of Brazil in 2001, is willing to make concessions to the likes of a predatory capitalist like Terry Gou.

Foxconn has assigned the blame for having to haul in water to the factory in trucks, not having enough food for worker lunches and for workers walking long distances to get to the plant to the alleged inefficiencies of local service providers. Many foreign businesses use this tactic, calling it the "Brazil cost" which is a talking point on many international business blogs.

Foxconn pays assembly workers at its Jundai plant more than what it pays its workers at iPod Village in China. But that income still falls short of being the bootstrap into a Brazilian middle class that is facing inflation and a big taste for American consumer spending habits, including a major teletubby epidemic. To make it in Brazil families pool resources and stick together, particularly since the real has lost value against both the U.S. dollar and the Chinese yuan over the past few months.

Gou's latest vision, Robot Kingdom, will create jobs for robot makers while reducing the number of human laborers required to produce Apple mobile gadgets and other digital ware. Just half an hour from Latin America's largest air freight hub at Viracopos Airport, the Jundai fab assembles Apple products from parts flown in from other nations, making it take on the characteristics of a Mexican-style maquiladora operation.

Beyond Apple, and the Google Android phone, Gou's Foxconn empire assembles products for Acer, Cisco, Dell, HP, Motorola, Nintendo, Nokia, Sony and Toshiba.

This considered, the question most journalists, Apple management and their public relations support fail to ask openly is, that with Foxconn serving as an outsource for so many high tech companies just what is it that is missing from Apple's corporate social responsibility standards toward suppliers that causes them to get singled out for labor action and bad press? Apple's recent document on supplier responsibility works around that question.

The mobile communications craze is creating a global society where kids put more importance on what color IPhone they take to school than on what they learn in school. While adding a more social dimension to daily life the truncated thought patterns associated with the iPhone and other mobile lifestyle utilities, like Twitter, are unlikely to incubate the next generation of mathematicians like Grigori Perelman or a Hubble space telescope pioneer like Jerry Nelson whose quiet scientific contributions, facilitated by higher education, have changed the course of civilization

In search of the American dream, Steve Jobs and Terry Gou did not align themselves with higher education, but with the often ethically challenged business practices of the arcade gaming, casino and entertainment industries. Both men achieved icon status mashing up top flight brainpower, a skill they both learned from their relationships with gaming industry pioneer, and self described "lapsed Mormon" Nolan Bushnell. And Jobs efforts to exploit the concepts of Xerox visioneer and Intel founder Max Palevsky were more opportunistic than Jobs' biographer Walter Isaacson cares to note.

In a recent interview Nobel Laureate economist Joseph Stiglitz criticized the neoliberal economists who provide the foundation for the Apple and Foxconn human capital business model. Stiglitz argues that they have been unwilling to acknowledge the defects in their theories that helped foment the current economic crisis. Wall Street showed the same hubris in denying responsibility for the Great Crash of 1929. As Stiglitz suggests, the pendulum needs to swing toward social spending to support struggling and emerging democracies. Using his university classroom as a bully pulpit Stiglitz hopes to imprint a future generation of economists with that social consciousness, which he says can be found in nations like Norway and Sweden.

Foxconn's broader agenda to expand its operations to assemble Apple gadgets and other tech ware in Brazil's low wage and undereducated Amazon region depend on its ability to project itself as a quality employer. But beyond all the PR spin and public diplomacy mediagenics Foxconn seeking low wage targets of opportunity actually disrupts Brazil's quest to create high value jobs that promote income distribution and build a stronger, more inclusive society.

Dilma's commitment to improve higher education, and her reaching out to MIT and other U.S. academic institutions for guidance don't skew with the way Foxconn and Apple run the good cop - bad cop business relationship that keeps Apple the world's most valuable corporation. China, whose Communist Party actually empowers the Foxcon-Apple model and is Brazil's #1 trade partner, is in the midst of a delicate political transition and will need to deal with a new worker surge in response to repression of dissidents and recent Hon Hai-Foxconn wage hikes in Taiwan that play back on the mainland... both factors played into U.S. secretary of state Hillary Clinton's tension filled visit to China.

Brazil seeks to bridge the digital divide by providing economically challenged regions with more broadband access and credit facilities for teachers and students to buy computers with affordable monthly payments. But the high retail cost of Foxconn assembled Apple products puts them out of the reach of Brazil's working poor. The Foxconn conundrum also complicates relations with the Obama White House which while seeking to expand trade with Brazil is also is hungry for the Silicon Valley campaign dollars that support the Foxconn-Apple global business model. Since public relations will not make Foxconn's hard line labor relations tactics go away if Dilma wants digital social equality she needs to put on her game face and put Foxconn's feet to the fire.

Ironically, in spite of Dilma's record popularity, Lula, the former leader of metallurgical workers union, is the person most Brazilians want to run for president on the Workers Party ticket in 2014 according to a recent scientific poll.

With Gou calling workers "animals" and Lula, sporting cool shades and back on the warpath after winning his battle with laryngeal cancer, Brazil is now less apt to play Apple-Foxconn's good cop-bad cop by soft power rules.