China recruits villagers to restore Foxconn’s iPhone production after staff exodus

Chinese authorities are recruiting workers from villages and busing them to Foxconn’s iPhone assembly lines after the Apple partner suffered a staff exodus from its central China factory last month during a Covid-19 outbreak.

The problems at Foxconn’s Zhengzhou plant caused by Beijing’s strict zero-Covid regime forced Apple to cut estimates for high-end iPhone 14 shipments this month in a rare warning to investors ahead of its peak holiday sales season.

Now local governments in Henan province, where the plant is located, are trying to repopulate the iPhone production lines, with Chinese officials working to help Foxconn maintain production.

Businesses in China are grappling with disruptions from Covid outbreaks as Beijing eases some of its coronavirus restrictions to revive a slowing economy while trying to keep the virus under control.

Foxconn’s Zhengzhou plant usually employs more than 200,000 workers and was responsible for about 60 per cent of Henan’s exports in 2019, according to the most recently available data.

“We’ve sent over 300 workers in about a week,” said a labour official with the last name Han in Tangyin County, 200 kilometres north of the factory.

Han said the Tangyin local government helped quarantine workers for three days in a hotel before busing them directly to the Foxconn plant, where they would quarantine for another three days before starting work.

Workers fled the Foxconn factory late last month during a Covid outbreak. They said the plant was in chaos as Foxconn tried to stamp out Covid cases with tough tactics while maintaining production. Some employees climbed over fences and walked home hundreds of kilometres on foot to escape the plant.

The Apple partner has since raised wages, added large bonuses of as much as Rmb7,600 ($1,000) and divided the factory into two separate bubbles to split the worker population and try to keep Covid cases low.

The Henan government tasked officials across the province to recruit new assembly line workers.

“People are definitely nervous,” said an official in Yichuan County to the plant’s west, which bussed its first batch of 80 workers to Foxconn on Thursday. “We’re trying to make sure Covid is in control there, otherwise we may have to figure out how to bring our workers back” if the situation deteriorated, he said.

Analysts at Morgan Stanley on Monday lowered their iPhone shipment estimates by 6mn units to 79mn for the fourth quarter, noting that the “iPhone supply resumption at [the Zhengzhou factory] is the key”.

A village official in Baofeng County to the factory’s south said they had been tasked with recruiting at least seven workers from their village to send to the plant.

“This is the first time I have received such a mandatory and specific administrative order. In the past, it was merely an incentive for local people to work outside the village,” the person said, noting that the widespread social media videos of workers fleeing made it difficult to fill the quota.

Henan’s local state media this week stepped in to change the narrative, publishing videos and articles showing happy new workers filing into an orderly and clean campus.

“We hope they will feel like part of our family when coming to Yuhong [dorm],” said a worker wearing a hazmat suit in a video produced by Henan’s state-owned Dahe Daily. “This is what we’re working hard for.”

Foxconn did not immediately respond to questions about its hiring practices. Last week, Foxconn chair Liu Young-way told investors “we are working with the government to get back to normal production in the shortest possible time”.

With additional reporting by Nian Liu in Beijing