Free Giving Voice To Values: Case Study Example

Ethics in the Electronics Industry

Abstract
In recent years, significant media and consumer attention has been focused on the working conditions of foreign laborers employed in factories producing goods for sale in the US and other developed countries. Various human and labor rights organizations have reported that workers are routinely forced to work more than the legal amount of hours, greatly underpaid, and forced to work in unsafe conditions. As public outcry mounts, companies are increasingly forced to attend to these issues and keep pace with consumer consciousness and shifting consumer values. The purpose of this paper is to explore the ethical issues faced by a Purchasing Director for a mid-size electronics company when visiting his company’s main factory in China, described using the PLUS (Policy, Legal, Universal, Self) framework. It also addresses preliminary steps to address these issues using the “Voicing Our Values” technique (Ask Questions- Obtain Data- Talk to Others- Reframe the Issue) and presents possible first steps towards addressing the Purchasing Director’s concerns regarding working conditions in the company’s overseas factories.
Keywords: labor law, sweatshop labor, electronics industry, business ethics
1.1. Felipe perceives the working conditions in the factory to be unethical because the factory is exploiting their workers. In addition to using child labor by employing 12-16 year olds, the factory is knowingly allowing unsafe work practices that are causing a variety of health problems, (making them work without the necessary equipment to prevent damage to their eyesight and exposing them to toxic chemicals that result in illness and death). The abysmal wages and poor living conditions qualify the factory employees as not just child laborers but also sweatshop laborers.
Felipe’s company does not seem to have any policies that dictate a position on exploitation of their foreign workers. The company has grown by providing current, in-demand electronics at a very low price. Cheap foreign labor has enabled them to do this. As no representatives from the company have ever visited the factory, it is likely that there are no firm policies regarding the company’s expectation for foreign working conditions.
The factory may be adhering to local (Chinese) labor laws, which are one of the primary reasons that many global corporations have moved their production to China in recent years according to the AFL-CIO (2015). Under China’s labor laws, extremely low wages and poor working conditions are legal, and workers are not allowed to form independent trade unions or strike over poor working conditions (“Labor Rights in China,” 2015). It is possible, however, that the factories are not adhering to local laws - Electronics Watch reported that many factories fail to adhere to minimum standards even by local law (2013). While these conditions might be legal under Chinese labor law, they stand in stark contrast to US labor laws.
Unfortunately, because the organization has yet to adopt any policies or guiding principles regarding the treatment of foreign workers, it cannot be said that their working condition do not conform to the organization’s principles or values. It seems, from conversations that Felipe had during and after his visit, that the principles and values the company values are centered around providing their products at an affordable price- i.e., they seem far more consumer and profit-focused than focused on the safety and well-being of the laborers producing their goods.
Felipe’s greatest conflict is with the stark contrast between his personal sense of what is right, good, and fair. Felipe is distressed by what he sees as inhumane working conditions, and feels guilty that his role in the company puts him in contrast with his own principles.1.2. There is a great deal at stake for the company in carrying on “business as usual” for the investors, shareholders, executives, and employees. If the executives take a stand against the factory’s practices, they would incur a drop in production as they transition to a new factory and an increase in prices when switching to a factory that adheres to stringent labor standards. Shareholders may decide to sell their shares, which could lead to a drop in stock prices, which could result in layoffs and decreased pay for company employees at various levels. The factory owners also are interested in maintaining the status quo because making any changes or improvements to the working conditions of certain workers could lead to resentment among others, or demands for improved conditions at other factories run by them.1.3. The arguments that Felipe should anticipate include a loss in revenue if changes are made to the way goods are produced. Because the company is a smaller electronics company, executives may be concerned that they will be unable to compete with larger companies that choose to continue using foreign labor under similar conditions. It is clear that many at various points within the chain of command in Felipe’s company, other companies that use the factory, and the factory itself, believe that even if working conditions are subpar, they remain more favorable than the conditions employees would face if not employed by the factory. 1.4. One argument that Felipe can employ against the increased cost that the company may incur is that by cutting out distributors, the company is now saving 30% on the purchase of goods; it is possible to transfer those savings to programs that improve conditions for laborers without negatively affecting the company’s profit margin and alarming investors or stockholders. Another argument that Felipe could mount is that, given the increased media attention on the poor working conditions in many overseas factories and increased consumer consciousness, if the company were to receive negative media attention regarding the exploitation of laborers in the factories, it may negatively affected sales (Johnson, 2012). Given that the company is a smaller company, they may not survive such a scandal as well as some of the larger companies. Furthermore, if the company were to establish themselves as a leader in championing improved working conditions for their foreign laborers, they may actually gain customers who are conscious of the ethical issues surrounding factory labor in the electronics industry and looking to support a company that is also conscious of the same issues.
2. Day 1 - Felipe should begin by preparing a list of questions for his manager that probe his manager’s own personal feelings on the issue of worker exploitation in a non-threatening manner. Felipe could begin by asking his manager what the company’s guiding principles are and attempt to determine if the company has established any regarding labor conditions, and if the manager feels the company faces any risk in not addressing these conditions If none have been established and the manager does not feel that the company is at risk, (day 2-3) Felipe should then begin by gathering data regarding the media backlash against larger companies who have been found to employ sweatshop labor and the negative effects that backlash had on sales and stock prices. Felipe should also come up with three ways that the company could improve conditions for workers at a low cost to the company using the 30% saved from cutting out the distributor (purchasing magnifying glasses for workers and better respiratory masks for workers who are exposed to noxious fumes are two possible ideas). Felipe should begin seeking other professionals with whom his company could consult that have experience in addressing labor concerns (including the company’s charitable fund), and research what types of solutions these professionals have implemented in the past, though he should not yet contact them. Day 4 - Felipe should approach the manager with a presentation that outlines his concerns (including the specific conditions he witnessed in the factory) presents the supporting data regarding the risk other companies have faced in employing this type of labor, and offers his ideas for simple low-cost solutions that could mitigate this risk as well as the possible next step (approaching others who have had similar experiences and been successful in addressing them in a way that does not decrease profits or drastically change the production of company goods). In approaching the situation in this manner, Felipe avoids going over the manager’s head, and will hopefully be successful in helping the manager to understand and share his concerns regarding working conditions. By presenting ideas for simple, low-cost solutions and clearly outlining small steps that can be taken to begin exploring potential improvements for workers, it is less likely that the manager will feel that Felipe is attempting to drastically change the culture and policy of the company and the electronics industry at large and may be more willing to listen and share Felipe’s well-thought out and presented concerns and suggestions with managers further up the chain of command.

References

Johnson, J. (28 Mar 2011). “1 Million Workers. 90 Million iPhones. 17 Suicides. Who’s to
Blame?” Wired Magazine. Retrieved from http://www.wired.com/2011/02/ff_joelinchina/
“Labor Rights in China.” (2015). American Federation of Labor and Congress of Industrial
Organizations (AFL-CIO). Retrieved from
http://www.aflcio.org/Issues/Trade/China/Labor-Rights-in-China
“Poor working conditions persist at at Chinese suppliers of global IT-brands.” (2013 Nov 6).
Electronics Watch. Retrieved from
http://electronicswatch.org/en/poor-working-conditions-persist-at-chinese-suppliers-of-global-it-brands_14704