China Jobs Freeze as Apple Cuts Orders

iPhone 5
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iPhone 5

Foxconn, the world's largest contract electronics manufacturer, has imposed a recruitment freeze across most of its factories in China as it slows production of Apple's iPhone 5.

The suspension in hiring by China's largest private-sector employer and the biggest assembler of Apple products, is the first such countrywide move since the 2009 downturn, prompted by the financial crisis. It underscores the weakening demand for some Apple products, which has put pressure on the U.S. company's battered share price.

"Currently, none of the plants in mainland China have hiring plans," said Liu Kun, a company spokesman at Foxconn's manufacturing facility, in the southern Chinese city of Shenzhen across the border from Hong Kong.

Human resources officials at Foxconn's largest factories, local government officials and external recruiters working with the company said there had been internal notices on Tuesday and Wednesday to halt hiring until at least the end of March, in response to reduced orders for the iPhone 5.

Apple did not respond immediately to a request for comment. But Tim Cook, chief executive, told a conference last week that he did not think demand for iPhones was peaking.

"We don't have the word 'limit' in the Apple vocabulary . . . I see a [smartphone] market that's incredible to be in. Maybe one of the best markets of all time,"he said.

However, an external recruiter in the northern province of Shandong, who identified himself only as Mr Zhang, said Foxconn's demand for workers this year was as low as that in 2009.

The company's China workforce was estimated at about 800,000 during the 2009 crisis, but rose to 1.2 million last year ahead of the launch of the iPhone 5.

Workers' tenure at the company is less than 13 months on average, according to a person close to the company. This suggests that headcount at Foxconn could fall by tens of thousands if it stopped hiring for a month and its turnover of workers remained as high as last year.

Recruiters said hiring has stopped for the iPhone and iPad production lines in Shenzhen, the company's largest plant with more than 200,000 workers,as well as at Zhengzhou, the second-largest with about 200,000 workers, which also makes iPhones. Taiyuan, which had 79,000 workers as of September and makes iPhone parts, and Chengdu, which makes the iPad, were also putting a freeze on hiring.

A recruiter for Foxconn in Shenzhen said the company was still hiring some technicians. A Foxconn engineer in the city said the group was recruiting a small number of workers for its TV and computer screen production at the factory, but otherwise was not hiring because of "fewer orders for the Apple products" made there.

The overall effect of the freeze is likely to be even larger than the usual attrition rate suggests, as the weeks after the lunar new holiday are typically when Chinese workers switch jobs.

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While Mr Liu said 97 percent of the company's workers had returned to their jobs after the holiday, a human resources official at the Taiyuan plant said almost one-third of the workers there had not come back.

The move follows a recent decline in sales at Apple suppliers. "In January, Apple supply chain-related names generally delivered a slowing sales momentum due to the sluggish shipments of MacBook, iPhone 5 and iPad during the holiday season," Nomura said in a research note this week.

Hon Hai, the Taiwan-listed flagship of the group which uses the trade name Foxconn, reported an 8 per cent sales decline last month, and Quanta Computer, the world's largest notebook contract manufacturer and also an Apple supplier, saw sales drop 16 percent.