50,000 Seasonal Jobs Cut By Foxconn Due To iPhone Demand Slowdown: Nikkei

As the global smartphone industry passes through its worst slowdown every in a decade, tens of thousands of seasonal jobs are being cut by Apple’s iPhone suppliers much earlier than they were scheduled.

According to Nikkei citing an industry source familiar with the situation,  iPhone assembler Foxconn has dropped off about 50,000 workers employed by it on contractual  basis since October last year at its iPhone factory at Zhengzhou, in China’s Henan Province. According to the trends in previous years, most of the these workers would have had their contracts renewed every month since August every year till about the middle to late January when Foxconn lets go of these employees because of  a traditional slowdown in orders for iPhone production.

While the number of contractual workers laid off is not more than the previous years, the sacking has taken place much before than it traditionally did in the past years.  “It’s quite different this year to ask assembly line workers to leave before the year-end,” a source with knowledge of Foxconn’s reductions told the Nikkei.

The slower-than-expected demand for Apple’s iPhones has also forced other crucial iPhone suppliers to sac temporary workers much earlier than usual. Earlier this month, a very surprise and rare profit warning and slump in the revenues at the end of 2018 was issued by the California based Apple. Analysts are also expecting 2019 to be tough year for Apple because of decline in demand in the overall global smartphone market even as demand in China – the largest market for Apple outside of the US, for the latest iPhones is also expected to drop because of the ongoing trade war between China and the United States.

Monthly labor contracts were started to be cancelled in November last year by Pegatron, the second largest assembler of iPhones.

Nikkei reported that, the company typically reduces its workforce of 200,000 by tens of thousands every month till the total number of employees reach about 100000, which, according to sources cited in the report, is the bare minimum number of workers that is required to get through the daily operations of the company. “And for [2018], it just happened sooner than in the past because of poor demand,” said the source to Nikkei.

The companies that are placed at lower levels of the supply chain for iPhones are also engaged in cutting down their workforce and contractual workers, said industry sources. The Nikkei reported that “vacation” was asked to be extended from October last year to March this year for about 4000 workers of a company that supplies one key component based in Shenzhen. “The company has not actively laid off those workers yet. It will decide whether or not to lay them off after March 1,” Nikkei quoted a source as saying.

(Adapted from AsiaMikkei.com)

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