Foxconn Closes Plant After Rioting; iPhone 5 May Be Affected

Foxconn Technology Co., Ltd. (TPE:2354), which is known for assembling Apple Inc. (NASDAQ:AAPL)’s iPhones, and is also a major supplier to top global electronics companies, closed a plant in China today. The plant was shut-down after about 2000 workers engaged in a brawl at the company’s dormitory.

Foxconn Closes Plant After Rioting; iPhone 5 May Be Affected

“The cause of this dispute is under investigation by local authorities, and we are working closely with them in this process, but it appears not to have been work-related,” Foxconn said

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The reason for the brawl is still unclear, and officials are still investigating the issue. However, as per the company, the trouble started with a personal row that blew up into a brawl, but, as per the posts on Twitter like sites, the brawl sparked due to the beatings of the workers by the factory guards. In a posting on the Chinese Twitter-like microblog site, Sina Weibo, user “Jo-Liang” said that four or five security guards beat a worker almost to death. Another user, “Fan de Sa Hai”, was quoted, saying guards beat up two workers from Henan province, and in response, other workers set bed quilts on fire and tossed them out of dormitory windows. However, as per the state-run Xinhua news agency, the fight broke out due to the clash between the workers from Shandong Province and Henan, and about 5000 police were sent to end the violence.

The plant, which employs about 79,000 people, is located in the northern Chinese city of Taiyuan.

According to Foxconn Technology Co., Ltd. (TPE:2354), the brawl started at 11 p.m. on Sunday in a privately managed dormitory, and was brought under control by police at around 3 a.m.”The plant is closed today for investigation,” Foxconn spokesman Louis Woo told Reuters. An employee contacted by telephone said the closure could last two or three days.

The Taiwanese firm recently came in the limelight for accusations regarding poor conditions and mistreatment of workers at its operations in China, where it employs about 1 million workers. Following the accusations, the company has been spending heavily to improve working conditions and to raise wages. Also, in June, about 100 workers went on a rampage at a Foxconn plant in Chengdu, in southwestern China.

“Clearly there is deep-seated frustration and anger among the employees, and no outlet, apart from violence, for that frustration to be released,” Geoff Crothall, communication director at the China Labor Bulletin, a labor rights group in Hong Kong, said in a statement.”There is no dialogue and no means of resolving disputes, no matter how minor. So it is not surprising when such disputes escalate into violence.”

The component supplier has still not confirmed which of its plants supply to Apple Inc. (NASDAQ:AAPL), but according to news from Reuters, the company’s Taiyuan plant is among those that assemble and make parts for Apple’s iPhone 5. If such is the case, we could expect some possible delays in the delivery of the latest iPhone.

Foxconn Technology Co., Ltd. (TPE:2354), the trading name of Hon Hai Precision Industry Co, and the world’s largest contract maker of electronic goods, confirmed that 40 people were taken to the hospital, and many were arrested, while the local reports say that three people were in serious condition.