Foxconn explosion could affect Apple contracts

The recent explosion at one of Foxconn's Chinese assembly plants, which left three workers dead and several severely injured, could call the company's relationship with Apple into question according to industry bean-counters.

Tech market analysis outfit iSuppli reckons the fatal incident, which has been blamed in some reports on the combustion of clouds of tiny aluminium particles, will hit production of Apple's iPad 2 to the tune of 500,000 units, but it thinks the damage to the company's international reputation will run much deeper.

Apple has become embroiled in several embarrassing incidents involving its far eastern suppliers, including wide-spread criticism of working practices in Foxconn's China and Taiwan assembly plants. Poor conditions, low wages and forced overtime have been blamed for a spate of suicides at the company's facilities, forcing Apple to deny that is was using sweat shops to build its expensive gadgetry.

Although suicide rates at the company which employs more than 400,000 workers, many of them shipped in from rural locations, are lower than those in the USA, every time a worker's death is reported it becomes a public relations disaster for Apple.

The Cupertino company has always been keen to cultivate a reputation as a caring, sharing community as well as its Californian hippy green credentials, which doesn't really fit with repeated accusations of corporate culpability emanating from its manufacturing partners.

And it's partly Apple's squeaky clean demeanour which leads to shrill media reports which rarely mention any of Foxconn's dozens of non-Apple customers whenever an industrial accident occurs.

Dale Ford from iSuppli suggests in a recent report that the explosion will reignite the debate regarding Apple's corporate responsibility. "Apple as a global company is accountable to all stakeholders for the conduct of its business, and the proper balance of safeguards and regulation will be debated because of the multiplicity of opinions on the topic. In the end, Apple will have to drive a level of corporate responsibility that is acceptable to its stakeholders," he writes.

As with any industrial accident, it could be months or even years before investigations into the explosion are complete but, with Apple's international reputation constantly being called into question, the relationship between the Cupertino company and Foxconn can't be a happy one.

"Until more information is available about the cause of the explosion and deaths of three Foxconn employees, its unclear how this disaster will impact the relationship between Apple and Foxconn," writes the analyst.