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Samsung pledges to improve supplier working conditions

BusinessNews
, 30 Nov 2012News
Samsung pledges to improve supplier working conditions

Samsung has outlined its recommendations on how its manufacturing partners can provide a better working environment for its employees, in a response to findings of a recent supplier audit that exposed "several instances of inadequate practices".

"There were indeed some cases of excessive overtime work. When workers have to work weekends, for example, due to a temporary spike in orders, overtime work reached 32 hours a week or 100 hours a month,"  Mok Jangkyun, Samsung’s vice president of HR, told Reuters.

"We've recommended they hire more workers, introduce automation and improve production processes to fix this. We are also working on guidelines to gradually reduce overtime work hours."

The Samsung executive ascribed the labour violations to local regulations that enforce the general practice of instituting fines for “faulty production” and late attendance. These local laws violate global standards but are hard to enforce at a regional level.

"We're working with them to change these practices and introduce a better work environment," Mok added.

He also went on to extol the virtues of Samsung’s policy of self-manufacture, which sees the Korean firm produce 90 per cent of its own goods.

"Manufacturing is the backbone of Samsung's growth and we put very much emphasis on improving manufacturing competitiveness, as this is how we've become the leader in chips and displays," he explained.

In-house production is a more cost-intensive undertaking than outsourcing, but the benefit of market adaptability outweighs the concern of additional expenditure, according to Samsung.

An example of this is the production of the Galaxy S handsets, which are developed primarily at Samsung plants located in Vietnam and China. As the smartphone developer is not beholden to a contractor it can better adjust output according to demand. This is in stark contrast to the current problems facing main competitor Apple, whose outsourced production of the iPhone 5 continues to be plagued by delays.

"Multinationals are increasingly opting for outsourcing for various reasons. But at Samsung, out of over 200,000 staff worldwide, more than half are manufacturing jobs, which indicates we are very much a manufacturing-driven company and it is where our core strength is," the executive said.

"Samsung manufactures more than 90 per cent of our products internally and only relies on contractors for peripheral products such as components, feature phones and handset cases."

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