Two factories, two fates: Foxconn ascends on cheap labor, Sharp hangs on

The story of these two companies is told in your living room

Shige Watanabe remembers the boom days.

"It was solid cars on the roads. The factories ran full steam, constantly," he says, standing in front of the electronics shop he has run for 30 years in the Japanese town of Yaita. A car occasionally cruises by his shop window, packed with Aquos TVs and other Sharp appliances, but the giant Sharp plant across the street is still, its windows dark on a quiet Friday afternoon.

About 1,500 miles to the west, in the outskirts of Zhengzhou, China, the scene is very different, with the sounds of traffic and construction heavy in the air. This is Foxconn Electronics territory, and thousands of assembly workers roam the streets between shifts, walking around piles of bricks and construction equipment. Building crews scramble to finish dormitories next to bustling factory lines, and tractors flatten fields nearby to build more.

Foxconn dorms
Many of the dorms for Foxconn workers in Zhengzhou are newly constructed, in areas where once there was nothing. (Image: Michael Kan, IDG News Service)

The story of these two cities is the story of your living room, which likely contains products from both companies, under a variety of brands. Sharp is teetering on insolvency as its prices are repeatedly undercut by foreign rivals, but it is still one of the world's largest makers of LCD panels and displays for devices like tablets and smartphones. Foxconn, meanwhile, cranks out more electronic goods than any other company does or probably ever has before. In many cases, screens made by Sharp are shipped to Foxconn, where they are assembled into products like iPhones and iPads.

The two are engaged in wide-ranging negotiations over a deal that may see Foxconn, founded in 1974, acquire a roughly 10 percent ownership in Sharp, which celebrates its 100th anniversary this year. The deal may also see Sharp hand over some of its factories to Foxconn, all in exchange for a much needed injection of cash. A previous agreement fell through when Sharp shares plunged in value, and the company has had to mortgage its buildings and factories to secure emergency loans, as well as reduce its workforce and wages.

It's likely you can't tell where your gadgets were made, or by whom. But the two manufacturing towns provide a stark contrast between the way things used to be made, and the way they are now. The Japanese town of Yaita is a fading, placid community where many factory workers have spent most of their lives, commuting from roomy apartments and cheering the powerhouse high school soccer team on weekends. Zhengzhou is raw, pulsing capitalism, with young recruits pouring in from all over China with suitcases in hand, sleeping four to eight to a dorm room between marathon shifts on the factory floors.

Sharp's Yaita factory, which produces its Aquos TV set, has about 1,600 workers. It was built carefully around the remains of an ancient castle in an old logging region. The area was renamed "Hayakawa Town" after Sharp's founder, and includes large grassy playing fields and tennis courts for workers.

Foxconn's Zhengzhou complex employs over 120,000 and is absorbing the land around it as it grows, generating what feels like an entire city out of what was recently rural farmland.

Li, a 22 year old who asked to be identified only by his surname, started working at one of Foxconn's Zhengzhou factories eight months ago, drawn by recruiting ads displayed in his home city of Jincheng, located in a neighboring province. "There were a lot of employment ads for Foxconn," he said. "The government is really promoting these jobs."

"Foxconn's wage is higher than most other factories," he said. "The pay is good and so are the benefits."

In August, Foxconn increased its base monthly wage to 1800 yuan (US$284), up from 1550 yuan. Company workers interviewed, however, said they generally make around 2,600 yuan from the additional overtime worked.

In Yaitai, a 53-year-old Sharp employee shrugs when asked about the future of the factory where he has worked for three decades.

"I joined simply because I thought it was a big company that would grow," he said. "Now it doesn't really matter what I think, I'm here until the end."

The average monthly wage for a worker at a Japanese electronics factory was AY=346,000 (US$4,455) last year, about ten times what Foxconn workers make with overtime. Sharp employees interviewed for this story declined to provide their names or exact salaries, citing fear of repercussions in the small town where they live and work, but all made it clear they see their employment as a career.

A massive Foxconn complex gobbles up land and workers, while a Sharp plant fades quietly away

This story, "Two factories, two fates: Foxconn ascends on cheap labor, Sharp hangs on" was originally published by IDG News Service .

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