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Huge Foxconn iPhone plant in China rocked by fresh worker unrest

Source image: https://www.cnbc.com/2022/11/23/huge-foxconn-iphone-plant-in-china-rocked-by-fresh-worker-unrest.html

Hundreds of workers joined protests at Foxconn’s flagship iPhone plant in China, with some men smashing surveillance cameras and windows, footage uploaded on social media showed.

The rare scenes of open dissent in China mark an escalation of unrest at the massive factory in Zhengzhou city that has come to symbolize a dangerous build-up in frustration with the country’s ultra-harsh COVID rules as well as inept handling of the situation by the world’s largest contract manufacturer.

The trigger for the protests, which began early on Wednesday, appeared to be a plan to delay bonus payments, many of the demonstrators said on livestream feeds. The videos could not be immediately verified by Reuters.

“Give us our pay!”, chanted workers who were surrounded by people in full hazmat suits, some carrying batons, according to footage from one video. Other footage showed tear gas being deployed and workers taking down quarantine barriers. Some workers had complained they were forced to share dormitories with colleagues who had tested positive for COVID-19.

Foxconn said in a statement it had fulfilled its payment contracts and that reports of infected staff living on campus with new recruits were “untrue.”

“Regarding any violence, the company will continue to communicate with employees and the government to prevent similar incidents from happening again,” the company added.

A source familiar with the situation in Zhengzhou said production at the plant was unaffected by the worker unrest and output remained “normal.”

Reuters has previously reported that Foxconn aimed to resume full production at the Zhengzhou iPhone plant by the second half of November.

While the latest unrest has added “uncertainties” to the target, the source said the company was still working hard to hit it, adding that “only a portion” of the new recruits took part in the unrest.

A second source familiar with the matter, however, said Foxconn was unlikely to hit the target, pointing to disruptions triggered by the unrest, impacting particularly new recruits who were hired to bridge the gap in the workforce.

“Originally, we were trying to see if the new recruits could go online by the end of November. But with the unrest, it’s certain that we can’t resume normal production by the month-end.”

Recruitment Drive

Discontent over strict quarantine rules, the company’s inability to stamp out outbreaks and poor conditions including shortages of food had caused workers to flee the factory campus since the Apple supplier imposed a so-called closed loop system at the world’s biggest iPhone plant in late October.

Under closed-loop operations, staff live and work on site, isolated from the wider world.

Former workers have estimated that thousands fled the factory campus. Before the unrest, the Zhengzhou plant employed some 200,000 people. To retain staff and lure more workers Foxconn has had to offer bonuses and higher salaries.

Local authorities also stepped in to help, with some urging retired soldiers and government workers to take on stints, according to local media reports.

The first source said that the eagerness of local authorities to recruit workers may have played a role in causing “miscommunication” with the new hires on issues including allowance and accommodation.

The Zhengzhou government did not immediately respond to a faxed request for comment.

Worker Woes

In the videos, workers vented about how they were never sure if they would get meals while in quarantine or over inadequate curbs to contain an outbreak.

“Foxconn never treats humans as humans,” said one person.

Apple did not respond to requests for comment.

“It’s now evident that closed-loop production in Foxconn only helps in preventing COVID from spreading to the city, but does nothing (if not make it even worse) for the workers in the factory,” Aiden Chau of China Labour Bulletin, a Hong Kong-based advocacy group, said in an email.

As of Wednesday afternoon, most of the footage on Kuaishou, a social media platform where Reuters reviewed many of the videos, had been taken down. Kuaishou did not respond to a request for comment.

The protest images come at a time when investors are concerned about escalating global supply-chain issues, due in part to China’s zero-COVID policies that aim to stamp out every outbreak.

The curbs and discontent have hit production. Reuters last month reported that iPhone output at the Zhengzhou factory could slump by as much as 30% in November due to COVID restrictions. read more

Foxconn is Apple’s biggest iPhone maker, accounting for 70% of iPhone shipments globally. It makes most of the phones at the Zhengzhou plant, though it has other smaller production sites in India and southern China.

Shares of Foxconn, formally called Hon Hai Precision Industry Co Ltd, have slipped 2% since the unrest emerged in late October.

Source: https://www.cnbc.com/2022/11/23/huge-foxconn-iphone-plant-in-china-rocked-by-fresh-worker-unrest.html

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Two children and two adults survive after Tesla plunges 250 feet off California cliff

View from the helicopter during a rescue operation after a vehicle carrying two adults and two children went over a cliff in Devil’s Slide, San Mateo county, California, U.S., January 2, 2023, plunging hundreds of feet, according to the Department of Forestry and Fire Protection, in this still image obtained from social media video.

CHP – Golden Gate Division | Reuters

Two adults and two children were rescued from a Tesla that plunged 250 feet off a cliff Monday morning in San Mateo County, California, officials said. 

The car was traveling southbound on the Pacific Coast Highway when it went over the cliff at Devil’s Slide, south of the Tom Lantos tunnel, and landed near the water’s edge below, the Cal Fire San Mateo-Santa Cruz Unit said. 

The car flipped and landed on its wheels in the fall, CAL FIRE/Coastside Fire Incident Commander Brian Pottenger said. Witnesses saw the accident and called 911. 

As crews were lowered down, they were able to see movement in the front seat, through their binoculars, meaning someone was alive.

“We were actually very shocked when we found survivable victims in the vehicle. So, that actually was a really hopeful moment for us,” Pottenger said. 

Fire officials called for helicopters to help hoist the survivors to safety. As they waited, firefighters rappelled to the scene and rescued the two children.

Rescue teams are seen at the scene as a Tesla with four occupants plunged over a cliff on Pacific Coast Highway 1 at Devils Slide on January 2, 2022 in San Mateo County, California, United States.

Tayfun Coskun | Anadolu Agency | Getty Images

The California Highway Patrol shared video on social media showing helicopters lower first responders to the scene to extricate and rescue two adults inside. 

All four were hospitalized. The San Mateo Sheriff’s Office said the two adults suffered non-life-threatening injuries and the two children were unharmed.

It’s not clear what caused the car to go over the cliff. CHP is handling the investigation. 

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Tesla shares tumble more than 10% following deliveries report

Tesla vehicles are shown at a sales and service center in Vista, California, June 3, 2022.

Mike Blake | Reuters

Shares of Tesla dropped 13% on Tuesday morning, a day after the electric auto maker reported fourth-quarter vehicle production and delivery numbers for 2022.

Deliveries are the closest approximation of sales disclosed by Tesla. The company reported 405,278 total deliveries for the quarter and 1.31 million total deliveries for the year. These numbers represented a record for the Elon Musk-led automaker and growth of 40% in deliveries year over year, but they fell shy of analysts’ expectations.

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Some analysts see a buying opportunity in Tesla for 2023 despite persistent demand pressures

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According to a consensus of analysts’ estimates compiled by FactSet, as of Dec. 31, 2022, Wall Street was expecting Tesla to report around 427,000 deliveries for the final quarter of the year. Estimates updated in December, and included in the FactSet consensus, ranged from 409,000 to 433,000.

Those more recent estimates were in line with a company-compiled consensus distributed by Tesla investor relations Vice President Martin Viecha. 

Some Wall Street analysts think Tesla’s deliveries miss spells trouble for the electric vehicle maker, but others see a buying opportunity for the company in 2023.

Baird analyst Ben Kallo, who recently named Tesla a top pick for 2023, maintained an outperform rating and said he would remain a buyer of the stock ahead of the company’s earnings report, which is scheduled for Jan. 25.

“Q4 deliveries missed consensus but beat our estimates,” he said in a Tuesday note. “Importantly, production increased ~20% q/q which we expect to continue into 2023 as gigafactories in Berlin and Austin continue to ramp.”

Analysts at Goldman Sachs said they consider the delivery report to be an “incremental negative,” and view Tesla as a company that is “well positioned for long-term growth.” Goldman reiterated its buy rating on the stock in a Monday note and said that making vehicles more affordable in a challenging macroeconomic environment will be a “key driver of growth.”

“We believe key debates from here will be on whether vehicle deliveries can reaccelerate, margins and Tesla’s brand,” the analysts said.

Shares of Tesla suffered an extreme yearlong sell-off in 2022, prompting CEO Musk to tell employees in late December not to be “too bothered by stock market craziness.”

Musk has blamed Tesla’s declining share price in part on rising interest rates. But critics point to his rocky $44 billion Twitter takeover as a bigger culprit for the slide.

Morgan Stanley analysts said they think the company’s share price weakness is a “window of opportunity to buy.”

“Between a worsening macro backdrop, record high unaffordability, and increasing competition, there are hurdles for all auto companies to overcome in the year ahead,” they said in a note Tuesday. “However, within this backdrop we believe TSLA has the potential to widen its lead in the EV race, as it leverages its cost and scale advantages to further itself from the competition.”

CNBC’s Lora Kolodny and Michael Bloom contributed to this report.

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Tesla makes China boss Tom Zhu its highest-profile executive after Elon Musk

Tom Zhu Xiaotong, Tesla’s current executive in charge of China, speaks as a new Tesla experience store opens on Aug. 18, 2015 in Hangzhou, China.

Visual China Group | Getty Images

Tesla’s China chief Tom Zhu has been promoted to take direct oversight of the electric carmaker’s U.S. assembly plants as well as sales operations in North America and Europe, according to an internal posting of reporting lines reviewed by Reuters.

The Tesla posting showed that Zhu’s title of vice president for Greater China had not changed and that he also retained his responsibilities as Tesla’s most senior executive for sales in the rest of Asia as of Tuesday.

The move makes Zhu the highest-profile executive at Tesla after Chief Executive Elon Musk, with direct oversight for deliveries in all of its major markets and operations of its key production hubs.

The reporting lines for Zhu would keep Tesla’s vehicle design and development — both areas where Musk has been heavily involved — separate while creating an apparent deputy to Musk on the more near-term challenges of managing global sales and output.

Tesla did not immediately respond to a Reuters request for comment.

Reuters reviewed the organizational chart that had been posted internally by Tesla and confirmed the change with two people who had seen it. They asked not to be named because they were not authorized to discuss the matter.

Elon Musk needs to go back to Tesla and have others run Twitter, says Jim Cramer

Zhu and a team of his reports were brought in by Tesla late last year to troubleshoot production issues in the United States, driving an expectation among his colleagues then that he was being groomed for a bigger role.

Zhu’s appointment to a global role comes at a time when Musk has been distracted by his acquisition of Twitter and Tesla analysts and investors have urged action that would deepen the senior executive bench and allow him to focus on Tesla.

Under Zhu, Tesla’s Shanghai plant rebounded strongly from Covid lockdowns in China.

Tesla said on Monday that it had delivered 405,278 vehicles in the fourth quarter, short of Wall Street estimates, according to data compiled by Refinitiv.

The company had delivered 308,600 vehicles in the same period a year earlier.

The Tesla managers reporting to Zhu include: Jason Shawhan, director of manufacturing at the Gigafactory in Texas; Hrushikesh Sagar, senior director of manufacturing at Tesla’s Fremont factory; Joe Ward, vice president in charge of Europe, the Middle East and Africa; and Troy Jones, vice president of North America sales and service, according to the Tesla notice on reporting lines reviewed by Reuters.

Tesla country managers in China, Japan, Australia and New Zealand continued to report to Zhu, the notice showed.

Zhu does not have a direct report at Tesla’s still-ramping Berlin plant, but a person with knowledge of the matter said responsibility for that operation would come with the reporting line for Amsterdam-based Ward. Ward could not be immediately reached for comment.

Zhu, who was born in China but now holds a New Zealand passport, joined Tesla in 2014. Before that he was a project manager at a company established by his MBA classmates at Duke University, advising Chinese contractors working on infrastructure projects in Africa.

During Shanghai’s two-month Covid lockdown, Zhu was among the first batch of employees sleeping in the factory as they sought to keep it running, people who work with him have said.

Zhu, a no-fuss manager who sports a buzz cut, favors Tesla-branded fleece jackets and has lived in a government-subsidized apartment that is a 10-minute drive from the Shanghai Gigafactory. It was not immediately clear whether he would move after his promotion.

He takes charge of Tesla’s main production hubs at a time when the company is readying the launch of Cybertruck and a revamped version of its Model 3 sedan. Tesla has also said it is developing a cheaper electric vehicle but has not provided details on that plan.

When Tesla posted a picture on Twitter last month to celebrate its Austin, Texas, plant hitting a production milestone for its Model Y, Zhu was among hundreds of workers smiling on the factory floor.

Why China is beating the U.S. in electric vehicles

Allan Wang, who was promoted to vice president in charge of sales in China in July, was listed as the legal representative for the operation in registration papers filed with Chinese regulators in a change by the company last month.

Tesla board member James Murdoch said in November the company had recently identified a potential successor to Musk without naming the person. Murdoch did not respond to a request for comment.

Electrek previously reported that Zhu would take responsibility for U.S. sales, delivery and service.

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