SeanReadsTheNews

NYT: Apple's Supply Chain is Evil

This blogger doesn't really have time to do justice to the most important business story of the week - but it's Charles Duhigg and David Barboza's New York Times expose of workplace conditions at factories making popular Apple gadgets in China that published on January 25.

Employees work excessive overtime, in some cases seven days a week, and live in crowded dorms. Some say they stand so long that their legs swell until they can hardly walk. Under-age workers have helped build Apple’s products, and the company’s suppliers have improperly disposed of hazardous waste and falsified records, according to company reports and advocacy groups that, within China, are often considered reliable, independent monitors.

One almost wonders if all of the former Apple employees who were quoted anonymously due to confidentiality agreements waited until Steve Jobs had died to spill the beans on all of the detail the reporters were able to uncover.  

Those quotes, which demonstrate unequivocally that the famously progressive, liberal-loved corporation's leaders knew about working conditions Americans would consider inhumane at their suppliers and at best did nothing and in general did what they could to make it worse.

This is one of the nicer ones.

“You can set all the rules you want, but they’re meaningless if you don’t give suppliers enough profit to treat workers well,” said one former Apple executive with firsthand knowledge of the supplier responsibility group. “If you squeeze margins, you’re forcing them to cut safety.”

You need to read the whole thing - and it prints at 14 pages off the Times' website - to truly understand the impact but the reporters diligently undermine what would be the standard rejoinders to a story like this that alleges harm at a third party.

"We didn't know," shot down by those insider quotes, "we tried to fix the situation once we knew," ditto, "everybody does it," the reporters came up with examples of other companies boosting their suppliers margins to offset safety costs, and so on.

This blog is not so naive as to expect developing countries to adopt Western codes of conduct when they are still trying to grow.  That's not how the West developed and things will always be a little rougher until there is more wealth around.  However, this story came out the same week that Apple reported a cash hoard of almost $100 billion sitting on its books.  Without raising prices, cutting a dividend or affecting its own compensation at all, Apple has the resources to fix this problem.  Jobs and his successors just didn't want to.

This blogger also often takes issue with reflexively anti-enterprise coverage in The New York Times.  That's why it is even more important to take note when they publish an article where they set out to take down a corporate icon, and nail the company over and over again with well-source facts and not just thinly disguished opinions bridging from their own prejudice.

The Times' story is business journalism practiced at its highest level. It should win the Pulitzer this year.

 

Forbes: Village Voice Gets a Bad Rap For Abetting Prostitution

Dan Fisher, veteran legal eagle at Forbes Magazine today takes up the case of down-trodden alternative-weekly The Villiage Voice, which like Craig's List before it stands accused of abetting child prostitution and slavery thanks to its "Backpage.com" racy classified section. 

HIs article was spurred by a hit-piece in The New York Times by Nick Kristof which can be found here.

Dan's piece gets at the heart of The Voice's defense:

Since posters also supply credit-card numbers, it isn’t hard in most cases for police to track down who places those ads. (The advertiser in the Kristof case wrote a plain-vanilla personal ad for “labor day weekend fun” with a 21-year-0ld, but his credit card number allowed him to be quickly identified, Backpage says.)  The Backpage executive said the company responds to about 100 subpoenas a month, and dispatched an employee to testify before a grand jury called by the Brooklyn prosecutor Hersh as recently as September.

It's a tricky journalistic effort to defend companies accuses of crimes like that and Fisher, who is an attorney as well as a reporter, does a great job of making the argument that Kristof's article doesn't hold water.  He argues that there is no way to stop this activity altogether and by shutting down places that play fair with enforcement bodies, it only shifts the activity to even less savory places.

The Voice is engaged in a dirty business and its fair game for journalists to point that out but when accusations are this serious, they really should have the goods before calling for government action.

 

Reuters on the Rise of Zombie Mortgages

Most of the "victims" mentioned in stories about foreclosure during the housing crisis aren't victims at all, just people who didn't pay their mortgages trying to take advantage of paperwork errors by the bank to stay in their homes without making payments.

With several clients in the real estate business, I've read hundreds of these stories and can count the number that included someone who was foreclosed on despite being current on his or her payments on one hand clenched into a fist.

Today, Michelle Conlin, the former workplace-beat stalwart at BusinessWeek, writes on "zombie mortgages," and to her credit, she finds actual victims who have been wronged by the system.

So was Shantell Curtis of Utah. She showed up at her accountant's office last year only to learn that she had been sued for foreclosure on a house she had sold years before. Bank of America reported the delinquency to credit bureaus, tarring Curtis's credit. It turned out the entire saga stemmed from a bank coding error. The amount the bank falsely alleged Curtis still owed on her mortgage? One dollar.

Vietnam vet Dwight Gaines fell behind on his payments on his Birmingham, Alabama, home. Gaines paid off his entire mortgage, plus all the fees and expenses he owed the bank in March 2010, as a part of a Chapter 13 bankruptcy plan. But Bank of America kept sending Gaines notices that he still owed $6,842.37. Nearly two years later, Gaines is still fighting the bank in court.

In fact, she finds so many verified cases of people who had paid off a mortgage in full - let alone remained current - who were being tagged by the banks, she devoted almost half the article to that problem alone.

This should be the minimum standard for reporting on foreclosures, and yet this story stands out for being well-researched and sourced.  This type of advocacy journalism is important to fix the system - and to point out that not all people fighting the banks are created equal.

NYT: Baby, My Car Can Drive Itself

John Markoff, veteran technology reporter at The New York Times, has a fascinating story in the paper today about self-driving cars, which have been proven workable in road tests but could get held back from the market by a host of what would seem to be lesser issues.

What happens if a police officer wants to pull one of these vehicles over? When it stops at a four-way intersection, would it be too polite to take its turn ahead of aggressive human drivers (or equally polite robots)? What sort of insurance would it need?

By stepping away from his core area, how technology works and its market opportunity, Markoff's stretch into reporting on law and regulation makes a fascinating statement about what it takes to bring a truly novel product to market in today's America.  When cars first hit the road, there were no rules - those came later.  Driverless cars may find themselves matching the 12 tasks of Hercules to prove themselves safe.

Markoff does a good job of balancing sources who speak for regualtors who just don't like the idea of 2-ton cars rolling down the road without drivers and technology-driven leaders at Google who believe that programming is everything.

It makes for a fascinating read and a look into the not-too-distant future, a great form of business jouranlism we could stand to see more often.

Forbes Explains Why Best Buy Is Going Bankrupt Gradually

My New Year's Resolution is to try and figure out a way to make a blog about great business journalism happen in a timely enough fashion to be valuable while also dealing with my professional schedule.

As a start, I'm highlighting an article from Forbes.com by Larry Downes, who is a management consultant not a reporter, on why Best Buy is blowing it.  His deconstruction of Best Buy's incredibly lame attempt to weasel out of taking responsibility for taking orders it couldn't deliver during Christmas season is a PR 301 course.

The company issued a statement that read:  “Due to overwhelming demand of hot product offerings on BestBuy.com during the November and December time period, we have encountered a situation that has affected redemption of some of our customers’ online orders.”

Let’s parse that sentence for a moment.  The company “encountered a situation”—that is, it was a passive victim of an external problem it couldn’t control, in this case, customers daring to order products it acknowledges were “hot” buys.  This happened, inconveniently for Best Buy, during “the November and December period,” that is, the only months that matter to a retailer. For obvious reasons, the statement ties itself in knots trying to avoid mentioning that the “situation” occurred during the holidays.

Amen.  Downes goes on to re-write the statement in a way that accurately describes what happens.  Best Buy's PR people, working too hard to craft a statement that avoids taking responsibility for anything, has brought down more negative press (and my first blog in more than a month).  

A straightforward statement and some kind of offered compensation would have at least started to put the situation behind them.