Foxconn COVID-19 latest: New outbreak prompts a return to closed-loop production

Full-on Foxconn COVID-19 precautions are back in effect, at the request of the city government in Shenzhen, China. The company has been asked to return to closed-loop production, where workers live in dormitory accommodation on the campus, and are prohibited from physical contact with anyone outside the factory complex – including family members.

While Foxconn is downplaying the measure, it is raising concerns about a repetition of Shanghai-style lockdowns that could create extremely difficult conditions for workers and other residents, as well as significantly disrupting production …

Background

We’ve previously summarized the country’s “COVID Zero” goal, and the impact on both workers and production.

Unlike most countries around the world, China is attempting to completely eradicate COVID-19 from within its borders. Even a handful of infections leads to highly restrictive lockdowns, with most places of work and schools closed. Even food shopping is controlled.

Many companies introduced a “closed-loop” production regime. This approach was pioneered in Wuhan during the initial COVID-19 outbreak and has been extensively used in Shanghai, where there have been multiple lockdowns.

Closed-loop production means:

• Companies provide dormitory accommodation within the overall campus.
• Workers remain on campus for extended periods, typically one month.
• No one enters or leaves the plant without an on-the-spot negative test.
• Anyone testing positive on attempted entry is sent to a quarantine center.

This is obviously tough on workers, who are unable to see their families and friends for weeks at a time, and has previously led to a worker revolt at a Quanta plant in Shanghai.

While almost every other country in the world accepts that we will have to learn to live with COVID-19 to a greater or lesser degree, China remains adamant that it can use lockdowns to completely eradicate the virus.

Full-on Foxconn COVID-19 precautions back in operation

Bloomberg reports that the initial lockdown is for seven days, and impacts 100 companies.

China has forced some of its biggest companies, including iPhone maker Foxconn and oil producer CNOOC Ltd., to operate within a “closed loop” restricted system for seven days as the southern manufacturing hub of Shenzhen battles its latest Covid outbreak.

The city government has asked its 100 biggest companies, including automaker BYD Co., networking giants Huawei Technologies Co. and ZTE Corp. and drone-maker DJI to restrict operations only to employees living within a closed loop or bubble, with little to no contact with people beyond their plants or offices. Authorities also asked companies to reduce unnecessary interaction between non-manufacturing staff and factory floors to reduce infection, according to a Shenzhen government notice seen by Bloomberg News […]

A Foxconn COVID-19 statement downplayed the position.

A Foxconn spokesperson said operations at its Shenzhen sites “remained normal.” Its plant in the central Chinese city of Zhengzhou is a far bigger iPhone-making hub.

However, there are fears that the time period could be significantly extended if infections increase.

The measure in Shenzhen rekindles the possibility of Shanghai-style lockdowns that forced tens of thousands of workers into isolation. Apple supplier Quanta Computer Inc., chipmaker Semiconductor Manufacturing International Corp. and Tesla Inc. were among the companies that ran their Shanghai plants in closed loops for weeks or months, when China’s financial hub battled the worst outbreak since Wuhan.

Previous lockdowns saw iPhone 14 work fall behind schedule, with the iPhone 14 Max reported to be hardest hit.