Hon Hai says China plants operating normally amid furlough rumors

Taiwan-based Hon Hai Precision Industry Co., the world's largest contract electronics maker, said Monday its production sites in China are running normally and denied rumors it had put large numbers of workers on furlough.(CNA)

TAIPEI (CNA) — Taiwan-based Hon Hai Precision Industry Co., the world’s largest contract electronics maker, said Monday its production sites in China are running normally and denied rumors it had put large numbers of workers on furlough.

Hon Hai, known internationally as Foxconn, was responding to reports in Chinese and Hong Kong news media that it has asked some workers at its Shenzhen complex to take unpaid leave because of sharply falling orders due to the global COVID-19 pandemic.

Apple Daily in Hong Kong, Tencent affiliate qq.com and other media said Hon Hai’s unpaid leave program began May 1 and will continue until Sept. 1, a move necessitated by Apple closing its stores outside China because of the spread of the new coronavirus disease.

Hon Hai is the biggest iPhone assembler, and the widespread closure of Apple stores and lower iPhone sales have led to a big fall in its orders, the reports said.

In a statement issued Monday by Hon Hai, however, the company said its plants in China are running normally and have not reported massive layoffs or large unpaid leave programs, but it did not respond to the claims of a sharp fall in orders received recently.

Hon Hai is one of the largest Taiwanese-invested businesses in China, with a workforce of more than 1 million workers.

In addition to the unpaid leave programs, some media cited sources as saying Hon Hai has moved to persuade some of its Chinese workers to retire ahead of schedule.

The company has not recruited any new workers at its plant in Zhengzhou in Henan province since April and cut overtime hours, resulting in lower incomes for its employees, the reports added.

Industry sources told CNA they had not heard that the company had put people on furlough in China, but they did say that Hon Hai has allowed some of its workers to take eight days off for the May 1 Labor Day holiday.

Hon Hai has said it expected to receive deferred orders in the second quarter from the first quarter, when the COVID-19 contagion escalated in the U.S. and European markets.

In the first quarter, Hon Hai posted consolidated sales of NT$929.68 billion (US$31.20 billion), down 46.6 percent from a quarter earlier and also down 11.99 percent from a year earlier.