Introduction

How many different nations and workers does it take for you to be able to buy a cup of coffee in the morning? How many does it take to make your smartphone? Do the companies that produce these products treat their workers well? Do their products harm the environment?

Let’s try to answer those questions.

Thus far, you learned how the world has become more interconnected. Transportation and communication have improved tremendously. Skilled labor is easier than ever to find. In addition, the ways in which goods are produced and distributed has changed enormously. This includes everything from a simple cup of coffee to something as complicated as your smartphone. There are now hundreds to even thousands of people who are involved in making and delivering the products you use every day.

Today, Asia is the world’s center of production and distribution. More goods are produced there than anywhere else. This was not always the case. During the early years of the Industrial Revolution, Britain and the North Atlantic zone were the main centers of manufacturing. But since the late 1900s, this role has shifted to Asia, and in particular to China.

This shift has hurt some nations while benefiting others. Companies moved factories to nations with cheaper labor and fewer rules. As a result, the United States has seen its manufacturing jobs fade away. But at the same time, there has been an increase in other kinds of jobs like those in the service industry. These have replaced many of the manufacturing jobs that were lost.

Apple’s iPhone

Over the past 10 years, the Apple iPhone has been one of the world’s most desired items. Apple has sold more than 1 billion phones worldwide. So, it makes sense to look at how the iPhone is produced and distributed.

Apple is an American company. However, it makes about half of its phones in Zhengzhou, China. The parts for the phone come from more than 700 different suppliers and about 30 different countries. The Apple factory in Zhengzhou is run by a Taiwanese company called Foxconn. It has around 350,000 workers. Most make only about $300 a month.

Low Chinese labor costs are not the only reason Apple chose not to make its phones in the United States. One of the main reasons is that the U.S. workforce does not have the necessary skills. China has focused on training workers to meet the needs of manufacturers. Meanwhile, the United States has become much less focused on training people for factory work.

“There’s a confusion about China…the popular conception is that companies come to China because of low labor costs… China stopped being the low labor-cost country many years ago and that is not the reason to come to China from a supply point of view…the reason is because of the skill…and the quantity of skill in one location…The products we do require really advanced tooling. And the precision that you have to have in tooling and working with the materials that we do are state-of-the-art. And the tooling skill is very deep here. In the U.S. you could have a meeting of tooling engineers and I’m not sure we could fill the room. In China you could fill multiple football fields” (Tim Cook, Apple CEO).

Apple says it wants to make sure all the workers who help produce its phones are paid a living wage.¹ It also says it wants to make sure workers have a safe workplace. Still, the company has not always lived up to its promises. It has come under fire for continued problems at some factories. It has also been criticized for problems at the African mines that supply the necessary metals for its iPhones. Some of these mines are sources of conflict minerals. That means they come areas where they may be used to fund civil wars.

There are about 400 steps in the production of the iPhone at its factory in Zhengzhou. Each day, about 500,000 phones leave the factory and move around the world into the hands of consumers. A city has formed around the factory to provide housing and necessities for workers. This has increased the number of people who depend on Apple for their livelihoods.

Starbucks coffee

Starbucks has grown enormously over the past few decades. The company now has 28,209 locations in 76 countries. As it has grown in popularity, its business practices have been challenged. Critics say the company needs to be more ethical—that is, more fair and responsible. They say Starbucks must make sure the farmworkers who harvest its coffee beans are not mistreated. They also want the company to do more to prevent harm to the environment.

Starbucks has listened to its critics. It has attempted to make sure that all its coffee is ethically sourced, produced, and distributed.

Starbucks gets its coffee beans from growers in Latin America, Asia, and Africa. It says it has tried to make sure the coffee beans it buys were ethically sourced. But how much does Starbucks really know about the practices at local farms? In 2018, for example, some suppliers in Brazil were accused of using forced labor and children on their farms.

Starbucks says 99 percent of its beans are ethically sourced. It says the farms it uses have been officially certified (examined and cleared) by experts. Some of its coffee brews are Fairtrade certified, meaning that farmers growing the coffee beans meet standards that protect workers and the environment. But there are different levels of certification. Some are not very strict. They only ask that coffee farmers be 30 percent compliant.² This allows some coffee farmers to get away with using poor environmental and labor practices.

Starbucks has also had problems within the United States. In 2018, a Starbucks store manager called the police on two African American men at one of its stores in Philadelphia. The men were simply waiting for a business partner to arrive. After the incident, Starbucks closed 8,000 of its stores to provide retraining for employees. Supporters say this shows the company is serious about fighting racism. Critics claim it was all show. They claim the company only acted to prevent its brand and profits from taking a hit.³

Starbucks has created programs that promote diversity. The company created the Global Farmer Fund to encourage production at minority-owned farms. It supports equal pay for men and women. They have also committed to hiring more veterans and refugees.

Starbucks has also pledged to make its stores less harmful to the environment. For example, it has attempted to increase the percentage of recyclable materials in its coffee cups. It has also increased recycling in its stores. But these efforts are still relatively small. They are outweighed by the huge number of coffee cups and straws thrown away every single day.

Both Starbucks and Apple charge a lot for their products. However, people are still willing to pay the high prices. Until sales begin to drop, these companies will continue to produce goods in the same way. But customers do have the power to push for change.

1 A living wage is pay that is high enough for a worker to buy what they need to live comfortably.

2 Being compliant means making the necessary changes to meet certain standards.

3 “Taking a hit” refers to companies losing money or causing damage to their brand.