Foxconn Rocked by Factory Explosion, Suffers PR Blow

The iPad and iPhone manufacturer reports three people died and 15 others were injured in a blast Friday after dust from a polishing workshop spontaneously combusted in Chengdu. Foxconn has now closed down the iPad 2 polishing operations in all of its factories, in addition to emptying its new $2 billion Chengdu plant.

China has also blacked out all news of the explosion, leaving only the Taiwanese press to cover events. Reporters at Taiwan's CTiTV say Foxconn won't disclose even to family members how many workers are still missing inside the factory.

"We are deeply saddened by the tragedy at Foxconn's plant in Chengdu, and our hearts go out to the victims and their families", said Steve Dowling, Apple spokesman. "We are working closely with Foxconn to understand what caused this terrible event".

This is the latest in a string of incidents about the pressure and problems at Foxconn. The company recently denied reports it was making its workers sign anti-suicide pledges to discourage employees from leaping to their deaths amid incredible production pressure and reportedly dismal working conditions. Thirteen Foxconn employees killed themselves in 2010.

The role of combusting dust should also send up red flags for fair labor activists who already have Foxconn on their radars. The activist group Students and Scholars Against Corporate Misbehavior recently released a report on May 6 detailing workers' reports of prolonged overtime and workplace health hazards.

According to one employee in the report, "I'm breathing in dust at Foxconn just like a vacuum cleaner. My nostrils are totally black every day".

Along with calling attention to working conditions at its factories, Foxconn's latest mishap may also affect Apple's already tight production schedule. The Chendgu factory produces less than 20 percent of Apple's iPad 2s and insists it will soon get back up to speed. But, since Apple customers must now wait four to five weeks for their tablets, since even a minor hitch in the supply line will mean additional delays.

Apple could lose up to 1.3 million tablets if Foxconn shuts down production for a month, reducing its revenue anywhere from $800 million to possibly $1.7 billion, according to analysts. And with Apple already tackling "the mother of all backlogs" due to the devices' popularity, this setback could cost it even more in customer loyalty if people get fed up with waiting and buy Android tablets instead.