Foxconn’s iPad Plant Reopens

Foxconn’s plant in Chengdu, China, has resumed operations following an explosion that killed three employees last month. The company has concluded its investigation into the incident and implemented safeguards it claims will prevent it from happening again.

“While the investigation into the tragic explosion that took place at our facility in Chengdu is ongoing, we have addressed the preliminary finding, that the accident was likely due to an explosion of aluminum dust in a ventilation duct, by putting in place improvements in workshop ventilation, a total revamping of the policies and practices related to the disposal of that dust, and through the application of new technologies that will further enhance the safety in these workshops,” the company said in a statement (full text here). “The new measures we are employing in our workshops, which have resumed operation following the review referred to above, are a direct response to our efforts to ensure that we are applying the highest possible safety practices. Should the investigation identify any additional areas where enhancements could be made, we will not hesitate to immediately implement those measures.”

The plant’s reopening should allay further concerns about shortfalls in iPad production capacity, though as Ticonderoga Securities analyst Brian White notes in a message to clients this morning, this doesn’t mean that Apple’s out of the woods yet.

“…Our meetings today indicate that the Chengdu facility has been held back by yield issues on certain outside components; thus, the operation may not have reached the optimal utilization rate,” White explains. “Therefore, the explosion in Chengdu may result in more of an equilibrium situation with certain component vendors, rather than a shortage situation. Netting this all out, we believe the production of iPad 2 will be supply constrained during the June quarter; however, we are not prepared to place the bulk of the blame on the Chengdu operation.”