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World’s Largest Electronics Manufacturer Foxconn Wants 1 Million More Robots In 3 Years. Bye-bye Human Labor

Foxconn announced it will be adding 1 million robots in the next three years. Is human labor on the way out?

Cheap labor isn’t cheap enough for the world’s largest electronics manufacturer. Terry Gou, the CEO of Foxconn recently told employees that they would be replacing human workers with one million robots over the next three years. These robots would handle many basic manufacturing tasks such as spraying, welding, and assembly. Foxconn is based in Taiwan and has nearly 1.2 million workers, the vast majority of which (~1M) live in China, but it’s unclear how many humans would be losing their positions during the switch. Even if robots are used to augment production rather than completely replace people, we’re looking at a major shift in the industry. Contracted with Apple (it’s rumored Foxconn makes the iPad2), HP, Dell, Nokia, Sony, and many other top brands, the electronics giant is singlehandedly responsible for nearly half of all such technological production in the world! If Foxconn switches from cheap Chinese labor to robots, can the rest of the world be far behind?

According to Xinhua News, Gou’s comment was made at a company dance party last week. (Way to kill the mood, Gou.) Without a formal press announcement, it’s unclear how drastic the cuts in human labor will be, though Gou said the move was intened to “replace some of its workers with 1 million robots in three years to cut rising labor expenses and improve efficiency.”

Those rising labor expenses come in the form of bad press as well as actual financial costs. Since 2010, the world news outlets have been reporting on a ‘rash’ of suicides among Foxconn’s Chinese workers, supposedly due to harsh conditions, long hours, and low pay. Last year, Gou announced that the number of suicides (roughly 18 in 2010 alone) were well within the statistical expectations for the company (as compared to general rates among the Chinese populace). Continued tragedies surrounding Foxconn’s factories in China, however, continue to link the electronics giant to poor labor practices, as this more recent IDG news clip attests:

Terry Gou’s recent announcement, then, may be a political statement as much as a business plan. Tell us our working conditions are too harsh on people…well then we’ll just remove the people. Howda you like dem Apple(iPad2)s?

No matter their rationale, the shift in workers is a gargantuan overhaul. Currently Foxconn only has around 10,000 factory robots in use, but somehow plans to increase that figure to 300,000 during 2012 and up to 1 million in 2014. That seems like a herculean task, though not impossible. Foxconn has also already announced plans to increase mainland China workers to about 1.3 million by year’s end. If both projections are correct, it looks like Foxconn will be growing in both human and robot workers, or perhaps using traditional labor as they continue to increase their automation. Either way, the company clearly means to stay at the top of the global electronics market.

Growth of Foxconn

As their yearly revenue shows, Foxconn is the biggest name in the game, with a reputation for increasing their production rates at incredible speeds. Their compound annual growth rate has been over 50% for a decade. If they think increased automation is the way to maintain that growth, you can bet others will want (even need) to follow suit.

Finding the cheapest and most efficient labor has always been one of the key ingredients of success in manufacturing, so if Foxconn is aiming to replace or augment its workforce with a roughly equivalent number of machines in just three years, it’s a good indicator that the world as a whole may be moving in that direction. We’ve certainly seen many examples of modern factories where automation has removed a great majority of human workers from the floor, and even cheap labor markets will often see machines and humans working side by side to increase efficiency. As Foxconn follows through on their three year plan, they’ll give the world insight into the best ratio of man to machine to optimize production. Foxconn may add 1 million robots, but still keep the majority of its large human workforce and use the massive increase in output to keep up with the equally massive global demand for cheap electronics.

Yet whatever ratio of human/robot labor Foxconn adopts, you can bet that in the long run the percentage of people in production is only going to decline. As machines become more sophisticated, and associated costs of humans (medical expenses, lawsuits, etc) continue to rise, robots will make more sense for a great many repetitive tasks. In essence, the world’s largest electronics manufacturer may have essentially declared the beginning of the end for human labor in the factory.

What will that mean in the years ahead? It’s possible, as US robot makers have maintained recently, that the shift towards automation will bring employment back to post-industrial nations in the form of higher-end jobs. It’s also possible (perhaps likely) that citizens may struggle during the transition from human to robot labor even as economies thrive, leading us to more “jobless recoveries”. Martin Ford, in his book The Lights in the Tunnel, argues that the move to a robot based economy will ultimately require enormous shifts in government and economics as the majority of humanity no longer performs what could be traditionally called ‘work’.

All of that, however, is purely speculation. What is certain is that Foxconn will do everything in its power to keep providing cheaper electronics to the world’s leading brands. In the near term, that just means more inexpensive computers and mobile phones. Hopefully, however, this announcement will fuel a more public and substantive debate on the importance of automation. Media coverage in traditional news outlets has been disappointingly short sighted and uninspiring when it comes to facing the (possible) crisis that global adoption of automation may create. This is a topic that effects us all. While factories were among the first to become automated, law firms, news agencies, call centers, and dozens of other industries will soon be replacing/augmenting human labor with AI software. We need to be asking ourselves tough questions: How do we make that transition as painless as possible? What can we do now to lay down the foundation for future generations where the majority of work is automated? Where should we invest our capital to ensure the best returns when robots finally rule the world?

…if you have an answer to the last one, let me know.


[source: Xinhua Net]

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9 comments

  • Rob says:

    Lean and mean BRIC economies have taken our business but cost cutting was resisted and debt taken on instead but the burden of debt has become unsustainable and now cost cutting is unavoidable. Additionally, technological development has continued to accelerate making technology cheaper than people and automation is now the most important factor in economics. For desperate firms in high wage economies the best way to compete is to use technology so cutting employment but this has not stopped automation in BRIC economies, upping the ante still further.

    Services too are rapidly automating. Retail is the UKs biggest employer but are losing business to online stores that are highly automated. Our second biggest employer is food processing and that too is automating rapidly. South Korea has provided ipad type tools for all their primary school children. This is why unemployment is so high everywhere. The power of automation is increasing at 20-30% pa, doubling every 4 years. This will not stop but accelerate because technological development is intrinsically exponential. There are physical limits to the power of IT per £ but life and work will be transformed long before those limits are reached.

    Wealth is access to goods and the more they are produced by machines the less work for us to get them. But a lack of work means a fall in income and demand so fall in prices, more automation in a deflationary spiral that will be all the more disruptive the less politicians understand what is happening. Prices will fall with demand and welfare met by taxes on firms. Technology will improve to the point will come where all production will be automated and cost will be irrelevant so economics as we know it will end.

    I can’t see that things will get ugly other than during the transition over the next five to ten years if government do not understand what is happening and they try to inflate or borrow their way of of cutting costs and ‘stimulating’ the economy. After that, as IT improves then the goods will improve increasing quality of life for no extra work.

    • why06 says:

      Yehp the fact of the matter is human labor is being increasingly devalued by automation. We can only learn so much, we are only so fast, and only so strong. Technology advances exponentially. Now households must work two jobs. Getting a college education costs so much money it puts people in dept for their entire life. what we are seeing is a transition of the majority of people into serfdom because in this economic system their wealth is defined by their worth in the production of goods. Something has to be done. The Venus Project shown by the Zeitgeist Movement is one Solution, but that assumes you can get the rich to give up a system that benefits them. There will be some sort of revolution, but to say their will no longer be currency I think is silly. There’s nothing wrong with making money, but everyone should have an equal chance to do it, and a baseline standard of living.

  • Scotty Zeitgeist says:

    The Zeitgeist Movement has the most viable solution that has been presented. Its called city design, the age of currency for the necessities of life has to end if we want a smooth transition out of the traditional labor game.

  • Ivan Malagurski says:

    So basically the only safe job from now on will be a robot repair technician :) until they make a robot for that too :)

  • Khannea Suntzu says:

    Yes. Human labour is ending. Those who have money will buy machines. Those with skills will be left competing tooth and nail for an ever smaller circle of jobs. Those with no skills will survive on crumbs.

    It’s an extremely simple arythmatic. It means that eventually those owning any big corporation (i.e., someone who has access to resources, energy and means of production) will ask themselves “what do these losers have to offer me that I make products for them?” Labor? Not interested.

    At some point the amount of money you get for anything you can do for them will systemically become less and less. At some point many people will experience this – and not just some powerless, confused kids or half shellshocked old people or the immigrants with no legal status – at some point even educated people and the middle classes will really feel the bite.

    So in anticipation on that point those in power are consolidating society. Plain and simple. They are destroying unions, the right to protest, the right to call to protest on facebook, the right to vote. It will be one giant state of emergency, and it will end in society evolving towards corporate feudalism.

    What can countries do? Nothing. It’s a shell game. Try substantially raising taxes – all productive industries will leave. This mechanism means that all productive industries are moving to the most hysterically desperate places – China, India – with very intimidated populations. Places where wages are so low, and people so desperate and society so intimidate (you’ll die there) people will accept everything.

    And then 15-20 years from now, overnight those jobs will disappear too, and there will be some protests, and then what? By then property, power, access to energy and minerals, means of production, ownership of robots…. that will mean something. Money will not be a sensible means of commerce, and states will print it to give big stacks of deflated Weimar to their citizinry.

    And then what? It will be a massive globalist “go fuck yourself, losers”. If you are lucky you will get 5-10 years of welfare, some dole yeast to feed yourself, and some TV or games to not go insane. Unemployment levels can not stop at a certain point – and it will be this generation that will experience 20, 30, 40, 50 % unemployment.

    The “Singularity” will be the effective moment of near-100% unemployment – in other words it will be EITHER subsistence and worthless, OR owning stuff.

    Worst is – when I argue this, all these ideological drones come out of the woodwork ranting “are you some kind of socialist?” and I shake my head.

    I’ll tell you what I am – I am a revolutionary. If we don’t deal with this shit soon, we may have to fight ourselves from the ghettoes the favelas and the FEMA camps, through the barbed wire, through the attack dogs with steel teeth and through the automated security systems and robocops and kill them all.

    Or you can just say I am exaggerating and wait it out. Can you afford to?

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