Apple factory finds answer to worker suicides... replace staff with one million robots
10:02 AM on 2nd August 2011
Taiwan's Foxconn Technology Group, known for assembling Apple's iPhones and iPads in China, plans to use more robots, with one report saying the company will use one million of them in the next three years, to cope with rising labour costs.
Foxconn's move highlights an increasing trend toward automation among Chinese companies as labour issues such as high-profile strikes and workers' suicides plague firms in sectors from vehicles to technology.
Contract manufacturers such as Foxconn, which also counts Dell, Hewlett-Packard and Nokia among its clients, are moving parts of their manufacturing to inland Chinese cities or other emerging markets.
Soon to be replaced? A Chinese technician poses at an iPhone assembly plant in Shenzhen at Foxconn
They are also boosting research and development investments to lift their thin margins.
‘Workers' wages are increasing so quickly that some companies can't take it longer,’ said Dan Bin, a fund manager at Shenzhen-based Eastern Bay Investment Management, which invests in technology and consumer-related shares in China and Hong Kong.
‘Automation is a general trend in many sectors in China, such as electronics.
‘Of course some companies will consider moving their manufacturing overseas, but it's easier said than done when the supply chain is here.’
The China Business News today quoted Foxconn Chairman Terry Gou as saying the company planned to use 1 million robots within three years, up from about 10,000 robots in use now and an expected 300,000 next year.
Foxconn, whose listed units include Hon Hai Precision and Foxconn International Holdings Ltd, issued a statement later saying Gou told staff at its campus in Longhua, China, that he planned to move its more than 1 million employees up the value chain beyond basic manufacturing work.
STRIKES, SUICIDES
The technology group which makes Apple's iPhones and iPads plan to use more robots
Foxconn, which has been plagued by a spate of workers' suicides in its Chinese factories since last year, plans to use the robots for simple assembly line procedures, the statement quoted its chairman Gou as saying.
Since last year, China has been struck by a series of labour-related issues, such as high-profile strikes and suicide cases at well-known companies as heady economic growth fuelled the need for wage increases.
In southern China, auto and parts factories owned by Japan's Honda Motor and Toyota Motor went on strike.
‘Rising salary costs should be the key reason why Foxconn is doing this.
‘This year's wage increase has been quite significant and I don't expect the pace to slow down next year,’ said C.K. Lu, a Taipei-based senior analyst at research firm Gartner.
‘If they don't do this, they will have to move their factories elsewhere.’
At Foxconn, a worker fell to his death last month at a manufacturing plant in southern China, local media reported.
The worker's death was the latest in a series of apparent suicides by young migrant workers at its factory complexes in the past two years.
Foxconn employs about 1.2 million workers, one million of which are based in mainland China, the China Business News said.
‘The use of automation is driven by Foxconn's desire to move workers from more routine tasks to more value-added positions in manufacturing such as R&D, innovation and other areas that are equally important to the success of our operations,’ Foxconn said.
Foxconn plans to buy a set-top plant in Mexico from Cisco Systems and is looking into investing more in Brazil, where it is already making mobile phone handsets.
It has bought LCD TV plants from Japan's Sony Corp in Mexico in 2009 and Slovakia in 2010 and is in cooperation talks with a number of top Japanese hi-tech firms, including Sharp, Canon and Hitachi.
Today, Hon Hai Precision's Taiwan shares rose 3.3 per cent, while Foxconn's cellphone maker unit Foxconn International's Hong Kong shares ended up 4.3 per cent.
Shares of another of the group's unit, Foxonn Technology Holdings Ltd, which mainly makes casings, jumped 6.8 per cent.
BEIJING: The electronics manufacturer Foxconn has been accused of treating its workers like machines as they toil on assembly lines making Apple's iPhones and iPads, particularly after a spate of suicides among its Chinese employees in recent years. Now the company has found a solution: use robots instead.
The Taiwanese company has vowed to expand automation, with Chinese state media reporting plans to use a million robots in the next three years.
The news highlights questions about the future of southern China's Pearl River Delta, ''the factory of the world''. Its low-cost, high-employment model has transformed the international economy, sucking in manufacturing from around the globe, and keeping down inflation in other countries through cheap exports. Advertisement: Story continues below
As the world's biggest contract electronics maker, whose clients include Sony, Nokia, Dell and Hewlett-Packard, Foxconn expanded at incredible pace - with its mainland workforce growing from 600,000 just after the financial crisis to a million - but has faced increasing costs and growing criticism of working conditions. At least 17 workers are reported to have killed themselves in five years.
Now Terry Gou, the founder and chairman, wants to cut rising labour costs and improve efficiency by using machines for simple tasks such as spraying, welding and assembling.
Speaking at a company event, Mr Gou said Foxconn already had 10,000 robots and would increase that to 300,000 next year and a million within three.
Foxconn said last year it had overhauled conditions and more than doubled salaries at its vast plant in Longhua, Guangdong, after coming under fire over suicides by workers.
Others questioned whether the announcement was genuine. ''I am suspicious,'' Liu Kaiming, of the Institute of Contemporary Observation, which supports workers in Guangdong, said. ''Think about the cost … overall, workers are still much cheaper.''
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