ONG KONG/TAIPEI (Reuters) - 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 labor costs.
Foxconn's move highlights an increasing trend toward automation among Chinese companies as labor issues such as high-profile strikes and workers' suicides plague firms in sectors from autos 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.
They are also boosting research and development investments to lift their thin margins.
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 had this to say.
"Workers' wages are increasing so quickly that some companies can't take it longer. 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 on Monday 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
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 labor-related issues, such as high-profile strikes and suicide cases at well-known companies as heady economic growth fueled the need for wage increases.
In southern China, auto and parts factories owned by Japan's Honda Motor and Toyota Motor went on strike.
C.K. Lu, a Taipei-based senior analyst at research firm Gartner said.
"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. 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.
Foxconn 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 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.
On Monday, Hon Hai Precision's Taiwan shares rise 3.3 percent, while Foxconn's cellphone maker unit Foxconn International's Hong Kong shares ended up 4.3 percent.
Shares of another of the group's unit, Foxconn Technology Holdings Ltd, which mainly makes casings, jumped 6.8 percent.
COMMENTARY: In a blog post dated October 11, 2011, I was very critical of Apple because of they outsource the manufacturing of their "magical" devices, namely the iPad, iPhone and iPod, to the slave labor camp known as Foxconn International. Foxconn International is nothing less than Gulag, a slave labor camp, where workers experience intolerable work conditions and long hours for very little pay. 12 workers committed suicide between 2009 and 2010.
MacStories reader Jay Yerex forwarded to Steve an email campaign from LabourStart, which said:
“As many of you will be aware, the Apple iPad (pictured) had its world-wide launch this weekend.
What you may not know is that the factory which produces it, in China, has been the scene of a dozen worker suicides in recent months.
We’ve been asked by unions and NGOs in Hong Kong and Taiwan to launch a big international campaign to put pressure on the factory owners — and on Apple — to probe why this is happening, and to allow workers there to have real, independent unions that can bargain collectively.
Please take a moment to send off your message now.
And please — spread the word!
Thanks very much.”
Together with the forwarded email, he wrote:
“Steve
Apple can do better!
Sent from my iPhone”
Steve Jobs replied later, with this message:
“Although every suicide is tragic, Foxconn’s suicide rate is well below the China average. We are all over this.”
It is unfortunate that Steve Jobs never did anything to end Apple's association with Foxconn International or seriously address the suicides, and basically shrugs it off as their (Foxconn's problem).
Courtesy of an article dated August 1, 2011 appearing in Reuters and an article dated June 1, 2011 appearing in MacStories
Yes, the era of robotics is here. Check all my ROBOT posts by category: Robotics
Posted by: Tommy | 11/27/2011 at 07:36 AM
WOW! Has the robot age really started??
Posted by: vending machine business | 11/27/2011 at 04:49 AM