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Print 18 comment(s) - last by DrizztVD.. on Dec 14 at 11:46 PM


  (Source: supplychaindigital.com)
High costs and changing technology were cited as two main hurdles

Foxconn would love to eliminate its worker woes by deploying a full fleet of robots to do the work instead, but this venture may be trickier than previously thought.

Foxconn, which is the trading name for Hon Hai Precision Co. in China where devices like the iPhone and iPad are made, hopes to replace all 1.5 million of its workers with robots in the future, but issues like changing technology and high costs are putting delays on the project.

Hon Hai Chairman Terry Gou said in 2011 that he wanted 300,000 robots installed by the end of 2012 and a total of 1 million by 2014. However, in June of this year, it was apparent that those targets weren't going to happen. Instead, he hopes to have "monotonous" tasks eliminated through automation within a few years and fully automated plants in five to 10 years.

The issue? For one, the cost to install that many robots would be very high. According to The Wall Street Journal, Foxconn would have to spend anywhere from $2.1 billion to over $10 billion for fully automated plants, depending on the type of robots used. Foxconn's traditional capital spending is below $3 billion.

In addition to cost, technology is ever-changing, and keeping up with the production cycles of different products would take more time than having humans perform the same task. For instance, once you've finished stabilizing the process for one product, it's already time for a new product to roll down the line.

Just last month, it was announced that at least one Foxconn factory in China received 10,000 robots for the purpose of replacing human workers. These robots, which were manufactured in house and called "Foxbots," are capable of doing simple tasks like lifting, making selections and placing items where they belong. They will act much like assembly line robots. According to Singularity HUB, each robot costs about $20,000-$25,000.

The whole point of Foxconn's robot replacement program is to rid itself of the troubles that come with having human workers. Foxconn has been under the microscope since 2009 for various troubles like worker suicides, explosions in the plants due to aluminum dust build-up and other unsafe working conditions, riots, excessive overtime, low pay, etc.

The company came under fire earlier this year when The New York Times published a massive article on the working conditions of Foxconn factories. Apple was also targeted because the report mentioned Apple's lack of action when receiving reports on these poor working environments and overtime/pay issues.

Foxconn gave employees a pay boost earlier this year and is cleaning its act up slowly but surely to comply with audits. 

Source: The Wall Street Journal



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RE: Welcome to incorporation 101
By drycrust3 on 12/11/2012 3:33:00 PM , Rating: 2
quote:
Take the money they otherwise would have spent on robots and spend it in improving process improvements and worker moral.

Totally agree.
It wouldn't surprise me if the next generation of accounting software does away with most accountants.


RE: Welcome to incorporation 101
By Solandri on 12/11/2012 6:49:23 PM , Rating: 3
I completely disagree. Fundamentally, you increase the standard of living when the productivity per person goes up. In the middle ages, productivity per person was barely enough to feed the one person. So you had the vast majority of people toiling 12 hours a day in the fields just to be able to feed themselves. Physically it's impossible for a person to manually work a field any more effectively. This only changed when technology entered the picture and acted as a multiplier which improved each person's productivity. It used to take hours of work grinding wheat into flour. Add a water wheel and suddenly the only work is that needed to build it. Add a tractor and suddenly an individual can farm hundreds of times more land than he could manually.

Basically, it used to take a farmer 95% of his time and energy just to grow enough food to feed himself. Now it takes him less than 1%. Consequently, he can grow enough food for hundreds of people. But only short-sighted people see that as putting hundreds of farmers out of work. Those ex-farmers are freed up to do other productive tasks. As productivity goes up through technological improvements, less time is spent on necessities like food, clothing, shelter. More time can be spent on entertainment and relaxation. Number of working hours goes down while (paradoxically) disposable income goes up. The standard of living increases.

Bottom line is, if you want the standard of living to continue to rise, you have to embrace changes which increase productivity. If you resist such technological improvements solely in favor of preserving menial labor jobs, you get what happened to the U.S. We had the chance to modernize with robots in the 1980s-1990s. Instead we chose to preserve manufacturing jobs. Consequently, when another country (China) came along which offered to do the same manufacturing at lower wages, all our manufacturing jobs went there.

If we had modernized back then, yeah we would've lost a lot of manufacturing jobs. But those workers would've (eventually) been retrained to operate and maintain the robots. And when China came along, their labor might have been cheaper per hour than ours. But our robots would've been much more productive per hour than their human workers, resulting in it costing less per product to manufacture it here. And the manufacturing jobs would've stayed here.

Process improvements and worker morale only go so far. Human hands can only move so quickly, human eyes are only so accurate. Productivity is nearly always higher with a machine doing the work, while a person sits at the controls. Yes short-term it results in a loss of jobs. But long-term, once those workers have been retrained, productivity is higher, prices lower, and the standard of living increases.

The owner of Foxconn sees and understands all this. As China industrializes, the middle class is growing as are its income and wage expectations. The prevailing wage in China is soon going to be far higher than in neighboring less developed countries, and it's not going to look like such a great place for the West to do its manufacturing. He doesn't want Vietnam or Thailand doing to China what China did to the U.S. So he's planning ahead to prevent that from happening in the way we failed to do in the 1980s-1990s.


By Master Kenobi (blog) on 12/11/2012 11:33:18 PM , Rating: 2
You nailed it.


RE: Welcome to incorporation 101
By Mint on 12/12/2012 8:47:03 AM , Rating: 2
You just wrote an essay explaining the most obvious benefit of technology, and really only needed a sentence to do so. That is not the threat we are facing now. Everyone knows that automation can increase productivity per worker.

The problem is that you can only use that technology to enhance the output of everyone (i.e. achieve full employment) if there is someone to buy it.

We are in a demand limited economy. People with disposable income don't want to buy more stuff; rather, they want to save (putting the world at the mercy of banks to find more and more people to safely lend it to) and they want to produce (i.e. invest), but can't do so without demand. People without much income want to buy more, but can't, especially since their last resort for spending power - home equity from rising home prices - is now fully tapped out. We got a free demand boost for decades that we can't rely on again.

That's why we're stuck. That's why we're replacing workers with robots now instead of increasing output with them. It's not universally true, of course, but it's true enough that we've been growing our economy for four years without going above 58.5% employment-to-population-ratio.

Unless the rich start pimping out and splurging on themselves to a far greater degree than ever before (which is what we long thought would happen with negative real interest, but hasn't), no amount of tax cuts or spending cuts can increase total production, because it does nothing to address the required matching consumption.

That's why income distribution is so important. Technology is now hitting a threshold that is rapidly reducing the number of tasks that make general labor worth hiring at reasonable wages.

Technology and automation is a wonderful thing that should bring nothing but benefits to everyone. As a society, we're just too selfish to let that happen.


RE: Welcome to incorporation 101
By RedemptionAD on 12/12/2012 10:36:24 AM , Rating: 3
Much like the assembly line in the early 1900's and Beginning of Automating with robots of the 70's, and yet people still insist that robots and technology in assembly and manual labor fields steals jobs and hurts the economy. Where the reality is is that they shift jobs to the design and manufacturing of the robots and improve the number of jobs due to a necessity of a more diversified number of robots for each task and a certain number of people required to be involved in each robots production. Wages increase because instead of making a $50 part with a $20 margin they are making a $50k part with a $20k margin.


RE: Welcome to incorporation 101
By Mint on 12/14/2012 12:47:17 PM , Rating: 2
It's a different world today.

Jobs only shift fast enough if there's something else for workers to do. In the 1900's or even the 1970's, we didn't have nearly as developed of an economy as we do today.

Today, people with high disposable income simply aren't asking for enough to be built. They just want to hold onto their money. Even in the 80's, 90's, and 2000's, they weren't asking for enough, and instead lent money (via the banks) at an astronomical rate to others so that they could buy more houses, cars, etc. Unfortunately, that free ride is over.

That's why robots are now stalling job growth instead of increasing output at past rates. They're reducing the total hours society needs to work to satisfy its needs, which should be a good thing, but we're not handling it very well.


RE: Welcome to incorporation 101
By DrizztVD on 12/14/2012 11:46:13 PM , Rating: 2
True true. However do note that the above analysis only applies if the retrenched workers can actually be replaced by higher-skilled robot designers and programmers. A country like China satisfies this criteria, but it will still take a while for the labour market to meet the demand for more robotics students to actually run the plant, so a time frame of 10-15 years is more much more healthy for the economy than 2-4 years.

It would however by incorrect to assume that an economy is demand-limited as stated elsewhere. The economy is price-limited. Only the top 2-3% of income earners actually live significantly below their means. The middle class' only investments amount to retirement savings. If this automation reduces the price of components, demand for it will increase and if the market conditions are right (price elastic) revenue will increase since sales will increase more than price decreased. units*price = revenue. Remember that developing countries have huge amounts of customers, but they only buy entry-level priced electronic equipment.

The mere ambition of the automation is a sure sign to me that Foxconn aren't about to stagnate and eventually die due to resting on their laurels. And a non-existing Foxconn is surely far worse than an automated one.


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