Foxconn Runs into Trouble Deploying Robot Replacements for Human Workers
December 11, 2012 12:48 PM
comment(s) - last by
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
, 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.
The Wall Street Journal
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RE: Welcome to incorporation 101
12/12/2012 8:47:03 AM
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
bring nothing but benefits to everyone. As a society, we're just too selfish to let that happen.
"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007
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