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
This article is over a month old, voting and posting comments is disabled
RE: Welcome to incorporation 101
12/14/2012 11:46:13 PM
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.
"I want people to see my movies in the best formats possible. For [Paramount] to deny people who have Blu-ray sucks!" -- Movie Director Michael Bay
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