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The New Economy

Huge employer in China makes big step toward robots

Foxconn, a big contractor for Apple and others, breaks ground for robot facilities. It plans to replace 500,000 workers with 1 million robots.

By Frank TobeContributor / November 17, 2011

Workers are seen inside a Foxconn factory in the township of Longhua in China's southern Guangdong Province in this 2010 photo. After a spate of employee deaths and complaints about working conditions, electronics manufacturer Foxconn has broken ground on new robot facilities. Within five years, it says it plans to replace 500,000 workers with 1 million robots,

Bobby Yip/Reuters/File

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When the world’s largest maker and assembler of electronic components and products announced plans in August to replace Chinese workers with robots, some robot executives called it a ploy to keep their workers in line. The company didn’t want to build robots, they said, it wanted to control its workers, who had complained of tough working conditions and had a spate of suicides.

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But earlier this month, officials from Hon Hai Precision Industry and its subsidiary, Foxconn, took the next step, signaling a potential sea change in the electronics industry. They broke ground for new robotics R&D and manufacturing facilities in a new industrial park in Taichung, central Taiwan. Foxconn, which made its name by using cheap mainland Chinese labor to supply the likes of Apple, HP, Sony, Dell and Nokia, says it will replace 500,000 workers with robots in the next three to five years.

The plan is so sweeping that its implementation would have huge implications for China and the robotics industry worldwide. It signals that Chinese labor may no longer have the low-cost advantage it once enjoyed and that the robotics industry is ripe for change.

Start with China. Most of Foxconn’s 1.2 million employees work there. So an automation plan that would replace nearly half the company’s workforce suggests that the cost of those workers is rising. In a press release, the company said mass producing assembly-line type robots was part of its plan to cope with labor shortages and rising wages.

Foxconn has special reasons for speeding up factory automation. During the past 15 months, at least 14 Foxconn workers have died in apparent suicides, most of them in the Chinese city of Shenzhen, where harsh working conditions were said to exist. The company received so much negative publicity and scrutiny from labor groups and clients, Apple in particular, that it began a two-pronged effort to reduce labor costs.

Foxconn has been relocating factories closer to its source of employees, inland China and central Brazil, and is moving ahead with its robot development. The company expects its new robot R&D and manufacturing facilities to create 2,000 jobs in Taiwan. The new robots which will be deployed in China, will allow Foxconn to move displaced workers up the skill ladder to better paying and more interesting jobs. How many workers are kept on is anybody's guess. But with sufficient growth, Foxconn has an incentive to redeploy most of them, which would avoid having to hire, train, and house additional workers as production needs increase.

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