You want cheaper smartphones so Foxconn will use robots to make them

Foxconn makes many of the worlds smartphones and tablets. They make Apple iPhones and iPads. They also make some android smartphones. The CEO of Foxconn has indicated that he wants to make a lot of robots to reduce the hiring of workers. Currently Foxconn has 1.3 million workers. They are one of the largest private employers in the world.

Pricing pressure on their smartphone products means they will be a leader in automating manufacturing. There would be more room for human manufacturing jobs if people did not want cheaper products. Also, there is the competition to deliver less expensive products.

There is overall competition to provide cheaper goods and services and a big part of providing it will be with robotic automation and process improvement. In other decades lower costs were provides were provided with innovations like assembly lines and outsourcing of work.

Labor costs had more than doubled since 2010, when the company faced intense media scrutiny following a spate of worker suicides.

Taiwan’s Foxconn Technology Group, the world’s largest contract electronics manufacturer, will cut its massive workforce.

“We’ve basically stabilized (our workforce) in the last three years,” Special assistant to the chairman and group spokesman Louis Woo said. When asked if the company plans to reduce overall headcount, he responded “yes”.

Revenue growth at the conglomerate tumbled to 1.3 percent in 2013 and only partially recovered to 6.5 percent last year after a long string of double-digit increases from 2003 to 2012.

Growth in smartphone sales will halve this year from 26 percent in 2014, according to researcher IDC, while PC sales will contract by 3 percent.

Similarly, the average smartphone will sell for 19 percent less in 2018 than last year’s $297.

“Even if technology is improving, the price will still come down,” Woo said. “We’ve come to accept that, our customers have come to accept that.”

Automation will be key to keeping labor costs under control in the long-term, Woo said, as the company pushes to have robotic arms complete mundane tasks currently done by workers.

But Woo noted that company chairman Terry Gou’s previously stated goal of 1 million robots was “a generic concept” rather than a firm target

SOURCES -Reuters, Upstart Business Journal

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