Foxconn automatons and outsourcing impact more than just jobs

By Steve DeCollibus

OpinionThe 1.3 million employees Foxconn currently uses to do the repetitive, mind numbing tasks that produce so many of the gadgets the Company makes cost too much and make too many mistakes to continue to use them.  — Steve DeCollibus

It is interesting and sad to note Foxconn, the world’s largest contract electronics manufacturing services provider, is planning to replace one million workers with robots over the next three years. (See: Top 10 EMS / ODM company rankings)

This information has been all over the wires the past few days. Plus, the news comes on the heels of Foxconn’s recent announcement that Company employment had risen between 30 to 40 per cent last year and was expected to rise 20 to 30 per cent annually going into to 2013.

In the US, it is ironic to me that much of the rational for the U.S. offshoring so much of its manufacturing work over the years has been that we would be able to get a lot of the same work accomplished in other regions of the globe as a result of vast populations in those regions, such as China, able to be employed more cheaply than the cost of automating manufacturing and assembly lines in the US. (See also: Comments by U.S. Chamber of Commerce president and CEO Tom Donohue on outsourcing and offshoring)

I suppose the thinking went it would not matter to U.S.-based manufacturing and global operations executives that mistakes would still be made and, that quality might suffer because the ability (read: cost) to rework and make over would still be easily managed within the boundaries of the significant margins that lower cost labor would provide.

Foxconn founder and chairman, Terry Gou, said to his employees recently regarding the automatons, “…the move is designed to improve efficiency and combat rising labor costs.”

To me, Gou is saying the 1.3 million employees Foxconn currently uses to do the repetitive, mind numbing tasks that produce so many of the gadgets the Company makes cost too much and make too many mistakes to continue to use them.

Foxconn sign

Theoretically, robots are more efficient than their human counterparts. They don’t require things like food or lodgings. Paychecks. But, while automated manufacturing environments may result in a reduced workforce, there is a need placed on more engineering help, software support and maintenance to keep things running.

Gou went on to say he wanted to shift the company’s employees, “higher up the value chain, beyond basic manufacturing work.”

Gou’s last statement could be perceived to mean that after the one million robots come on line, the people that are left will get to maintain the equipment and manage the automated lines. They would also comprise about 25 per cent of the current work force, resulting in possibly more savings for the Company.

Savings at what cost?
Automating work forces comes with a significant price. If you need to study an example, Detroit would be a great place to start.

After almost three decades of trying, Detroit has yet to achieve the nirvana manufacturing state that has been described as ‘lights out manufacturing’. In fact, no one but FANUC ( has even come close and they are building robots that make robots. (Read also: U.S. job loss? Look in the mirror)

I do not doubt Foxconn and China will succeed in automating a great portion of their manufacturing output, and that Chinese robot manufacturing facilities will provide employment for the low cost labor that becomes available as other portions of China’s industrial base automates.

I do wonder, however, about the price that will eventually be paid, both in terms of cost of goods and un-employment .

What will one billion and a half people do to earn a living?

Does a strong middle class have a chance to develop in this environment?

I have always viewed low cost manufacturing, as an enabler of cheaper, better, faster products (especially in the high technology sector) and feel it creates false expectations for consumers and corporate shareholders.

Low cost manufacturing leads to cheap and unreliable goods, disgruntled customers and falling stock prices.

The US has spent a lifetime of careers developing processes designed to cut costs and increase output at the expense of quality, reliability and jobs and not enough good has come from this.

Now might be the ideal time to take the good we have learned and apply it to a new paradigm. Perhaps something like: better, faster, humane.

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