Foxconn, pressured by the stresses of rising labor costs and negative media attention over employee suicides, could be reshaping the landscape of manufacturing forever. How?
According to Focus Taiwan, the company recently announced it was building a $223 million “robot kingdom” in the Central Taiwan Science Park in the Taiwanese city of Taichung. The research and development center and manufacturing hub is part of chairman Terry Gou’s ambitious plan to build one million industrial robots.
Let’s put that in perspective; according to a September report by the International Federation of Robotics (IFR), the world is on track to reach 1.3 million operating industrial robots by 2014. That means that if Foxconn’s parent company, Hon Hai Precision Industry Co., reaches its goals, it would effectively double the number of industrial robots worldwide.
(PHOTOS: Portraits of Chinese Workers)
Foxconn, one of Apple’s biggest suppliers, has a number of good reasons to go the robot route. First, there are the suicides; at least 17 people have killed themselves at Foxconn factories over the last half-decade, according to a special report from Wired. Foxconn’s initial responses seemed a bit crass; first it looked to stop people from jumping off buildings by putting up nets, then it reportedly made workers sign pledges stating that they wouldn’t commit suicide.
Nearly half of Foxconn’s one-million workers are located in the company’s massive campus in Shenzhen. While it’s not the Ritz, it isn’t exactly a Dickensian nightmare either; workers have access to clean dormitories and amenities like coffee shops.
Still, life at the Shenzhen plant can be tough. An undercover report from Southern Weekend reporter Liu Zhiyi described a world of monotonous work under bright lights, 10-hour work days before overtime (which, thanks to voluntary overtime affidavits, can exceed 36 hours per month) and strict, unceasing supervision. It can also be lonely; earlier, TIME reported on the high employee turnover that makes social connections for migrant workers, already separated from their families, extremely difficult, even in cramped quarters.
Unsurprisingly, many of China’s newly-educated young people don’t want jobs like these, which brings us to Foxconn’s second problem: China’s industrial sector faces the vexing problems of both rising labor costs and a labor shortage.
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Recent graduates in China want to be using iPhones, not making them, resulting in increased competition for the shrinking pool of workers willing to do factory work, which drives up wages. The minimum wage—about $207 a month in Shenzhen—has risen in China by almost 22% in the last year, according to the Financial Times.
Thus China faces losing manufacturing jobs to countries with lower labor costs, most notably Vietnam and Bangladesh. Even Foxconn has moved much of its manufacturing to Malaysia and China’s interior. Which brings us back to robots.
Industrial robot sales were up 18% worldwide over the last year. The IFR predicts that over the next three years “rising wages and the increasing standard of living” will “push automation in the still low-wage countries of Eastern and Central Europe as well as in Asia and in South America.”
Talk about pushing automation; China’s state-run Xinhua News Agency reports that Foxconn is looking to produce 300,000 robots by next year and one million in the next three years. The industrial robots will perform simple tasks such as spraying and assembly. If all goes according to plan, an estimated 500,000 of Foxcon’s 1.2 million jobs will be obsolete.
In September, Slate’s Farhad Manjoo ran a series about how robots were poised to one day take over white collar jobs in the fields of law, medicine and media. For blue collar workers, that day is already here. The barrier to robots taking over jobs in medicine is, at this point, technological; the barrier to robots taking over factory jobs is a matter of simple economics. It’s still cheaper for a factory owner in Vietnam to pay human workers $85 a month than it is to install industrial robots.
But that might be changing. The IFR predicts that China will be the top robot market by 2014. If more large companies such as Foxconn put their muscle behind building industrial robots, economies of scale could make it cheaper for other manufacturers to buy and install robots. If the number of industrial robots rises to, say, three or four million, who knows how it would affect developing countries’ labor markets.
Foxconn did not respond to an email query by the time this story was published.