Foxbots in China
Last year Foxconn chairman had said that he would use 1 million robots to replace most of the workers in his numerous factories in China. Foxconn which is one of the largest electronic manufacturers in the world supplying to all the top brands such as Apple, HP etc. is also one of the largest employers in China with a large number of factories. Though the revenues are high, Foxconn margins are thin as it works at the low end of the value chain. The company has been hit with bad news stories a number of times for ill treating its workers by paying them low wages for long hours of service. But given the massive competition from other low cost manufactures in Asia, the company does not have much choice. Most of the profits are taken by the big companies at the top of the value chain such as Apple who earn billions of dollars per quarter due to their competitive advantage, leaving little for its suppliers such as Foxconn and Pegatron.
Using robots will remove a major pain point for the company as robots do not complain about long hours, do not have to take toilet breaks and do not ask for higher wages. They can work continuously day in and day out and you do not even have to give them holiday breaks. We had recently written how India is going to face a huge problem with the rise in automation and robots. Recently a large textile maker announced plans to replace 10000 workers with robots in India. This trend is starting to catch on fast and will create a huge problem for developing countries such as India and China which do not have the resources to provide for such large number of unemployed workers.
Foxconn is not only using robots to replace workers at its tablet and computer factories, but is also getting big time into making of robots known as “Foxbots” for other companies. It is getting into the game early and wants to be a big supplier of robots. Bad times ahead if you are a semi skilled or unskilled worker in India and China.
The Foxbots are currently being installed in a number the group’s factories in China, including an industrial base in Zhengzhou, a tablet plant in Chengdu, and computer products and peripheral plants in Kunshan and Jiashan.In addition to producing robotic products in-house, the group does not rule the possibility of acquiring other robot-producing companies, Dai noted, adding that Foxconn also plans to step into the production of medical robots.