Rise of the bots: Why we should be worried by the Foxconn lay-offs

In China, man is being replaced by machine as automation advances inexorably

Are we heading for a future where the technology we use every day is 100 per cent manufactured by robots? Foxconn seems to be taking us a step closer to that reality after a Chinese local authority revealed the Taiwanese giant has “reduced its employee strength from 110,000 to 50,000, thanks to the introduction of robots.” It’s not alone, either, with as many as 600 other firms said to be mulling similar plans for their facilities in the manufacturing hub of Kunshan near Shanghai.

But does it really matter to IT buyers in the West, as long as the price we pay for our kit remains stable?


Man vs. machine

The Foxconn story made quite a few headlines around the world. But it’s not exactly new. Contract manufacturers in China and around Asia – most of them Taiwanese in origin – have been looking at robots as a replacement for human labour for some time. When I was filing news from Hong Kong a couple of years ago it was reported that Foxconn – which makes products for the likes of Apple, Samsung, Sony and others – was planning to have one million bots on the production line by 2014. It’s unclear whether it hit its goal.

The drivers are pretty straightforward. Unlike human workers, machines don’t need to eat or sleep; they don’t go on strike; they don’t need housing; and they don’t give rise to bad PR stories about rising suicide rates and abysmal working conditions. With workers’ wages on the rise in China as the manufacturing industry matures, there’s a definite economic imperative to put more robots on the factory floor. And we’re told that AI technology is maturing at a rapid rate. In fact, according to a new report from research firm Leading Edge Forum, machine intelligence has already reached a tipping point.


Beginning of the end?

Many IT buyers won’t really care what happens on the other side of the world as long as the price of hardware doesn’t go up. But it’s a serious issue in countries like China, where Foxconn alone employs over 1.2 million people. The contract manufacturer sought to reassure the government by claiming it will maintain a “significant workforce in China”. It added:

“We are applying robotics engineering and other innovative manufacturing technologies to replace repetitive tasks previously done by employees, and through training, also enable our employees to focus on higher value-added elements in the manufacturing process, such as research and development, process control and quality control.”

However, the jury’s out on whether there are enough roles further up the value chain for displaced workers to move into.

“There will be fewer of these more advanced roles, and some of the type that existing workers will not have the skillsets to be able to transition to,” IHS principal analyst Alex West told me by email.

“Employment in the manufacturing sector in Asia will be negatively impacted by robotics, although to what degree is still unclear. However, as China’s economy transitions, there will be a demand for more staff to support its growing service sector.”

This is not just a China phenomenon, of course, and other Asian tech manufacturing nations could also be hit. But it’s also not just an Asian or tech industry problem. And that could have a dramatic repercussion on workforces much closer to home.

“From a global perspective, with manufacturing growth subdued, more efficient production of similar volumes means [fewer] people employed as robots are introduced into more tasks on the factory floor,” explained West.

Taking industrial robotics as a whole, 2015 saw an eight per cent increase in sales globally to nearly 240,000 units, according to the International Federation of Robotics. While this was mainly driven by demand from China, sales in North America increased by 11 per cent and in Europe by eight per cent. A report from the Bank of England last year predicted as many as 15 million UK jobs could be at risk of automation in the coming decades. And a Deloitte/Oxford University study in January claimed 35 per cent of today’s jobs have a “high chance” of being automated in the next 10-20 years, with the wholesale & retail, transport & storage, and human health & social work sectors particularly at risk.

West cautioned that there’s a difference here between industrial robots and service bots. We’ve been talking mainly about the former in the context of Foxconn, although the latter could be the main worry for the UK workforce. “Service robots are newer but will hit a wider range of jobs across the service sector,” he warned.

We might not blink an eye if 60,000 Chinese tech workers lose their jobs to robots. But as global trends go, this one’s only just getting started. 


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