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Foxconn taps robots to weather rising China labor costs: report

2011/08/02 19:30:57

Taipei, Aug. 2 (CNA) Foxconn Technology Group, the world's largest contract electronics maker, plans to equalize the number of robots and the number of workers in China within three years to lower operating expenses as labor costs rise on the mainland, the Financial Times said Monday.

According to the report, the group currently employs 10,000 robots on the production lines in China, while it has hired about one million workers.

Foxconn, which churns out iPhones and iPads for Apple as well as other high-tech gadgets for multinational companies, such as Dell, Hewlett-Packard and Sony, currently ranks the largest employer in China.

The report said Foxconn Chairman Terry Gou has already come up with an automation plan to raise the number of robots in its factories in China to absorb the impact from rising labor costs.

Gou announced at a function in the group's Shenzhen production base last week that Foxconn plans to utilize 300,000 robots next year, and the number will increase to one million by the end of 2013.

Foxconn wants its employees to move higher up the value chain beyond basic manufacturing work.

The group has been working on relocating its production facilities from the expensive coastal city of Shenzhen to inland Chinese cities, such as Zhengzhou of Henan Province and Chengdu of Sichuan Province, where labor costs are relatively low.

In the report, Dong Tao, the chief regional economist at Credit Suisse, said wages for migrant workers in China, the backbone of Foxconn's workforce, rose 30-40 percent in 2010 and are expected to rise an additional 20-30 percent per year until 2013 at least.

Quoted by the report, Alvin Kwock, head of hardware technology research at JP Morgan, said Foxconn's robotics plan is part of the automation drive among China-based manufacturers.

Kwock said the efforts indicate the cost of labor in China is no longer lower than the cost of capital.

Foxconn is also known as Hon Hai Group in Taiwan.

(By Frances Huang)