A former Foxconn executive explains why media reports heralding a robot takeover are overblown.
On Sunday, the South China Morning Post reported that Foxconn is "culling" 60,000 workers from its factory in Kunshan, with robots taking over much of the workload. Other outlets, like The Stack, characterized the move as layoffs in preparation for the reign of our new robot overlords, but the truth is that the reality is less sexy, much less an indictment of Foxconn. This becomes more clear if you read the original Morning Post article with a critical eye, as the publication is careful to never refer to what happened as layoffs, for example.
Dan Panzica, the Chief Analyst Outsourced Manufacturing Intelligence Service for IHS, told Motherboard that "it's the fourth most expensive area in China for labor, and there's nobody from there, meaning that there's very few indigenous people you can hire locally." This contributed to how the Foxconn workforce in the region is shifted around. "When I was at Foxconn [as Vice President, Quality and Engineering], we were transferring jobs," he explained. "Foxconn, you know how big they are, you know who they are, you know what they do. What you might not know is, like General Motors, they have their own internal 'university,' kind of like GMI [General Motors Institute], and it's called the I.E. [Industrial Engineering] Academy. If you're gonna start as an engineer at Foxconn, you're gonna go through a whole sequence of courses in their I.E. Academy."
Operators are often temps, not employees in for the long-haul at Foxconn. Thanks to the One Child Policy artificially limiting the potential pool of operators, Foxconn and similar companies need to get creative with how to replenish each facility's workers. "These kids will come out, and they'll be 17 or 18, and they'll go off and they'll work for a semester to raise money," said Panzica. "A large percentage of the workforce is temporary that end up going back to school. What percentage of those 60,000 number that was quoted were school leavers, people that was just naturally [going] back to school? I doubt very much that there was a layoff."
It's not like a full automated factory, where there's nothing but robots. No, no, no.
As for robots, Panzica doesn't think that there's a real connection between any developments on that end and the 60,000 workers "culled" from Kunshan. "This whole thing on robotics... I mean, heck, we were putting robots in India, and Juarez and Brazil many, many years ago. When you think robots, you think an entirely automated semiconductor factory where there's no humans, but what Foxconn does with robots [is] they'll mechanize a given job. Anything that's kind of a like a routine job, they'll mechanize it. So there will be some human, some machine interaction, just to speed up that process. It's not like a full automated factory, where there's nothing but robots. No, no, no."
How this works is Foxconn will combine a few workers jobs into a single workstation that has a robotic element, and, as Panzica put it, "you'll still have the operator loading and unloading that workstation." Again, it's nothing new. "I've been doing that for a gazillion years. So that's just a natural course of a business, just like the guys in the States are doing with the automobile business."
It seems as if the combination of the robot hysteria and the sheer numbers, even if they're a small percentage of Foxconn's overall workforce, tend to get people panicking with a quickness. "The thing that flips everybody out is the numbers, just because it's a big number," Panzica noted. "'60,000, oh that's a big number' [or] 'Oh, layoffs...' Everyone wants to hear that, especially the NGOs in Hong Kong, they're flipping out. But it's just not that big of a deal. We move people around all the time, from site to site to site, especially within China. So I doubt anyone is really out on the street. You look at the problems you have in laying folks off there, the difficulty and the cost... there's just no way."
Update, May 26 at 12:30pm ET: Panzica later told Motherboard that while Foxconn does lay off staff, particularly when projects end, there was "no way" that the company would be laying off 60,000 operators.