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Foxconn Turns to Robots to Save Apple Business

Foxconn -- known for building Apple (AAPL) products as well as worker suicides and labor strikes -- will incorporate more robots in its manufacturing. A lot more -- upwards of 1 million over the next three years, according to a report in the China Business News.

The goal is to go from 10,000 this year to 300,000 next, all in hopes of containing growing labor costs. But a more accurate formulation might be in an effort to keep the Apple business that has helped fuel Foxconn's growth. The same pressures that high tech corporations bring elsewhere in their cost structures also lands in Asia, where so many electronics products are actually built. Not only does Foxconn face Apple's tight-fisted squeeze, but it has become a magnet for bad publicity, something that Steve Jobs clearly doesn't need or want. It's going to take some persuasion to keep those critical, high-volume manufacturing lines cranking out product.

At least 17 workers have dies at Foxconn since January 2010, most of them by suicide. Company officials says that they don't know why the deaths occur this year:

Ask around among the more than 250,000 workers at the Shenzhen complex, and you'll find explanations. One 21-year-old assembly-line worker, who asked that his name not be used, says conditions at Foxconn make his life seem meaningless. He says conversation on the production line is forbidden, bathroom breaks are kept to 10 minutes every two hours, and workers get yelled at frequently.
Maybe that's why workers have been striking and demanding more pay -- The reason Foxconn gets the business from Apple, as well as Dell, Microsoft (MSFT), and others is because it under cuts prices from competitors. Even small amounts add up when a company is purchasing millions of units.

Apple has already begun to ratchet the pricing pressure by opening bidding to make the iPad 3. One report says that Taiwan-based contract manufacturer Pegatron under bid Foxconn. The company also supposedly got the iPhone 5 nod.

Companies have already gone to the ends of the earth to find cheap labor. Now the only option is to ramp up automation and cut out as many jobs as possible. But where's the future in all this, after all the major manufacturers reduce people to a minimum?

The problem ultimately facing high tech and other industries is that the idea of zero labor costs translates into a global workforce that doesn't make enough to buy the products that keep companies afloat. What happens then? Or doesn't it matter because it will be someone else's problem at that point? Other than "Let them eat cake," ever wonder what the court of Louis XVI said about the working class?


Image: Foxconn
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