Foxconn, HSBC Join Global Trend: Technology Reducing Labor Costs

Date: 05-08-2011
Source: International Business Times

For corporations, people are becoming a redundancy. Reliance on technology to reduce costs and increase efficiency is a corporate trend that has contributed to high unemployment rates. An International Business Times article reports the trend is expanding into areas often blamed for jobs lost in the developed world: the world of finance and outsourcing to China. HSBC Bank and Foxconn, the maker of Apple’s iPad, are investing in robots to replace workers, by 30,000 and 1 million, respectively. “We used to talk about the great work-place shift that would occur one day because of technology as something for the future,” writes David Magee. “But it’s no longer the future.” Profitable companies are investing profits in technology rather than labor, and Magee adds, “Workers who don’t evolve, finding a niche among such technological advancement with proper training, will be left behind – standing in a very long unemployment line.” Education, understanding fast-changing technology, is increasingly essential for securing employment in the modern workplace. – YaleGlobal

The future is here, with robots slated to replace thousands of workers in manufacturing and finance

Sooner or later, it had to happen — the world outsmarting itself. It’s happening at this moment, the global worker getting left behind by technology.

Consider only that Foxconn, the Chinese maker of Apple’s iPad and iPhone, is adding one million robots over the next three years to reduce labor costs. HSBC bank will reduce its workforce by 30,000, relying increasingly on technology over people by reducing accrued bureaucracy.

People are costly. So is technology. But technology doesn’t require benefits, or pay increases, or sick days.

Technology yields higher wages for some — those who are trained — but less need for others. So companies around the world from Foxconn to HSBC and others have figured that out, pouring money into technology so they will rely less on as many people.

At HSBC, for instance, the massive cutbacks will affect those engaged in back office, functional head office support that’s no longer needed. Now that technology can do a lot of that work, the bloated work force becomes “unnecessary bureaucracy.”

That’s one reason America’s unemployment rate remains above nine percent two years after the recession ended. Politicians and pundits keep speculating on what different economic factors are needed to get American employment moving in the right direction again, but they seem to ignore that companies just don’t want people like they once did.

We knew the world would change in the twenty first century, but it took a decade for us to see exactly what that meant. Now we know. Yes, the world has flattened due to technology, but global workers are also getting flattened in the process — needed in smaller numbers as they once were.

Foxconn currently employs more than 1.2 million workers at plants in China, and the Taiwan-based manufacturer of Apple’s iPhone and iPad came under global scrutiny last year for a string of worker suicides, as concerns grew over labor issues including complaints of long hours, poor conditions and low pay.

Both Foxconn and Apple moved in response. But now, one can’t help but to correlate last year’s issue with this recent news, that Foxconn will move from 10,000 robots currently in use in its factories to one million or more in the next three years.

Foxconn is one of the world’s largest electronics manufacturers. In addition to making products for Apple, Foxconn also makes porducts for Sony, HP, and Nintendo. That means Foxconn is one of the most important and vital manufacturers in the world, considering such top-level consumer electronics are the fast-growing future in regard to making things.

Foxconn CEO Terry Gou told of the company’s plan to heavily invest in robots at remarks last week made at the company’s campus in Shenzhen, China. Gou told Foxconn employees he wanted to move the company’s workers “higher up the value chain, beyond basic manufacturing work,” according to a company statement.

With the addition of one million or more manufacturing robots over the next three years, Foxconn says it can improve the overall working environment in manufacturing facilities and allow the company to create more sophisticated products.

“The use of automation is driven by Foxconn’s desire to move workers from more routine tasks to more value-added propositions in manufacturing such as R&D, innovation and other areas that are equally important to the success of our operations,” Foxconn said.

Undoubtedly, the move will improve Foxconn’s manufacturing abilities, while lowering labor costs. Arguing with the strategy from a business standpoint is a losing proposition. We can’t stand in the way or progress, we simply as a global society have to evolve. That means more specialized training, and a more educated work force.

But the people aren’t necessarily keeping up with the progress. It’s all happening so fast, and not just in manufacturing. In finance, one global bank after another has announced jobs cuts in recent weeks. Banks are making money, but they are putting those profits into technology rather than people.

Automation is the wave of the future for mega-banks, like HSBC. They want to invest in salespeople, while placing daily, routine service needs in the hands of technology. Some of that is good.

With Chase, for instance, customers can now make deposits from their smartphone. Get a check, take a picture of it with an iPhone, for example, and you have made a deposit. No trip to the bank is required.

But no bank employee is required, either.

We used to talk about the great work-place shift that would occur one day because of technology as something for the future. But it’s no longer the future. It’s happening now.

Apple, for instance, is an American-based company that has risen to become one of the world’s most impacting and successful corporations. First, Apple sent manufacturing to China. Now, Apple is sending manufacturing to robots.

It’s all in the name of progress, and the progress is hard to argue from a business perspective. But like banking, manufacturing increasingly requires fewer people than it once did because of technology.

Workers who don’t evolve, finding a niche among such technological advancement with proper training, will be left behind — standing in a very long unemployment line.

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