Apple manufacturer Pegatron begins automating factories, reducing hires
Apple's secondary manufacturer, Pegatron, is following in the footsteps of Foxconn and beginning to automate its factories -- and cutting back on new hires as a result, according to the company's chairman.
With automation in place, Pegatron is recruiting fewer workers at its Shanghai factory, DigiTimes quoted T.H. Tung as saying in response to Chinese media reports. The facility should be able to use 20 people to do what previously took 100, Tung claimed.
It's not clear how many Pegatron production lines have been automated, but transition solves two problems for the company's management: the increasing difficulty of finding enough people to do menial assembly work, and the cost of hiring them, given improvements in wage standards.
Indirectly that change should benefit Apple, since cheaper labor costs at Pegatron may mean lower order quotes, and hence higher profits on Apple's end.
Foxconn is already making large strides in automation, for instance shrinking the workforce at its Kunshan factory from 110,000 people to only 50,000. Concerns have been raised about the socio-economic fallout of that sort of shift, given thousands of people being put out of work or forced to find it elsewhere. Kunshan has a large population of migrant workers, and if they leave in droves, that could impact not just them but the local economy for those who remain.
Pegatron is believed to be handling at least a portion of this fall's "iPhone 7" production, but only 4.7-inch models, not any 5.5-inch units.
With automation in place, Pegatron is recruiting fewer workers at its Shanghai factory, DigiTimes quoted T.H. Tung as saying in response to Chinese media reports. The facility should be able to use 20 people to do what previously took 100, Tung claimed.
It's not clear how many Pegatron production lines have been automated, but transition solves two problems for the company's management: the increasing difficulty of finding enough people to do menial assembly work, and the cost of hiring them, given improvements in wage standards.
Indirectly that change should benefit Apple, since cheaper labor costs at Pegatron may mean lower order quotes, and hence higher profits on Apple's end.
Foxconn is already making large strides in automation, for instance shrinking the workforce at its Kunshan factory from 110,000 people to only 50,000. Concerns have been raised about the socio-economic fallout of that sort of shift, given thousands of people being put out of work or forced to find it elsewhere. Kunshan has a large population of migrant workers, and if they leave in droves, that could impact not just them but the local economy for those who remain.
Pegatron is believed to be handling at least a portion of this fall's "iPhone 7" production, but only 4.7-inch models, not any 5.5-inch units.
Comments
As for the reduction in workers, a cut of 50K is nothing for the Chinese workforce. The estimate on the workers used during the construction of the Three Gorges Dam was 250K. China's transient work force will find other work so I'm not that worried and I don't think China is either. This is also why people with bad hair don't understand why Apple can't bring production back to the US. We don't have 60K people (110K-50K) willing to work on one company's production line. We have more than that out of work but I don't see how any company or our government could bring that many people together to work on one project (except by creating another war, which seems to be the normal way to re-employ people).
But it will never happen because if massive manufacturing did return to the U.S., it would be highly automated, and it's more likely a plant would employ 200 or fewer workers than 20,000 or more. And that's aside from the issue of supply lines from component manufacturers, etc.
Some areas don't even want such plants if they employ many people because the influx of people means having to build new schools and puts a strain on public services, even though it would substantially increase the local tax base via real-estate taxes, etc.
Mr. Bad Hair knows that manufacturing jobs will never return to the U.S. But it all sounds good to blame China and threaten new and large import taxes. If ever accomplished and prices on such goods rose 25%, people would go nuts, but it would be too late and Mr. Bad Hair would find someone or something else to blame. Meanwhile, since U.S. sales would inevitably decline, stock prices would fall, pension plans would be worth less and there'd be more unemployment. But we'd feel good because we were macho and all the Donald cares about is winning the election. (Although with each passing day, I'm more convinced he's actually trying to lose the election because even he can't be that stupid. It seems like the more inane and ridiculous his comments, the stronger his support.)
The fact is that last quarter, U.S. manufacturing output was at an all-time high, but it already is highly automated and therefore doesn't employ as many people as the output would suggest.
But in the long run, we do have to find some solution, because our society will fall apart if there's no jobs or mostly only jobs that pay menial wages. I think most of the anger seen in this election cycle is about that.
That isn't to imply that there won't be a necessity of outsourcing volume processes and labor for production, but the barrier to entry for product development and marketing is pretty low for motivated individuals and small companies.
Imagine if the Trumps of the world had their way five years ago; they would have bought for America's basic labor force a whole five or ten years of repetitive jobs, before they went away entirely. And perhaps even went away sooner, because there would have been much greater incentive to automate under the pressure to move manufacturing to an expensive labor and regulation market as the U.S.. Not the way to plan a country's future.