1.2 million jobs to vanish as Foxconn unveils plans for fully autonomous factories 1.2 million jobs to vanish as Foxconn unveils plans for fully autonomous factories
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WHY THIS MATTERS IN BRIEF Foxconn is one of the world’s largest employers, and its pursuit of 100% automation at all of its factories... 1.2 million jobs to vanish as Foxconn unveils plans for fully autonomous factories

WHY THIS MATTERS IN BRIEF

  • Foxconn is one of the world’s largest employers, and its pursuit of 100% automation at all of its factories will put millions out of work and give China a headache


 

We’re hearing a lot recently about how most of our jobs are going to be automated away by robots and intelligent machines, and new Universal Basic Income schemes, that aim to soften the impact, now Foxconn, the Taiwanese manufacturing giant behind Apple’s iPhone and many other major electronics devices, have announced they are going to automate away all of their human employees – all 1.2 million of them – in order to improve efficiency, safety and reduce costs.

Dai Jia-peng, the general manager of Foxconn’s automation committee, says the company has a three phase plan in place to fully automate its Chinese factories using software and in house robotics units, known as Foxbots.

 

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The first phase of Foxconn’s automation plans involve replacing the work that is either dangerous or involves repetitious labor humans are unwilling to do. The second phase involves improving efficiency by streamlining production lines to reduce the number of excess robots in use, and the third and final phase involves automating entire factories, “with only a minimal number of workers assigned for production, logistics, testing, and inspection processes,” according to Jia-peng. And then one day, in the not too distant future, these workers will also be replaced, for example with machine vision systems that will be capable of carrying out the inspections, and with robo logistics systems.

The slow and steady march of manufacturing automation has been in place at Foxconn for years. The company said last year that it had set a benchmark of 30 percent automation at its Chinese factories by 2020.

The company now produces around 10,000 Foxbots a year all of which can be used to replace human labor, and last March the company said it had managed to automate away 60,000 jobs at just one of its factories.

Over the long term, robots are cheaper than human labor but the initial investment can be expensive – it’s also complicated, expensive, and time consuming to program robots to perform multiple tasks, or to reprogram them to perform new ones and that’s one of the big reasons why thus far humans have been far more economical.

To stay competitive though, Foxconn believes it has to transition to full automation, and as for the problem of re-programming robots? Well, those problems and costs are going away as robots become more adept at teaching other robots new tasks, using the equivalent of a “hive” mind.

 

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The Chinese government though could complicate Foxconn’s ambitions. They’ve incentivised and prioritised human employment in the country, and in areas like Chengdu, Shenzhen, and Zhengzhou, local governments have paid out billions of dollars in incentives, energy contracts, and public infrastructure to Foxconn to allow the company to expand. However, this too will become less of a problem as the company starts moving and expanding operations abroad to countries such as India, and now, under Trump, the US.

As of last year, Foxconn employed over 1.2 million people, making it one of the world’s largest employers and more than a million of those workers live in China, often at elaborate, university like campuses that house and feed hundreds of thousands of employees.

In an in-depth report published yesterday, The New York Times detailed these government incentives for Foxconn’s Zhengzhou factory, its largest and most capable plant that produces 500,000 iPhones a day and is known locally as “iPhone City.” According to Foxconn’s Jia-peng, the Zhengzhou factory has some production lines already at the second phase of automation and it’s on track to become fully automated in just a few years’ time. So it may not be long before one of China’s largest employers will be forced to grapple with its automation ambitions and the benefits it receives to transform rural parts of the country into industrial powerhouses.

 

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There is, however, a side effect to automation that would specifically benefit a company like Foxconn. The manufacturer has been plagued by its sometimes abysmal worker conditions and a high rate of employee suicide. So much so in fact that Foxconn had to install suicide netting at factories throughout China and take measures to protect itself against employee litigation. By replacing humans with robots, Foxconn would relieve itself of any issues stemming from its treatment of workers without having to actually improve living and working conditions or increase wages. But in doing so, it will ultimately end up putting hundreds of thousands, if not millions, of people out of work, and as far as we humans go, when we look at it like that it’s like curing a broken ankle by sawing off your leg.

However, if you think that Foxconn will end up with just two people on its payroll – the CEO and CFO – then think again, they can be automated too

Matthew Griffin Global Futurist, Tech Evangelist, X Prize Mentor ● Int'l Keynote Speaker ● Disruption, Futures and Innovation expert

Matthew Griffin, Futurist and Founder of the 311 Institute, a global futures think tank, is described as “The Adviser behind the Advisers.” Recognised in 2013, 2015 and 2016 as one of Europe’s foremost futurists, innovation and strategy experts Matthew mentors several XPrize teams, and is an award winning author, entrepreneur and international speaker who is regularly featured on the BBC, Discovery, Kurzweil, Newsweek, TechCrunch and VentureBeat. Working hand in hand with accelerators, investors, governments, multi-nationals and regulators around the world Matthew shines a light on the future and helps them transform their industries, organisations, products and services by demonstrating how the combination of democratised, and increasingly powerful emerging technologies, are helping fuel cultural, industrial and societal change that is transforming old industries and creating new ones. Matthew’s clients include Accenture, Bain & Co, Bank of America, Booz Allen Hamilton, Boston Consulting Group, Dell EMC, Deloitte, Deutsche Bank, E&Y, Fidelity, Goldman Sachs, Huawei, JP Morgan Chase, KPMG, McKinsey & Co, PWC, Qualcomm, SAP, Schroeder’s, Sequoia Capital, UBS, the UK’s HM Treasury, the USAF and many others.

  • Manoj Saxena

    7th January 2017 #1 Author

    Good post Matthew. And a very timely one as this trend will only accelerate. Job dislocation and replacement will be in the news for months and years to come. It will create a tech backlash against AI if the business and technology leaders do not get ahead of it, collaborate and realize the “new collar” jobs that AI can create by pairing humans and machine.

    Reply

    • David Geddes

      9th January 2017 #2 Author

      I suggest looking into architectures that are human-centered, in fact, ‘associate systems’ are the most powerful kind. Autonomous learning systems are not good for humanity, explicit/declarative models are in fact the strategic move for long term.

      Reply

  • Matthew Griffin

    7th January 2017 #3 Author

    Thanks Manoj, you’re right, and it is already accelerating. However as humans we’re very good at compartmentalising this type of news as news that’s affected “someone else,” when in fact this is simply the beginning of a global, cross industry trend that will affect us all. It’s only when this news gets closer to home that is starts making you think about your own future. Human-robot (hybrid) working models look interesting, such as Ford’s use of co-bots – robots that help reduce the stresses and strain on the human workers, making them more efficient without making them redundant. Unfortunately not all companies are as forward looking or as considerate, is that the right word… as Ford seem to be. Most organisations, from law to transport seem very keen to replace the “expensive human” without thinking through other options

    Reply

    • Andreas Freund, PhD

      9th January 2017 #4 Author

      Matthew Griffin … unless hybrid models are legislated, they will not happen at scale … less cost efficient. The interesting corollary is that this trend will force us to actively think and achieve a post-captalist model … automation canibalizes capitalism. The danger is, as it is emerging with Trump, Brexit etc., is that this post-capitalism could easily look like Germany in the 1930s.

      Reply

      • Ron Hodges

        9th January 2017 #5 Author

        Andreas Freund, PhD Your point about achieving a “post-capitalist” model is key here. Right now, the only value that is accepted is profitability within the frame of reference of the corporation. The impact on society of the decisions made within the corporation are merely “externalities”. Many economists (Nouriel Rubini, Thomas Piketty, Joseph Stiglitz, etc. etc.) are sounding the warning that the “financialization” of the economy and the plunge towards automation and AI are not sustainable from a social perspective. In the end, capitalism will eat itself. The only question is whether we will manage its devolution or be devoured as collateral damage.

        Reply

        • Matthew Griffin

          9th January 2017 #6 Author

          Ron Hodges The big question on everyone’s lips is – what does that post capitalist model look like? Funnily enough the Japanese government proposed something along those lines last year at the WEF but they proposed ending capitalism – when asked just what that would look like they didn’t have an answer… still it’s always good to throw some left field ideas around. And as for collateral damage, at the moment it looks like we could end up in that bucket – a recent Princes trust poll in the UK found that 26% of Gen Z didn’t feel in control of their lives – or, worryingly, that they would ever be in control of their lives (welcome to adulthood!)

          Reply

      • Matthew Griffin

        9th January 2017 #7 Author

        Andreas Freund, PhD I agree, and arguably the biggest problem with a hybrid model is that is still requires organisations to pay for headcount, and as well all know, if a CFO can cut out cost (people), without hurting business operations too much, then typically they will. You’ve an interesting point about cannibalising capitalism – I suppose in one way it does, but then again there is still some form of wealth distribution which could still be construed as capitalism (?)

        Reply

        • Andreas Freund, PhD

          9th January 2017 #8 Author

          Matthew Griffin … what wealth is that ? … asset values will deterioate as social distortions intensify … see Latinamerica

          Reply

          • Matthew Griffin

            9th January 2017 #9 Author

            Andreas Freund, PhD Not necessarily independent asset values but the transfer of value – which can be anything from a unit of energy, or a unit of compute, or a unit of currency – who says value has to be monetary and that all trades need to be monetary

            Reply

  • Kevin Saitta

    8th January 2017 #10 Author

    i am not sure who companies will survive if no one is left to buy their goods. no more people displaced the less people to buy the goods made. this is not a good thing.

    Reply

    • Matthew Griffin

      9th January 2017 #11 Author

      Hey Kevin, I’m starting to wonder if the Mormons have the right societal approach…!

      Reply

  • Jacques Kpodonu

    8th January 2017 #12 Author

    We need to be prepared for the fourth industrial revolution and that starts with relooking at our educational system ,jobs training models ,policies etc .The old jobs are not coming back .Welcome to the new world order of machines vs. man

    Reply

  • Will Hill

    8th January 2017 #14 Author

    it is a bad decision by foxconn. their manufacturing costs will drop at first… then slowly increase over time. it takes 5 human engineers to keep each machine-type/robot-type alive.

    Reply

    • Matthew Griffin

      9th January 2017 #15 Author

      Hey Will, now that would be an interesting case study… do you have any info you can share?

      Reply

  • Andreas Freund, PhD

    8th January 2017 #16 Author

    Ultimately any company will be a DAO … fully automated and run by AI as its stakeholders.

    Reply

  • Tom Smith

    8th January 2017 #18 Author

    The impact goes beyond just labor replacement through deployment of robots and automation. We have some major shifts happening in cognitive processing abilities that are being impacted by a growing reliance on AI technology and personal digital assistants. These technologies are incredibly valuable and useful in helping us make better more informed decisions, unfortunately because of human nature and brain elasticity it can also cause us to lose our ability to focus on longer duration cognitive tasks, such as those that require learned expertise. Consider the trends with driving cars (quickly becoming a lost skill), reading novels (too boring and slow), or apprenticeships in trades (notice how fewer new plumbers, electricians and other skilled trades are entering the workforce). All I’m saying is we need to consider the impact of technology advances to traditional societal systems like education and job structure so we can prepare people to be a productive and contributing part of society in the future.

    Reply

    • Matthew Griffin

      9th January 2017 #19 Author

      Hey Tom, I think you’re right about assessing the impact of technological advances, however, you have the sensible “let’s think this through” approach which would take into account the impact of all of these new advances on peoples real lives, versus the market driven “it saves us money, let someone else clear up the mess” approach. unfortunately history teaches us that we do then we think about the implications – but that we generally only think about the implications when they start coming home to roost, by which time it’s too late

      Reply

  • Andreas Freund, PhD

    8th January 2017 #20 Author

    Right now our strategy is to tell them that their old jobs will be legislated back, though all know that is a lie, as it is not sustainable. And we do not teach our children the required skills to survive the transition period.

    Reply

  • Matt Kime

    8th January 2017 #21 Author

    Great post. Automation will change our lives and even the political paradigm. There is a December White House report on AI worth reading. The gist of it is that government must come up with ways to provide a safety net for displaced and redundant labor.

    Reply

  • Marinos Kokkinos

    9th January 2017 #23 Author

    The best for the labors would be to adopted by the new technology, each company should update to the A.I. but has to keep in mind of her labors. After all the labors have do their part in the past for this future.

    Reply

    • Matthew Griffin

      9th January 2017 #24 Author

      Hey Marinos true, unfortunately I’m not think many companies think that holistically about their workers (some do to be fair), perhaps this is when we began a societal shift of all being more caring and sharing?

      Reply

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