Foxconn’s robot recruitment drive: the beginning of the end of labour?

Paul Raven @ 01-08-2011

Alex Knapp picks up on the story about Foxconn’s plans to draft in a cool million robots for their manufacturing plants within three years, and ponders whether this is good news for the unemployed in the West:

A good portion of this move to robotics labor has, no doubt, to do with labor costs and the reports of working conditions in FoxConn’s factories in China. I do wonder, however, what this means for the future of outsourcing to Asian markets, though. If labor costs can be reduced by employing more robots in the factory, and if its feasible for a company like FoxConn to use such a large number, it begs the question of why Western companies might continue outsourcing.

One of the major reasons, after all, that companies are outsourcing their operations to Asia is for the labor costs. If those labor costs can be obviated by greater automation, then other considerations come into play. After all, America and Europe are still where most of the customers are, and with the price of oil on the rise, cheaper transportation costs might come into the mix. Moreover, with both Europe and the United States teetering on the brink of another double-dip recession, policies geared towards bringing manufacturing home via tax incentives and other measures are more likely to become law.

Hmm. Even allowing for the traditional hyperbole of corporate press releases, a million automated machines will displace a whole lot of jobs. But Knapp is far more confident than I am about governmental willingness to pass laws that make demands of their corporate paymasters, let alone ones they’d actually be obliged to adhere to; the geographically-bound nation-state has no leverage on the transnational corporation, and the only incentive you can offer them is a taxation low-ball and further erosion of worker’s rights. In other words, sure, you might get manufacturing returning to the West, but it’ll only happen because labour costs have equalised… and that’s only going to happen in places where you’ve carefully created a huge stock of labour that doesn’t have any other options. Sweatshop USA… it’s a sign of how bad things are if you can count that as a victory condition.

And to extrapolate further, the rapid maturing of fabrication technology is going to obsolete a lot of more complex machinist gigs, too. They may well be countering fabbers and sinterers among the Foxconn “robot” list, of course, though the article mentions more simple stuff – welding, spraying, low-level assembly, which are exactly the sorts of jobs that robots have traditionally obsoleted before. I watched pick’n’place machines and surface mount technology completely gut the electronics assembly industry here in the UK back in the nineties, and less than a decade ago it was already cheaper for one company I know of to source components internationally, ship them to the UK for collation, ship them out to Thailand for assembly and then back again for QA and (extensive) rework, than it was to pay UK workers to do the full process locally. That sort of price margin isn’t going to be significantly eroded by concessionary tax rates, though increased transportation costs will admittedly contribute as well.

I think if there’s anything to take away from this inexorable slide toward nigh-total automation, it’s that we can no longer sustain a global economy that relies on mass employment in the manufacturing industry to keep the money moving. I suspect there’s a tipping point in the near future (or possibly in the recent past) at which – barring existential-scale disasters that knock us back into pre-industrial ways of life – it will never again be cheaper to get humans to build things than it is to get machines to do the same work.

What happens after that point to the business models of tchotchke makers and Next Big Thing gadget creation, I have no idea… and the more economists and politicians I listen to, the more I suspect that no one else has a bloody clue either. If anyone can show me how this *isn’t* a big old zero-sum game that’s going to hit a brick wall sometime soon, please pipe up and do so.

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5 Responses to “Foxconn’s robot recruitment drive: the beginning of the end of labour?”

  1. Roy Pradhan says:

    Nation-states can leverage corporations by taxing the shit out of them as long as they don’t make it unprofitable to operate in their state – they can make it a lot less profitable through taxation as long as they don’t make it unprofitable. When they don’t like a corporation, they can increase taxation of that corporation; when the corporation appeases them, they can tax it less. I know the US doesn’t set different taxes for different corporations, but its legally feasible – we have an amendable Constitution after all.

    By the way, I’d like to know what you think of this:
    And this other one which is more important but less focused on corporations:

  2. Robert Koslover says:

    Ultimately, technology cannot (and very seldom should be) stopped. I suggest that this excellent old movie starring Alec Guinness is relevant here:

  3. Paul Raven says:

    @Roy: You’re a little more optimistic about the American political process than I am at the moment! (Or, indeed, 90% of the planet.)

    Nation-states can leverage corporations by taxing the shit out of them as long as they don’t make it unprofitable to operate in their state – they can make it a lot less profitable through taxation as long as they don’t make it unprofitable.

    That’s the theory, certainly, but look at the UK gov’t’s steadfast refusal to do any such think with the global banking consortiums, which they even admit is down to the fact that the bans would simply relocate to a cheaper haven and carry on as usual. Which, typed like that, sounds like a summation of a very abusive relationship indeed…

    @Robert: never seen that one, but know it by repute (and there are some critics who afford it a place in the canon of British sf cinema). And I’d agree with you that technology can’t be stopped (indeed, trying to stop its advance would probably be catastrophic in many ways), but I’d feel a lot more reassured if the folk in the civilisational driving seat were looking further ahead than the tip of the hood ornament, so to speak… 🙂

  4. Roy Pradhan says:

    @Paul Corporations can’t leave countries unless they cannot profitably operate there. Even if they are only making a few cents more from operating there than it costs them to operate there, they are obligated to their stockholders to continue operating there. So I’m not sure what this concern about corporations leaving is; they will outsource as much as they can anyway, because of their obligation to their stockholders to maximize profit.

    We have to start with teaching communities’ leaders/educators about mutual self-interest, about how we can benefit as a whole society by such changes.

    Hope and perseverance:

  5. Paul Raven says:

    @Roy: Oh, I understand the theory, certainly, and the lipservice paid to it. What worries me is that these systems are supposedly in place but seemingly never get used, which leaves us with two possible explanations: either the governments with their hands on the levers are scared to pull them (suggesting a dependence on or kowtowing to corporate power), or the levers simply don’t work when pulled. Whichever it is, we have a serious problem.

    But when it comes to mutual self-interest and community engagement, I think we’re on the same page. I hope you’ll stick around and continue to poke my ideas with sticks; that’s what I put them out here for, after all. 🙂