• Thursday, October 08, 2015

Foxconn recruitment spree shows automation plan setback

Staff Reporter 2014-07-07 16:17 (GMT+8)
Jobseekers outside Foxconn's recruitment center in Shenzhen, February 2012. (Photo/CFP)

Jobseekers outside Foxconn's recruitment center in Shenzhen, February 2012. (Photo/CFP)

Foxconn Technology Group is reportedly planning to recruit 100,000 workers in mainland China for the production of Apple's iPhone 6.

The Taiwan-headquartered manufacturer declined to comment on related media reports, but said that its plants in mainland China will continue to hire new workers based on the different production cycle for its various clients, Shanghai's China Business News reported.

However, for Foxconn, which employs nearly 1 million workers in mainland China, launching large-scale recruitment shows that it still relies heavily on OEM production as nearly half of its income is generated from assembling devices for Apple.

In 2013, Foxconn's parent company Hon Hai Precision Industry reported revenue of NT$3.95 trillion (US$131.1 billion), with its OEM business for Apple accounting for at least 40%.

The sizeable hiring for the production line also indicates that the company's project to step up automation at its plants, which was initiated three years ago, has not gone as smoothly as anticipated.

Foxconn chairman Terry Gou announced in 2011 that the company planned to manufacture 300,000 robots at a rate of 1,000 units a day and hoped to have 1 million robotic arms in 2014 for the benefit of the first batch of fully automated factories in five to ten years.

A vendor supplying equipment for automated production said that technically it is not a major problem for Foxconn to replace human workers with robots. However, using robots on the production line is only cost-effective for making homogeneous products and cuts cannot realistically be made in making mobile phones and tablet devices which have a more complicated manufacturing process, the vendor stated.

"The labor-intensive industry, such as OEM, can no longer sustain the company's growth," Gou said at a shareholder meeting on June 25. He further said that the company has been seeking a transformation of its business model in the past few years, which is expected to be crucial for Foxconn's continued growth in the next decade.

However, Foxconn's transformation has been slow and the group has suffered a number of setbacks. Last month, Foxconn subsidiary Pan International Industry sold a 48.01% stake in SMS Marketing, which operates electronics retail unit CyberMart, indicating that Foxconn's strategy of expanding its retail channels had fallen flat.

Gou did not deny his company's setbacks in the transition period, but said the learning experience of failure was cheaper than directly buying out firms that have achieved success.

A former Foxconn executive who is close to Gou revealed the company now plans to make use of its patent claims to drive profits. Figures from New York-based consulting firm EnvisionIP showed that Foxconn was on the top-20 list of US patent holders in 2013.

Who`s who »
Chen Miner (陳敏爾)

Chen Miner is the Communist Party secretary of Guizhou province. Born: 1960 Birthplace: Zhuji, Zhejiang province Country of Citizenship: China Profession: Politician Education: MA in Law, ...