Apple supplier Foxconn is expected to cut its massive workforce due to declining revenue growth and rising wages in China, reports Reuters. During peak production times the company employs around 1.3 million people.
Special assistant to the chairman and group spokesman Louis Woo did not specify a timeframe or target for the reduction, but noted that labor costs had more than doubled since 2010, when the company faced intense media scrutiny following a spate of worker suicides.
"We've basically stabilized (our workforce) in the last three years," Woo said. When asked if the company plans to reduce overall headcount, he responded "yes".
Foxconn's revenue growth dropped to 1.3% in 2013 and and reached just 6.5% last year following double digit growth from 2003-2012. This is partially due to falling growth growth and prices for the gadget it produces. For example, growth in smartphone sales is expected to half this year from 26% in 2014. PC sales are expected to contract by 3% and smartphone prices are expected to drop 19% in the next three years.
"Even if technology is improving, the price will still come down," Woo said. "We've come to accept that, our customers have come to accept that."
To control costs long term, Foxconn is investing in robotics. However, recent reports have suggested that Foxconn's robots, the ones planned for use in assembling iPhones, are not precise enough to meet Apple's standards.
Foxconn reportedly has plans to deploy at least 10,000 Foxbots per Foxconn factory, and each robot will cost 20,000 to 25,000 U.S. dollars.
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Special assistant to the chairman and group spokesman Louis Woo did not specify a timeframe or target for the reduction, but noted that labor costs had more than doubled since 2010, when the company faced intense media scrutiny following a spate of worker suicides.
"We've basically stabilized (our workforce) in the last three years," Woo said. When asked if the company plans to reduce overall headcount, he responded "yes".
Foxconn's revenue growth dropped to 1.3% in 2013 and and reached just 6.5% last year following double digit growth from 2003-2012. This is partially due to falling growth growth and prices for the gadget it produces. For example, growth in smartphone sales is expected to half this year from 26% in 2014. PC sales are expected to contract by 3% and smartphone prices are expected to drop 19% in the next three years.
"Even if technology is improving, the price will still come down," Woo said. "We've come to accept that, our customers have come to accept that."
To control costs long term, Foxconn is investing in robotics. However, recent reports have suggested that Foxconn's robots, the ones planned for use in assembling iPhones, are not precise enough to meet Apple's standards.
Foxconn reportedly has plans to deploy at least 10,000 Foxbots per Foxconn factory, and each robot will cost 20,000 to 25,000 U.S. dollars.
Read More