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Foxconn to Cut Workforce as Apple Expected to Announce Record-Breaking iPhone Sales [Updated]

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Foxconn Technology Group, Apple's main assembly partner for iPhones, today announced (via Reuters) major plans to reduce its workforce due to "declining revenue growth and rising wages in China." The announcement comes mere hours before Apple's financial earnings announcement for the first fiscal quarter of 2015, in which the company is expected to announce record iPhone sales.

foxconn_workers_2.jpg
The company doubled its labor costs in recent years following a few public scandals involving worker suicides and poor working conditions, while revenue growth has slowed. After a decade of steady increases following the explosion of popularity for smartphones and tablet devices, mostly thanks to the manufacturing of Apple products, Foxconn hasn't faced the issue of diminishing returns until now.
"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".

Revenue growth at the conglomerate tumbled to 1.3 percent in 2013 and only partially recovered to 6.5 percent last year after a long string of double-digit increases from 2003 to 2012.
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Today's news comes on the heels of reports indicating Apple likely sold more iPhones in China than the U.S. in the last quarter, and expectations the iPhone will have record sales coming off the launch of the iPhone 6 and 6 Plus.

Foxconn's job cuts have not been specifically tied to its Apple business, but Apple is a major customer and hiring patterns do generally follow the iPhone product cycle, which should begin to slow a bit follow the rush of customers upgrading to the new models in the early months of availability. Foxconn is also reported to be increasing investments in Apple-related areas, including building a $2.6 billion display plant and perhaps working on sapphire displays for Apple products.

Update 7:48 AM: Foxconn has issued a statement calling the claims of workforce reductions "completely inaccurate", but noting it will slow its hiring in the coming years as it increases automation.
Foxconn wishes to clarify that a media report that alleges that our company is reducing its workforce is completely inaccurate and totally without foundation. We continue to recruit employees to support our business and operations globally and we continue to maintain a workforce of over one million employees worldwide. As we have long said, Foxconn is investing in the automation of many of the manufacturing tasks associated with our operations, applying robotic engineering and other innovative manufacturing technologies to enable our employees to focus on high value-added elements in the manufacturing process. As we continue to increase the application of automation in our operations, the magnitude of our employee recruitment is expected to decrease in the years ahead, but we have no plans to reduce our workforce numbers now or anytime in the future. In addition, our company is confident that we will continue to achieve sustained business growth in the years to come.
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Article Link: Foxconn to Cut Workforce as Apple Expected to Announce Record-Breaking iPhone Sales [Updated]
 
Article Link
https://www.macrumors.com/2015/01/27/foxconn-job-cuts/
Job cuts could be because of increased usage of robotics and automation, or better efficiency. It might have nothing to do with factory output or iPhone sales. It might have nothing to do with Apple itself - Apple isn't the only vendor who uses FoxConn.

So, basically this is an article meant to 'imply' something about Apple (less iPhones being produced) even though it might have nothing at all to do with Apple. Maybe this article is meant to get some people to sell their stock before Apple's sales announcement, so others can get in at a lower cost to make more money after the announcement increases the stock price?
 
JaySoul said:
Just wait until the robots take over even more jobs.
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bbeagle said:
Job cuts could be because of increased usage of robotics and automation, or better efficiency. It might have nothing to do with factory output or iPhone sales. It might have nothing to do with Apple itself - Apple isn't the only vendor who uses FoxConn.

So, basically this is an article meant to 'imply' something about Apple (less iPhones being produced) even though it might have nothing at all to do with Apple. Maybe this article is meant to get some people to sell their stock before Apple's sales announcement, so others can get in at a lower cost to make more money after the announcement increases the stock price?
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Agreed. The key issue is that now they are paying their workers more per hour and limiting how many hours they can work. This has increased their labor cost and at some point robotics start to make sense. There are a lot of tasks that could possibly be replaced by robots but only when the cost of purchasing and maintaining them is lower than getting an employee, training them and then paying wages and benefits.

In addition, I also agree that there could be gains in the process efficiencies that require less labor.
 
It's good to see that FoxConn will be using layoffs to reduce their workforce instead of what has happened in the past with attrition by suicide.
 
Bring on the robots. Don't see the difference between them as those workers allowed obviously damaged iPhone 5 units full of nicks and scratches to make their way into retail boxes.
 
TWSS37 said:
It's good to see that FoxConn will be using layoffs to reduce their workforce instead of what has happened in the past with attrition by suicide.
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I always viewed the suicides with some level of skepticism, I.E. blown out of proportion.

Not to say the working conditions are great, but the average suicide rate on a college campus in the US is higher than Foxconn's.

(17 deaths per 1 million workers, foxconn - "That 17 people have committed suicide at Foxconn is a tragedy. But in fact, the suicide rate at Foxconn’s Shenzhen plant remains below national averages for both rural and urban China" http://www.wired.com/2011/02/ff_joelinchina/all/)

US college suicide rate 7 per 100,000 population. (http://www.sprc.org/sites/sprc.org/files/library/SuicideAmongCollegeStudentsInUS.pdf)
 
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chirpie said:
I always viewed the suicides with some level of skepticism, I.E. blown out of proportion.

Not to say the working conditions are great, but the average suicide rate on a college campus in the US is higher than Foxconn's.

(17 deaths per 1 million workers, foxconn - "That 17 people have committed suicide at Foxconn is a tragedy. But in fact, the suicide rate at Foxconn’s Shenzhen plant remains below national averages for both rural and urban China" http://www.wired.com/2011/02/ff_joelinchina/all/)

US college suicide rate 7 per 100,000 population. (http://www.sprc.org/sites/sprc.org/files/library/SuicideAmongCollegeStudentsInUS.pdf)
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Understood, just going by what was cited in the article in regards to worker suicides.
 
TWSS37 said:
Understood, just going by what was cited in the article in regards to worker suicides.
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Seriously?!?! Please cite the place in the article where Foxconn is reducing employees with suicides as a policy. Are you freaking for real?!?!?!
 
People in the US continue to naively think that working conditions, benefits and wages can increase for a workforce without any impact. It was inevitable that as wages increased, fewer workers could be sustained. And when wages get high enough, automation becomes economically feasible.

I'm not saying that we should turn a blind eye while China operate sweatshops, but I'll bet those people who can't get a job at Foxconn now really appreciate all the Americans that pushed for better conditions and cost them a job.

Just like all the people at my University who got their hours cut back so that they wouldn't qualify for benefits under Obamacare, since as a state university, we literally don't have the money to give them benefits (not that most companies do either).
 
No plans until they do it ...

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The bigger problem is in accommodating so much temporary growth of manufacturing demand. A product that hasn't yet saturated the market (and people's desires for it) appears booming, but it's not perpetual. Shortages of product to sell slows purchases and income, but also requires less surplus workforce in the end when the inevitable slowdown happens. But we know sales are more important...

Hopefully they're not utterly insincere (like my prior comment suggests) and they do simply greatly reduce hiring, and train their current workers on different processes than what they originally were hired for. That way, when the automation is precise enough for Apple's demands, the robots don't displace the workers that used to hand assemble the product. There's always something to do. If a person can be trained in different tasks, they can keep being employed. Companies generally don't like spending money to make money, though.
 
TWSS37 said:
It's good to see that FoxConn will be using layoffs to reduce their workforce instead of what has happened in the past with attrition by suicide.
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They still suicide and suffer attrition but now it's due to unemployment and does not count as Foxconn problem.

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"... Foxconn's job cuts have not been specifically tied to its Apple business ..."
 
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