January 28, 2015 / 2:38 AM / 4 years ago

Apple supplier Foxconn seeks to slim workforce over time, eyes robotics

SHENZHEN, China (Reuters) - Taiwan’s Foxconn Technology Group, the world’s largest contract electronics manufacturer, would like to slim its massive workforce with the help of automation, and for now will work on stabilising its headcount, the company told Reuters.

Employees work inside a Foxconn factory in the township of Longhua in the southern Guangdong province in this May 26, 2010 file photo. REUTERS/Bobby Yip

Under its flagship unit Hon Hai Precision Industry Co Ltd (2317.TW), the group currently employs about 1.3 million people during peak production times, making it one of the largest private employers in the world. As a key Apple Inc (AAPL.O) supplier, the company has had a solid run in recent years, but faces declining revenue growth and rising wages in China.

Special assistant to the chairman and group spokesman Louis Woo did not specify a timeframe or target for any reduction in headcount, but noted that labour costs had more than doubled since 2010, when the company faced intense media scrutiny following a spate of worker suicides.

“We’ve basically stabilised (our workforce) in the last three years,” Woo said. “We would like to stabilise our employee headcount no matter how fast we are growing in the future.”

When asked if the company seeks to reduce overall headcount, Woo said it would be done over time as a goal and that the company had internal targets, but he could not disclose figures.

“It depends how successful we are in terms of introducing the process automation and also the robotics,” Woo said.

Hon Hai said later it would maintain its employee count at more than a million worldwide but would “decrease the magnitude of our hiring in the coming years”. There are no immediate plans for reducing staff, it said.

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.

That decade saw the firm ride an explosion of popularity in PCs, smartphones and tablets, largely driven by its main client Apple, but now it is feeling the effects of falling growth and prices in the gadget markets it supplies, a trend that is expected to continue.

Growth in smartphone sales will halve this year from 26 percent in 2014, according to researcher IDC, while PC sales will contract by 3 percent.

Similarly, the average smartphone will sell for 19 percent less in 2018 than last year’s $297.

“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.”

Automation will be key to keeping labour costs under control in the long-term, Woo said, as the company pushes to have robotic arms complete mundane tasks currently done by workers.

But Woo noted that company chairman Terry Gou’s previously stated goal of 1 million robots was “a generic concept” rather than a firm target.

Editing by Will Waterman

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