Tuesday, October 2, 2012

Apple going Vertical with its Robot army

I found the session on robots and supply chain quite intriguing and I immediately started surfing the net to analyze the current market of robots in supply chain. One of the most significant findings was Foxconn’s  goal of adding 1 million robots to its manufacturing workforce.
Refer to a quote in Time magazine:
the company recently announced it was building a $223 million “robot kingdom” in the Central Taiwan Science Park in the Taiwanese city of Taichung. The research and development center and manufacturing hub is part of chairman Terry Gou’s ambitious plan to build one million industrial robots [1].”
As per ‘Focus Taiwan’
“Foxconn is building a quarter billion dollar ($223m) robot R&D center [4].
To put this number in perspective, there would be approximately 1.3 million robots by 2014 and Foxconn alone aims to double this number to 2.3 million robots. Foxconn, for youreference, is a is a Taiwanese multinational electronics manufacturing company [2]. It manufactures products like iPhone, iPad, Playstation, Xbox, Kindle etc.
So why is Foxconn investing heavily in “robot kingdom” when it currently deploys cheap labor in China for the same job. The reason are the same as we studied in the article “Time to rethink offshoring”. The labor costs are rising in China. Also, there is labor shortage expected in China in future because of poor working conditions.
This ties in perfectly with Apple’s long term strategic plan of going Vertical. As per report in ‘Seeking Alpha’, Apple is about to become world’s biggest buyers in industrial robots [3].  Apple plans to buy computerized machine tools and robots from companies like Fanuc and deploy in the plants of its leading manufacturers such as Hon Hai and Foxconn. Since, Apple will own the robots deployed in this manufacturing facilities, they cannot be used for other companies’ products. Therefore giving Apple a competitive advantage, much like Amazon’s acquisition of Kiva, as discussed in class. 
Also, Apple iPhone’s display glass manufacturer, Corning, already uses robots for a host of its manufacturing processes.

With robots taking over the manufacturing, what will the skilled labor do for employement?

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