Archive for Layoffs

RB | August 23, 2011
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Foxconn Replacing 1 Million Humans with Robots

GreedI recently noted from the Bach Seat that the manufacturer all things digital,  Foxconn was moving production to Brazil from China because of rampant wage inflation. Now it seems that the Taiwanese technology giant has decided that to drop people from production altogether.

Foxconn workersTechEye reports that Terry Gou, founder and chairman of Foxconn (2038), told Xinhuanet that the firm will replace up to 1 million people with robots over the next three years. Mr. Gou told Xinhuanet that Foxconn now has 10,000 robots and the number will be increased to 300,000 next year and 1 million in three years. The manufacturer now has over 1.2 million employees with one million of them based in China.

Mr. Gou told Xinhuanet the robots will replace humans who do simple and routine work such as spraying, welding and assembling of products for firms such as Apple (AAPL), HP (HPQ), Cisco (CSCO), Dell (DELL), ASUS (2357), Intel (INTC), Microsoft (MSFT), Nintendo (7978) and Sony (SNE).

Foxconn needs to automate more of its manufacturing processes in order to make up for labor shortages and stay ahead of its competitors, said Amy Teng, an analyst with research firm Gartner (IT), told PCWorld.

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Mr. Gou told employees that he wanted to move the company’s workers “higher up the value chain, beyond basic manufacturing work,” according to a company statement cited by PCWorld.

While no one will deny that robots are efficient and they also don’t commit suicide due to harsh working conditions. But as we painfully know here in Detroit, robots create job losses, thus generating unintended consequences throughout the world economy.What could be the unintended consequences of 1 million unemployed Foxconn worker in the Peoples Republic of China?

If political leaders like former Gateway Computers CEO and Michigan Governor Dick Snyder and President Obama were truly interested in creating jobs in Michigan, they would be welcoming this announcement and pushing hard for Foxconn to build its robot factory in Detroit, where land is cheap and skilled robotics technicians cast off by the auto-makers can tend to the Foxconn robots.

iPad4, made in Detroit

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Category: China, Layoffs, Out-sourcing | Tags: , , , , , , ,
RB | July 21, 2011
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Cisco to Cut 11,500 Workers

Cisco‘s (CSCO) two consecutive under-performing quarters finally prompted CEO John Chambers to take action. One of the first actions Cisco will undertake during reorganization is to sell a set-top box manufacturing plant in Juarez, Mexico. FierceEnterpriseCommunications reports that Cisco will sell the plant to Foxconn Technology Group, The plant has about 5,000 workers who likely will remain as employees of Terry Gou according to FierceEnterpriseCommunications.

CiscoIn addition the embattled CEO vowed $1 billion in cuts this year to Cisco’s expenses. Mr. Chambers announced plans to cut its workforce by 11,500. Cisco said about 975, or 15 percent, would be executives with job titles of vice president or above. A Cisco spokesperson said the employee reductions announced would be enough to reach the $1 billion cost-cutting target Chambers set in May.

FoxconnGleacher & Co. analyst Brian Marshall told FierceEnterpriseCommunications that the staff reductions were a good first step for Cisco, but he added that the remaining questions, e.g. how Cisco would fix the top line and drive revenue growth and product innovations, need answers.

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I wrote about Foxxcom’s expansion into the America’s here. This also looks like another step in the de-consumerization of the Cisco product line.

Category: Layoffs, Recession | Tags: , ,
RB | August 5, 2010
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Wall Street Up Jobs Down

The Economic Policy Institute (EPI) recently pointed out that while Wall Street  has already made up all of the profits lost in the depression, recession,economic slump, the job market remains stalled. The country’s labor market still has far fewer jobs than it did at the start of the recession in December 2007.

The chart from EPI shows trends in both corporate profits (both privately and publicly owned) and employment since the start of the recession. The chart indexes both to 100 at the start of the recession so the lines show how far profits and employment have recovered. Although corporate profits suffered in the early part of the recession, they have been steadily growing for more than a year and are now 5.7% greater than they were at the start of the recession.

Category: Layoffs, Politics |
RB | February 24, 2010
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Recession Over??

Federal Reserve Chairman Ben Bernanke told us in September 2009 that the recession was “very likely over.” Mark Zandi, chief economist at Moody’s Analytics, told CBS News on 01-30-10  “The Great Recession is over.” UPS CEO Scott Davis told the Atlanta Constitution Journal on 02-03-10 that the recession is over. So to celebrate UPS is going to cut 1,800 positions.

Andrew Bartels, a Forrester vice president and principal analyst, declared the tech recession over on 01-12-10. Despite these prognostications by pundits and politicians, global tech layoffs have soared to over 613,00 since the bottom fell out of the world economy in October 2008.  Layoffs in January 2010 reached nearly 37,000, a monthly magnitude total not seen since May 2009. The telecom firms lead the layoff  count in January 2010 with Verizon, Sprint and ATT accounting for nearly 65% of this month’s announced layoffs.

Tech Layoffs

The overall trend for the last 8 months has been upwards, hardly an indicator that the recession is over.

Category: Layoffs, Recession | Tags:
RB | August 11, 2009
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No Job Growth for 10 Years

recessionThe New York Times is reporting that for  the first time since the Depression, the American economy has added virtually no jobs in the private sector over a 10-year period. The total number of jobs has grown a bit, but that is only because of government hiring.

The NYT charts show the job performance from July 1999, through July of this year. For the decade, there was a net gain of 121,000 private sector jobs, according to the survey of employers conducted each month by the Bureau of Labor Statistics. In an economy with 109 million such jobs, that indicated an annual growth rate for the 10 years of 0.01 percent.

According to the NYT, until the current downturn, the long-term annual growth rate for private sector jobs had not dipped below 1 percent since the early 1960s. Most often, the rate was well above that.

NYT chart

NYT chart

Fortunately for me the NYT says the field of management and technical consulting leaped at an annual rate of 5 percent. But while designing computers and related equipment was a growth field, building them was a very different story, as the manufacturing shifted largely to Asia. The number of jobs making computer and electronic equipment in the United States fell at an annual rate of 4.4 percent, substantially more than the overall decline in manufacturing jobs, of 3.7 percent.

That was a better showing than that of the automakers, which shed jobs at a rate of 6.7 percent a year. By contrast, auto dealers cut jobs at a much slower rate of 1.3 percent a year, although that rate may accelerate later this year as General Motors and Chrysler dealerships are closed.

The total picture is of an economy that has changed in substantial ways over the decade. After the recession ends, job growth is likely to resume. But there is no indication that the secular trend toward a more service-oriented economy will reverse. and few expect that manufacturing will reverse its long decline as a major employer in the United States.

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Enough said

Category: Business, Layoffs | Tags: ,
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