iPhone, Foxconn and Robotics – The Unemployed

On May 24, 2016 Foxconn, who is located in China and manufactures the iPhones for Apple announced that it was replacing 60,000 workers with robots. This all done to improve profits. I would have to assume this was being done for Apple’s bottom line as well. That’s 60,000 people who now have no income and can not purchase anything let alone an iPhone.

From a BBC article …

One factory has “reduced employee strength from 110,000 to 50,000 thanks to the introduction of robots”, a government official told the South China Morning Post.

Xu Yulian, head of publicity for the Kunshan region, added: “More companies are likely to follow suit.”

China is investing heavily in a robot workforce.

In a statement to the BBC, Foxconn Technology Group confirmed that it was automating “many of the manufacturing tasks associated with our operations” but denied that it meant long-term job losses.

Really? So if they’re not long term job losses, why are the 60,000 workers now unemployed, replaced by robots? I’m no economist but unemployed usually means no job or income right?

And if you thought this robot issue was only happening in China, think again. The Pacific Ocean isn’t as wide as you might have thought it was. The trend doesn’t stop there.

From a FoxConn Business post …

Former McDonald’s CEO Ed Rensi was interviewed on Fox Business Network’s Mornings with Maria on Tuesday, and during the interview, he reportedly warned that an increase in the minimum wage paid to workers in the fast food industry could lead to massive job loss.
“It’s cheaper to buy a $35,000 robotic arm than it is to hire an employee who’s inefficient making $15 an hour bagging French fries – it’s nonsense and it’s very destructive and it’s inflationary and it’s going to cause a job loss across this country like you’re not going to believe,” Rensi said.

You want fries with that? Wait for the robot arm to pass it out to you in the drive-through.

And don’t try to tell me that a possible $15 per hour minimum caused this. The idea of a robot workforce was already in the works long before the minimum wage was an issue. Big corporations don’t decide this kind of stuff overnight. It was in their long term strategy. Profits first right?

Minimum wage is a nescessity that was brought about by the corporate entities wanting to pay less to the worker in order to increase profits. So now the next step is to eliminate workers and buy robots to do the same work for less.

McDonald’s in Canada where I live changed their order counter full of happy teenagers to a big touch screen TV ordering system so you could order your food from it and pay for it as well. No person needed at the counter other than a chashier if you opted to pay by cash. They even had the audacity to have a kid go through the line like a Walmart greeter to see if you placed your order right. I was not in least impressed.

I went to McDonald’s after the change and ordered a McMuffin, coffee and a hash brown. I had to wait in the store line for 20 minutes for it. All of them were cold when I finally got them and I’ve never been back since. Not even the drive through.

If McDonald’s tried hard enough they could probably make a vending machine smaller than their buildings. I’m sure that’s in their long term sights. McDonald’s vending machines in a mall corridor.

Sorry McDonalds. You lost me as a customer. I happen to like human interaction. The type of interaction I get from a real restaurant with real people serving me. I’m more than happy to spend more for that experience. Guess the thought of people wanting interactivity with a real person must have escaped you? Or is it just the bottom line?

Now to be fair, I’ve heard a lot of pros and cons to this issue of robots taking over. From making goods cheaper to freeing up time for people to do other things. But to be honest, I only see one outcome. And it isn’t pretty.

As more robots displace workers and produce the goods that we need the less of a reason we need workers at all. All of this done to increase the bottom line and make all companies that use robotics more profitable right? Well that might be the goal but there’s another side to this. One I think the corporations are not seeing.

I’d like to counter with this thought. As we increase the use of robotics to displace workers, we also displace the income they make to the point that no matter how cheap the product becomes, no one can afford it.

Capitalism isn’t a one sided coin. It takes two to tango in order for capitalism to work. You can’t make profit from people that have no money to spend. No matter how cheap that product gets.

Seems like most businesses don’t understand the symbiotic nature of capitalism. Businesses need people to buy products. People need income in order to do so. Once you unbalance that relationship, the marriage falls apart for both players. And with the way things are playing out, I foresee a rather unpleasant divorce in the not too distant future.

Looking back at history, Henry Ford was a visionary. He voluntarily increased the pay for his workforce so they could buy his Model-T cars. And he moved his workers to the unheard of at the time 8 hour work day. That meant they had extra income to spend at stores and on other goods and the time to spend it. This transferred the wealth around. It wasn’t long before everyone was able to buy cars and he was making a huge profit as well. Henry understood the symbiotic relationship between consumers and manufacturers. He wasn’t ahead of his time. He just understood basic economics. It’s unfortunate but it would seem that lesson has been lost on today’s businesses.

Profit first, regardless of the long term effects. A yearly dividend without considering the long term losses. But as technology changes, and the savings the corporations think they will have using technology, the losses will slowly mount.

You can not grow forever without something to feed you. In the natural world predators leave something behind after every kill so others can feed and grow from it and become the food for their next meal. Both the predator and their prey benefit. It would seem businesses today do not understand this basic concept.

Their greed will be their final self inflicted death blow.

Most importantly one must understand that businesses do not create jobs. It’s the people with disposable income that buy products and create a demand for those products that create jobs. No tax breaks will work. No company will hire more people than they need just because of a tax break because it just becomes free profits. The trickle down economy was a facade and robots will not solve the problem.

This will only expedite the end result of less workers and no income. We need more workers with enough income to support purchasing the products we make. Without demand to make more product, no business will ever create a job or survive with or without a tax break. Period.

I’m sure I could buy a robot to make a pancake or flip a burger. But if there’s no one around that can afford to buy what the robot makes, what’s the point?

There’s your future.


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