Hon Hai Precision, the parent of Hong Kong-listed Foxconn International Holdings, is cutting its workforce amid the sharp fall in global demand for electronic products due to the financial crisis, chairman Terry Guo said at the weekend. Rumours have been circulating for a long time that the company may make massive cuts in its workforce in its production base in Guangdong as the firm is moving part of its capacity to Shanxi and Hebei to avoid rising labour costs in the southern province. Hon Hai is the world's largest electronic manufacturing service provider and helps to make products such as Apple's iPhone and iPod. Foxconn focuses on the production of mobile phones for customers including Nokia and Motorola. Mr Guo said in Taipei that the worst of the economic downturn was yet to come. He added the company was undergoing a global manpower adjustment to deal with the poor market sentiment. 'Our manpower adjustment will have three parts,' he said. 'First, we will not fill any vacancies that arise; these account for 3 per cent to 5 per cent of our workforce. 'Second, each department will lay off 10 per cent of its workforce. For Hon Hai, we have about 650,000 employees around the world. That will translate to about 50,000 employees losing their jobs.' The third part would be the redeployment of several professional staff within the group, Mr Guo said. Hon Hai is estimated to have 400,000 employees on the mainland, which accounts for 67 per cent of the group's global labour force. Half of Hon Hai's mainland labour force is in factories in Guangdong, including Shenzhen and Dongguan. With the introduction of a minimum wage under the new labour law in January this year, Hon Hai moved its production lines to Shanxi and Hebei provinces in the north to lower cost. 'The minimum wage in Shenzhen is one of the highest in China. Foxconn's move was followed by other electronic firms, such as BYD,' an industry watcher said last week. Foxconn's action was interpreted as a massive lay-off in Guangdong. However, analysts said the new plants in the northern region might take on more workers for the new production lines. Foxconn's chairman, Samuel Chan Wai-leung, said earlier this year the minimum wage in Shanxi and Hebei was 60 per cent lower than in Shenzhen.