New | Apple supplier Foxconn denies report it is cutting 1.3 million work force
Taiwanese electronics manufacturer and Apple supplier Foxconn Technology Group has denied reports that it plans to shrink its 1.3 million work force, one of the largest in the world.
“Foxconn wishes to clarify that a media report that alleges that our company is reducing its workforce is completely inaccurate and totally without foundation. We continue to recruit employees to support our business and operations globally and we continue to maintain a workforce of over one million employees worldwide,” a statement from the company said.
Reuters reported that special assistant to the chairman and group spokesman Louis Woo said “yes” when asked whether the firm planned to reduce overall headcount and Woo had noted labour costs more than doubled since 2010.
From 2010 through to 2012, the company was in the spotlight for a string of suicides linked to low pay and harsh working conditions which led the company to promise substantial pay rises.
One of the largest private employers globally, the group is staffed with about 1.3 million people during peak production times especially in the lead up to new iPhone launches by Apple, one of its major clients.
On Tuesday, Apple had reported record sales of 74.5 million iPhones in the fiscal first quarter ending December 27 due to its strong performance in the US and China markets. Revenue jumped to US$74.6 billion from $57.6 billion a year earlier.
Foxconn’s statement clarified that although recruitment was likely to decrease in the future with the rise of machine automation, it was not planning cutbacks on its workforce.
“As we have long said, Foxconn is investing in the automation of many of the manufacturing tasks associated with our operations, applying robotic engineering and other innovative manufacturing technologies to enable our employees to focus on high value-added elements in the manufacturing process. As we continue to increase the application of automation in our operations, the magnitude of our employee recruitment is expected to decrease in the years ahead, but we have no plans to reduce our workforce numbers now or anytime in the future.”
After enjoying double-digit increases in revenue from 2003 to 2012, growth fell to just 1.3 per cent in 2013 before partially recovering to 6.5 per cent last year. The firm is faced with the challenges of keeping costs down as smartphone prices drop.
“Even if technology is improving, the price will still come down,” Woo told Reuters. “We’ve come to accept that, our customers have come to accept that.”
Smartphone prices are forecast to drop from an average selling price of US$297 in 2014 to US$241 by 2018, research group International Data Corp said. Falling prices will pressure smartphone manufacturers to become more creative in product design and sales as markets become more saturated.
