It seems that the giant IT assembler Foxconn is seeking an alternative to paying its workers more (as discussed on this earlier thread). They’re planning to automate more, using industrial robots to replace much of the work currently done manually.
The use of robotics in manufacturing is hardly news; industrial robots have been around since the 1970s, and are routinely used in electronics manufacturing (as you can see in this rather hypnotic video). In many industries, the pittance paid to Chinese workers changed the balance between automating processes and manual labour; it was cheaper to pay a Chinese person than use a Japanese-built robot (Japan remains the center of the world’s robotics industry). It seems that, at least for Foxconn, the increased wages they need to pay Chinese workers are tilting the balance back.
Which is very interesting, because robots are going to cost much the same to operate pretty much anywhere in the world. The cost advantages of manufacturing in China must, therefore, be diminishing significantly.
Which matches another anecdote I read recently. The bicycle industry, except for the most bespoke high-end componentry, is dominated by goods manufactured in China and Taiwan. The mail is that prices for Chinese-made components are rising – significantly. Much more than can be explained by the appreciation of the Chinese currency. One wheel builder on one of the cycling forums I read mentioned that he was switching back to US-made componentry for his wheels – the price premiums for US-made are nothing like they once were.
The colossus that is Chinese manufacturing isn’t going away any time soon – not least, to serve its ever-growing domestic customer base. But assumptions on the future of manufacturing around the world -including Australia – may need rethinking, yet again.