Low labor costs and a growing reliance on automation will ensure Apple supplier Foxconn’s newly announced efforts to reduce overtime for its employees and hire extra workers has no effect on product prices, analysts have told the “IDG News Service” (http://macte.ch/lRYqh).
Foxconn, which manufactures iPhones and iPads for Apple, will restrict workers’ overtime to 36 hours a month by July 2013, bringing it down from the allowed 80 hours per month, according to an audit released by the Fair Labor Association on Thursday. The policy change means the company will need to hire more workers to make up for the lost hours.
However, labor costs in China only a make up a small fraction of a product’s total cost, Helen Chiang, an analyst with research firm IDC, told the “IDG News Service.” In the case of a personal computer, the labor cost will only amount to three to four percent of its price, she said.
Foxconn is also expanding its factory base into central and western China, where worker wages are lower. This should bring down Foxconn’s labor costs by 20-30%, Chiang told the “IDG News Service.”
What’s more, Foxconn plans to build robots for use in its manufacturing processes. This will reduce labor costs over the long term, Amy Teng, an analyst with Gartner research firm, told the “IDG News Service.”