Over the past year, Foxconn has been making the news for, among other things, its reported plans to replace a percentage of its factory workers with up to one million robots. Meanwhile, in a Drachten, Netherlands, factory, scores of robots toil away, building electric razors for Philips Electronics, using about one-tenth the number of workers at an otherwise similar factory in Zhuhai, China.

For many reasons, robots evoke scary thoughts for the common worker. Get beyond the Armaggedon-esque headlines (“Robots Steal Jobs”), and the potential for even greater achievement emerges. As we’ve been discussing the past few months, the opportunities to migrate to lower-cost regions are diminishing by the day. Those regions that offer roughly $1 a day labor and an ample supply of workers are down to Pakistan, Indonesia and most of Africa, locales in which the requisite security and infrastructure are in demonstrably short supply. OEMs and EMS companies simply cannot continue to chase cheap labor as a means to drive cost from the end-product.

Yet, to continue to provide lower cost goods to consumers – be they consumer or commercial – the value of labor content must continue to drop. Fortunately, the technology exists to replace operators with smart robots: programmable automated devices that require little maintenance, no wages and which never go on strike.

This isn’t some utopian dream. Jim Raby, for whom the CIRCUITS ASSEMBLY Hall of Fame is named, conceived and developed a “lights out” factory in the mid 1980s. More recently, Gary Freedman, a longtime H-P engineer, has noted the excessive number of touches in assembly, adding that the automation “already exists” to shed the line workers. (We will be hearing more on that subject in the coming months.)

Some industries – automotive, for instance – are well on their way to adopting such concepts. According to a New York Times article in August, automaker Tesla’s robots can build up to 83 cars a day, the equivalent of 20,000 vehicles a year. On a much larger scale, Hyundai and Beijing Motors have built a joint venture factory in China with an annual robot-automated capacity of one million vehicles.

To be sure, automation will bring about changes in the way a factory is staffed. It will require new knowledge, as the emphasis will shift from manual tasks and visual checks to programming and maintenance. But fewer workers will be needed, and that’s crucial both to higher cost regions that want to stay relevant in product design and manufacturing and to all those consumers who want prices to stay low – or get even lower.

This ties into the theme – some might say the alarm – we’ve been sounding the past couple issues. In case you missed it, the point is that change is coming to the supply chain, and it’s time OEMs start preparing for the shift.

And as if to underscore our point, lo and behold, additional disruptions, as most of India lost power for a few days at the end of July and thousands of workers struck in Jakarta over – what else? – wages. Given the increasing frequency of disruptions both environmental (Iceland’s volcano, Japan’s earthquake, Thailand’s flood) and manmade (power outages and labor strikes in India and China), there’s much to be concerned about insofar as supply chain reliability. For many products, the window is too narrow for OEMs to risk missing deliveries. Relying on tens of thousands of low-paid workers doesn’t seem a surefire long-term business model, either.

The potential rewards to automate have heretofore never been greater for electronics manufacturers, especially those in the West. We expect to read and hear much more on this in the coming year, hopefully sans the breathless disaster-in-waiting hype.

EMS moves. As we went to press, Reuters was reporting Hon Hai (Foxconn) is seeking to raise its stake in Sharp to about 20%, from a previously agreed 9.9%. As we noted in this space last month, EMS companies never sit still. This should serve as a wakeup call to all OEMs that want to remain relevant in the future.

Improvement by design. PCB West, our annual design and assembly trade show, takes place at the Santa Clara Convention Center Sept. 25-27. The show floor is sold out, and the technical conference has never been better. There’s even a full day of free sessions. Register now at PCBWest.com.

P.S. I’m speaking Sept. 18 at the Restronics NE all-day seminar in Boxboro, MA. Contact Mike Connolly at ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) for details. Besides PCB West, the PCD&F/CIRCUITS ASSEMBLY team will be at SMTA International in Orlando in October. And see senior editor Chelsey Drysdale at Zuken Innovation World in Newport Beach, CA, also in October.