TechEye: Pegatron boosts automation to ease losses

China Labour Bulletin is quoted in the following article. Copyright remains with the original publisher.

28 October 2011
By Matthew Finnegan in London

Pegatron, worried about higher worker costs and suffering sales, has announced it will be increasing automation at its plants.

Taiwan-based design manufacturer Pegatron announced net losses of $29.8 million after its shipments of notebooks, netbooks and tablets dropped this year. It is expected that such shipments will decrease 10-15 percent in the fourth quarter, while motherboards and desktops will drop by 15-20 percent.

Pegatron expects that it will see next year’s round of notebook shipments increase by 30 percent from what an estimated 14.5-15.5 million units in 2011.

With the addition of Japan-based clients, Pegatron expects 2012 shipments of notebooks to increase about 30 percent from an estimated 14.5-15.5 million units in 2011.

Pegatron was recently awarded a huge contract with Apple to put together the iPhone 4S and potentially the iPad 3.

According to Digitimes the company’s CEO Jason Cheng noted that it has to ramp up production at its Chinese Chongqing City plant. The way Pegatron feels it has to minimise production costs is through increased automation.

Rivals have had to increase automisation too, with Foxconn notably saving a few workers from suicide by replacing them with machines.

With manufacturers worried about demands for higher wages, which have in turn led to civil unrest from workers, it seems that, like booming Japan in the eighties, automation will continue to increase.

“It certainly is a trend that has been going on, and we are seeing increased automation in various sectors over the past five years,” said Geoffrey Crothall, a spokesperson for China Labour Bulletin.

However, he doesn’t think this will add to growing anger in the country's workforce.

“Mass lay-offs would of course be negative, but we are not seeing many yet. In fact there is still a labour shortage," Crothall said. "Manufacturers are actually struggling to recruit.”

According to Crothall, there is an upside: “The positive side is that automation can get rid of labour intensive low paid jobs, creating jobs which require higher skill levels from workers.”
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