Chinese Manufacturers Are Scrambling To Replace Workers With Robots As Wages Soar

Tepid wage growth has been frustrating Americans for years. But if trends in China’s manufacturing sector have any bearing on the US, there’s an upside to stagnant pay: Workers get to keep their jobs – for now, at least.

In China – where real wages have doubled in the past decade – the opposite is true: Manufacturers, squeezed by rising labor costs and a paucity of skilled workers, are fueling an unprecedented boon in the adoption of automated technologies to cut down on the number of workers needed on factory floors, according to the latest findings of the China Employer-Employee Survey.

Ironically, the Communist Party’s willingness to support unprofitable businesses is compounding problems for Chinese workers, as many manufacturers are barely profitable to begin with.

As Bloomberg explains, China is no longer the cheap labor haven it once was.

“Monthly manufacturing wages reached 4,126 yuan at the end of 2015, equal to those in Brazil but much higher than Mexico, Thailand, Malaysia, Vietnam, and India.

 

At the same time, many firms are relying on government subsidies, while barely eking out profits or even losing money, according to the study released June 20. “Time is running out fast for Chinese manufacturers to adapt,” says Albert Park, head of the survey’s international committee and a labor economist at The Hong Kong University of Science and Technology.

 

The study canvassed more than 1,200 companies and 11,300 workers in Guangdong, China’s biggest manufacturing province, and Hubei, a major industrial base in central China. Some 26 percent of workers left their jobs annually in Guangdong and that turnover rate was even higher for younger workers, about 37 percent for employees below 28."

In a viral video published back in April, the People’s Daily provided a glimpse into the rapidly approaching future of China's labor force: The video, also released by the SCMP, shows hundreds of round Hikvision robots, each roughly the size of a seat cushion, swiveling across the floor of the large warehouse in Hangzhou. A worker is seen feeding each robot with a package before the machines carry the parcels away to different areas around the sorting center. The robots sort more than 200,000 packages a day.


One factory owner explains to Bloomberg how he’s adding 40 robots to his workforce that will eventually allow him to reduce his human workforce by 25% or more.

As he marches through a gritty factory that makes baby strollers and wheels, Hu Chengpeng says finding workers is his number one challenge these days. Turnover at the facility in Hanchuan in Hubei province in central China is running at 20 percent, even while wages have been growing by double digits for his 400-plus workers every year. “Labor costs are getting just too high,” he said.

 

All of which explains why Hu, 34, is embracing China’s robotics revolution. He has added 40 new robots, each costing 40,000 yuan ($5,850), this year to replace dozens of workers tasked with cutting plastic molding. Eventually the factory will use a quarter fewer workers than today, without having to reduce annual production, he said. Hu also said he plans to shift more production away from making simple components and towards producing higher-margin branded strollers.”

Engineers are rushing to replicate even the most basic advantages that humans have over robots. In a video published by Bloomberg, employees at San Francisco-based Autodesk explain how they’re designing software to enable robots to “see” their surroundings. The engineers say it will ameliorate safety issues that have been a barrier to wider adoption. Soon, they say, robots and humans will be able to work in closer proximity.

Luckily, robots still have a ways to go before they can "think" like humans, too.

Comments

Endgame Napoleon Nexus789 Wed, 07/05/2017 - 05:25 Permalink

Not necessarily. If they do not lower the prices drastically, not just a few cents off on plastic items at big-box stores, they will not have any customers. Concurrently, the main expenses in life would also need to drop dramatically. I mean the cost of housing, food and transportation, not the cost of plastic strollers and other non-essential items. These are the only products that Americans saw any cost savings on by shipping millions of jobs to China and other foreign countries. All that did was to run a bunch of small, American merchants out of business, trying to compete with big-box stores, selling imports bought in bulk at huge volume discounts. The consumer got $5 off on a non-essential item in a country where the cost of living is far higher.

In reply to by Nexus789

PT Endgame Napoleon Wed, 07/05/2017 - 06:34 Permalink

Hey Tyler!  Think you can compete with 22 cents per kiloWatt hour electricity?  What does electricity cost in your city?  What does electricity cost in China?  (Dumb question to ask Tyler.  This whole website is about electricity.  But I think he knows what I mean.)Yes, yes, I cheated there.  I ignored start-up Capital costs, interest rates and maintenance.  Feel free to re-insert them at your leisure.  As always, PT says LET THE ROBOTS DO ALL THE WORK.  THAT WAS THE WHOLE IDEA.  Now you've got plenty of free time in which to figure out how to solve the new issues brought up by having robots PRODUCE everything. PT says the biggest problem will be dealing with vandals who want to destroy the labour-saving robots in order to bring "meaning" and "excitement" to their boring, useless lives. The second biggest problem will be people who insist on breeding faster than the robots can keep up with them.The third biggest problem will be the frustrated go-getters who will eternally be trying to acquire even more resources so they can produce even moar awesome resource-hogging machinery - eg a 16 MegaWatt Ferrari, or their own mobile 400 square metre house, or their own fighter jet etc.  PT will be one of those people.We can solve the first two problems by forcing those groups to do meaningless work all day just to keep the stupid idiots out of trouble.  The third group will have to go on rations unless they work for proportionately more.Obviously, that is a very rough outline and I can't be bothered adding any extra detail at the moment but I think we can agree that spending your life working your guts out trying to survive has been LITERALLY done to death (until the plebs actually die!) for the last several millenia and I, for one, would welcome the chance to experience a world where the robots produce too much stuff and then we have to figure out how to distribute it amongst a population of underserving unemployed for a change.  Let the robots do all the work.  That was the whole idea.  Stop pretending that people have to suffer when they have no jobs even though the robots built a bunch of stuff for free.  At the moment, there's still a little bit of work that needs to be done.  Share that shit around.  Stop underpaying the one slave and making him work 100 hours per week when obviously you could share the job amongst ten people working ten hours per week.  Let the surfie beach bums surf at the beach.  Embrace the robots and then figure out how to deal with the change.  Slavery has existed for thousands of years.  It just pisses people off and robs them of their ability to be creative.  We have the opportunity to try something different.  Use your brains and do it.

In reply to by Endgame Napoleon

PT PT Wed, 07/05/2017 - 06:44 Permalink

Alternatively, we could DECREASE our productivity so there is moar work that needs to be done and that will create moar jobs and the increased demand for labour will push up wages to the point where we can afford to buy moar stuff!!!!!!SEE HOW STUPID THE ALTERNATIVE IS!!!!!!!!!!!  Let the fucking robots do the work.  That was the whole idea.  Stop pretending people have to work their guts out and get nothing in return.  It's all a lie.  And if you don't believe it is a lie then I have three words:  One Child Policy.  We've got the information, we've got the technology.  Now either we have enough resources or we don't.If we don't have enough resources then we're fucked no matter what we do.  You can ignore the population problem until it solves itself for you - via famine, disease and war.  If we do have enough resources ... well, we got the robots, we got the IT.  Stop pretending people have to suffer.  We're not facing a robot problem.  We're facing a Human-Stupidity problem.

In reply to by PT

wally_12 PT Wed, 07/05/2017 - 07:33 Permalink

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Our kilowatt hour costs have risen from .06 to .13 cents per kilowatt hour. They have to  pay for the ridiculous windmill farms in central Michigan. DTE quickly tore down their giant coal generating plant in Marysville MI under the Obama administration incentives. Now, DTE "monitors" electric consumption with Smart meters and sends out notices to everyone I know saying you are exceeding consumption compared to your neighbors. They are lobbying legislature to base rates on consumption hours. Want to upgrade your A/C? New Federal regs require a "certified" technician to evaluate your house to determine how large a unit can be installed in your size house. (ACAA form)

In reply to by PT

DontWorry Déjà view Wed, 07/05/2017 - 06:21 Permalink

The problem since WW2 has been that productive capacity exceeded what people needed to buy.  Automation and factories could churn out way more goods than the population needed.  Madison avenue was invented to manufacture the demand in people to buy what they didnt need.  See 'century of the self' on vimeo.Now that problem is compounded by almost complete automation of production.  Productive capacity of manufacturing is growing and it doesn't need to employ people.  USA is 7th place in automation, and only a quarter as automated as South Korea, so we have a long way to go.  What does it mean if productive capacity is much more than needed, and people are no longer employed in production?  A few things come to mind:  Deflation in manufactured goods, because there is too much of it and not enough people to buy them.  Some of the manufacturers will go bankrucpt, and there will be a consolidation of the remainder until they get monopoly pricing power.  Growing influence of capitalists who own the means of production, and falling influence of workers, unions, etc.  Expect harsher working conditions to be accepted - longer hours, lower pay, fewer benefits. 

In reply to by Déjà view

PT DontWorry Wed, 07/05/2017 - 06:49 Permalink

You are correct, but see my rants above.  Why do the workers have to accept longer hours and less benefits when they operate robots THAT PRODUCE MORE!!!!!  If one robot does the job of ten, does not that mean we can either work one tenth as many hours or have ten times more crap? Ooooh, but free markets and hungry workers blah blah blah ...As I said, we do not face a robot problem.  We face a human stupidity problem.

In reply to by DontWorry

SHRAGS Iggby Wed, 07/05/2017 - 03:06 Permalink

Silicon Valley’s political endgame, summarized in 12 visuals5-Sentence SummaryThis is a visual table of contents for data-driven book about Silicon Valley’s political endgame: the path toward overhauling the Democratic Party and orienting our lives toward innovation.The central argument is that changes in the economy also change the political ideology in power; some personalities and value systems thrive in different occupations and industries. The growth of the knowledge economy has empowered an ancient, idealistic ideology that places an extreme faith in the power of information to solve the world’s problems.A growing demographic of highly-skilled college-educated liberals will transform government’s role to be about directly investing in citizens, funding them to become as entrepreneurial, civic, and healthy as possible.The ultimate goal is to make life as close to the college experience as possible: a life dedicated to research, exploration, and creativity, while automation ensures that everyone has enough food and leisure time to pursue their unique contribution to the world. The catch is, the serf's give up influence in return for the free shit:Economically, the technology industry exacerbates inequality between the rich and middle-class, but eradicates poverty by making essential goods freely accessible. Ultimately, this will trend toward a two-class society of extremely wealthy workaholics who create technologies that allow the rest of society to enjoy leisurely prosperity. The cost for this prosperity will be inequality of influence.  https://medium.com/the-ferenstein-wire/silicon-valley-s-political-endga…

In reply to by Iggby

Endgame Napoleon SHRAGS Wed, 07/05/2017 - 06:05 Permalink

The thing that contradicts their meritocracy idea is the cheap labor and the per-birth socialism that sustains it, driving wages down for the native-born citizens. There is nothing meritorious about it, although a few individuals do quality work, here and there, within that socialism-per-child-produced system that enables mass waves of immigrants to cover the cost of their major household bills via US taxpayers, while the middle class in the West erodes, more with each decade that technology advances.

The programmers no doubt work hard, but the dual, high-earner households in the top 20%, in general, are on an astounding number of excused babyvacations despite their enormous pay. Long vacations and hard work are opposite things, even when the employees have kids.

Not to say that the corporate buildings full of nothing but low-income, working moms, watching each other's backs, leaving work at 2:30 every day and taking days and weeks off for kids, work harder. They do not.

They have spousal income or welfare/taxfare. Due to the so-called welfare reform of 1996, the welfare moms need to work 20 hours per week to qualify for free rent and free food, with some getting monthly cash and energy assistance, too, in addition to their lump-sum, tax-time cash assistance in April that comes to $6,269 with 3 kids.

That life plan does not work for people who need to pay all bills from wages alone, but as jobs are filled more and more with family-friendly workers who have unearned income from womb-productivity, whether from spouses, ex spouses or welfare, wages have gone down for people who just have earned income to cover all bills.

The only thing I ever hear the Democrats discussing is more paid time off for babyvacationing moms in the top 20% and more welfare and taxfare for the single, low-income, babyvacationing moms at the bottom whose rent and groceries are paid by taxpayers on top of their $3,337 (one child) --$6,269 (3 or more) child taxfare credits. It is 100% absurd and based on emotional, ideological, fake-feminist arguments, not on rational thinking at all and sure as h** not on fairness.

In reply to by SHRAGS

kellys_eye Iggby Wed, 07/05/2017 - 08:24 Permalink

Doesn't Agenda 21 (or 30 or whatever's the latest iteration) recommend a world population of around 500 million rather than the 7 billion+ we now have?Isn't the prospect of mass de-population (by war or other means) something that 'appears' to be on course to be engineered for?What have we got to worry about then?

In reply to by Iggby

Ms No Wed, 07/05/2017 - 03:00 Permalink

In the US when wages soar they bring in the H1Bs and Mexicans.  The Bakken was interesting for that.  Housing was through the roof and after the first couple of years they were only in need of skilled people but they kept telling all the carnies that they would get rich out there.  Walmart was paying 17 an hour (couldn't live on that there) but they had full staff after the first couple years.  They kept a help wanted add up the whole time and the whole country "they are paying 17 an hour at Walmart, OMG!". Well they had stopped paying that after a while too because they had a constant flood of people coming in with false advertising.  Now they really couldn't afford to live there.  A whole lot of people came out there desperate in negative thirty degrees, sleeping in their cars, and then got turned away because nobody needed anyone that had zero skills.  The jobs that were always hiring had huge turnover and wouldn't pay.  It was like any gold rush, it was a dangerous slave ship for most of them.  They wanted those wages down! 

Endgame Napoleon Ms No Wed, 07/05/2017 - 06:33 Permalink

Wal*Mart pays $9/hour here, with area managers making $10/hour. I have seen paycheck stubs and tax information in jobs. Back when I was looking at all that information in my government job, they paid entry-level employees between minimum wage and $8/hour.

Everyone has "skills" of one type or another. "Skills" is the new buzzword, I notice, a way to put people down and lower expectations for pay except for a couple of employees in the building.

If people really have advanced, hard-won skills, it is one thing. I notice a lot of highly paid employees doing work that many people are capable of doing. Many of them take frequent and lengthy babyvacations.

They are described or self-described as "skilled." If people are truly skilled, they are needed at work. The constant babyvacationing would be a problem, as the rare, "skilled" employee would be missed, whether the business was established or trying to generate more growth.

Many of the "unskilled" babyvacationers at the bottom are actually needed to help with phones ringing off the hook and inconvenienced customers.

Whether "skilled" or not, they are needed to help retain business, but yet, they are allowed to retain jobs in low-wage workplaces, where gangs of absentee moms with unearned income from spouses or welfare reign supreme due to their ability to accept low pay.

At all levels in workplaces, there is more going on beneath the buzz-words than just a straight, linear path that is measurable in terms of relative "skill." Most workplaces have way more social-club stuff going on than work.

Skills can also be taught. And companies do train and churn, constantly, hiring for the exact same position, over and over. I think it is more a lack of consistent demand for their products than a lack of skilled workers for most positions.

If anything, they probably have too many applicants for most positions, not that women with plenty of spousal income seeking a lot of those positions really need to take a job, farming the raising of their children out to others. Back when they did not do that, the wage pool was not so diluted, and America had a much bigger middle class, albeit less McMansions for the top 20%.

In reply to by Ms No

Last of the Mi… Endgame Napoleon Wed, 07/05/2017 - 07:33 Permalink

Wal Mart pays as little as possible and dumps as much as they can in the way of business costs onto the government. Local and states pay for whatever Wal Mart management can barter for when opening a store and the Federal government now pays for health care costs Wal Mart actually causes in some cases. The net result is Wal Mart is a government subsidiary financed through a cooperative effort between the government and Wal Mart's management. You can say what you want about Amazon but I avoid the corruption that is Wally Word any chance I get. Oh, and I don't have to smell the damn place.

In reply to by Endgame Napoleon

sinbad2 Wed, 07/05/2017 - 03:32 Permalink

So in China they are going for robots because they can't find workers. When I was young it was like that here in Oz, more jobs than workers and the pay was very good.

Sudden Debt Wed, 07/05/2017 - 04:29 Permalink

and then the factories with the robots move back to the west because the only thing left to save on is transport.But those factories won't employ a single American or EuropeanGive it another 10 years to fully become reality where the effects are real

Dame Ednas Possum Sudden Debt Wed, 07/05/2017 - 06:20 Permalink

I read a stat recently stating that 38% of jobs in the US will be replaced by automation/ robotics by 2030.

38%... within approx. 12 years.

Taxi drivers, delivery drivers, truckers (the role comprising the greatest % of the US workforce) will all be automated.

People who do not prepare for this future will be the end of their family line. There's not a snowflakes' chance in hell that social welfare will pick-up this tab as the income tax revenue base collapses also.

Game changer...

In reply to by Sudden Debt

wally_12 Dame Ednas Possum Wed, 07/05/2017 - 09:58 Permalink

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The Japanese have already introduced automated trucking into Japan. It's called "Platooning" Major trucking companies are watching closely to see if kicking truck drivers to the curb will save them money.

In reply to by Dame Ednas Possum

zebra77a Wed, 07/05/2017 - 05:49 Permalink

How is GDP defined in a future where the 'consumer' becomes your future welfare recipient, immigrant, drug dealer, and.. I give up ads blocking my typing every 10 seconds .. Tylers ?!

Last of the Mi… Wed, 07/05/2017 - 07:54 Permalink

QE is the exact opposite of wage growth. The whole intent of the program was to make a secondary economy above and complete separate from the one where wage growth exists. It is essentially a "do over" for poor management decisions that gives companies a second chance that are circling the drain in a competitive market. It in now way supports survival of the fittest or encourages wage growth. What it does is reward crony capitalism at the highest levels which in turn continues to feed on the remains of a competitive economy for the sake of more income inequality. QW is THE factor that has done more damage to our economy than anything else previous to it. QE has single handedly destroyed the purchasing power of people like myself who have worked 40 years in order to gain an upper hand in the economy. It is the "fix" in the game. At some basic level I think Donald Trump understands this, you have to involve flyover America to have any type of recovery. The massive income inequality QE has ordained through it's corrupt process virtually guarantees more government corruption in order to keep the whole scam afloat. The largest indicator of this is the stock market. The higher it goes now, the worse main street is doing. Nothing indicates how bad things are in the US more than the continuously increasing stock market which is absolutely necessary to avoid any loss whatsoever on trillions of derivatives. It's a scam.

gregga777 Last of the Mi… Wed, 07/05/2017 - 08:48 Permalink

The stated goal of QE, per Benjamin Shalom Bernanke, was to create a "wealth effect".  Well, it worked.  The parasite classes have more wealth than ever.  Income and wealth inequality are comparable to just before the Great Depression.  During the Great Depression the CON Street Swindler parasites and the Banking Gangsters garaged for good their very, very expensive Dusenbergs, Rolls Royces, Packards and other expensive marquees because they were afraid of the public's anger towards them.  That will repeat when the Greatest Depression is in full swing.  And when the SHTF you can blame it ALL on the Goldman Sachs Feral Resereve System.  

In reply to by Last of the Mi…

BuddhistAescetic (not verified) Wed, 07/05/2017 - 08:13 Permalink

If you think the rage of the working classes is palpable now just wait for the day when 75% plus of us no longer have any jobs to support ourselves with.....

Too-Big-to-Bail (not verified) Wed, 07/05/2017 - 09:33 Permalink

and one day maybe they will be able to sell the shit they mass produce to the robots too

Silver Savior Wed, 07/05/2017 - 09:44 Permalink

Well if you assholes do that you might as well close up shop. No one will have any money to buy anything. What goes around comes around and karma is a bitch. 

Other Mr T Wed, 07/05/2017 - 21:19 Permalink

Another 'fear the robots' paranoia porn piece Tyler? Really!? Now robots aren't free or cheap or as easy to implement and optimize as software, so fucking what? You are a greedy butthead and go to get a huge business loan to just get started and then the gizmo you're making has to cost 99% less than it used to because every other clever 'biznisman' from anywhere-with-a-internet-i-stan got the same idea at the same time and is undercutting you. Before you blink your eye, the gizmo you've had your robots making isn't fashionable anymore, your robots are purpose specific, they can't be rebuilt/retrained/reset up to make the latest and greatest gizmo that everyone wants and no one wants to buy the old robots from you for any reasonable amount and you still owe a shitload to the banks so you can't buy the newest more expensive robots that make the newest gizmos for practically nothing, except if you go into more debt and never experct to have any profit margin at all. Then you borrow even more money to make the latest gizmo that everyone wanted 5 minutes ago and they already sick of it and want an even newer gizmo that they can can now make themselves with robots that they now own and it costs them nothing, because the tech that they got to build the robots that can make any freaking consumer gizmo happen to be open source and on youtube or something like it and this can be done by any stoned doofus with enough free time (if they ever stop playing video games and watching online porn) and hacked old robots that you paid to throw away last year because no one wanted to buy them. How does that sound Tyler? Sounds perfectly realistic too. Now, which scenario is really scarier?!