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Businesses China Iphone The Almighty Buck Apple Technology

Apple iPhone Supplier Foxconn Planning Deep Cost Cuts (bloomberg.com) 85

Posted by BeauHD from the cut-costs dept.
Foxconn, Apple's biggest assembler of iPhones, is planning to cut $2.9 billion from expenses in 2019 as it faces "a very difficult and competitive year." According to Bloomberg, citing an internal company memo, "The iPhone business will need to reduce expenses by [about $900 million] next year and the company plans to eliminate about 10 percent of non-technical staff." For reference, Foxconn's spending in the past 12 months is about $6.7 billion. From the report: Foxconn assembles everything from iPhones and laptop computers to Sony PlayStations at factories in China and around the world. Foxconn has been hit by a slowing smartphone market, while trade tensions with the U.S. add to global uncertainty. The company will conduct an in-depth review of managers with an annual compensation of more than $150,000, according to the memo. Other cuts include a planned [$433 million] reduction in expenses at Foxconn Industrial Internet Co., its Shanghai-listed offshoot. "The review being carried out by our team this year is no different than similar exercises carried out in past years to ensure that we enter into each new year with teams and budgets that are aligned with the current and anticipated needs of our customers, our global operations and the market and economic challenges of the next year or two," Foxconn said in a statement to Bloomberg.
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Apple iPhone Supplier Foxconn Planning Deep Cost Cuts More

Apple iPhone Supplier Foxconn Planning Deep Cost Cuts

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  • half of a statement (Score:4, Insightful)

    by sheramil ( 921315 ) on Wednesday November 21, 2018 @09:46PM (#57682824)

    "The iPhone business will need to reduce expenses by [about $900 million] next year ..."

    ... in order to achieve what? The level of profit desired by the investors? Will something bad happen if they don't get their fix?

    • Re:half of a statement (Score:4, Insightful)

      by LynnwoodRooster ( 966895 ) on Wednesday November 21, 2018 @09:55PM (#57682848) Journal
      To continue making a profit, since iPhone demand is falling [bloomberg.com]. Considering that iPhone sales are estimated to fall 20% to 30%, it's time to slash quite a bit of that work force - or lose a lot of money.

      • Re:half of a statement (Score:5, Interesting)

        by ShanghaiBill ( 739463 ) on Wednesday November 21, 2018 @10:36PM (#57682934)

        iPhone demand is falling [bloomberg.com]. Considering that iPhone sales are estimated to fall 20% to 30% ...

        Just to be clear: iPhone UNIT sales are falling, but Apple is still making record profits because the cost-per-phone is going up. But this doesn't help Foxconn because their revenue for assembly is not going up (the newer phones are easier to assemble) while their costs, especially labor, are climbing.

        An assembly line worker in Shenzhen makes about $3 per hour, vs less than $1 per hour for making the first iPhone in 2007.

        • iPhone UNIT sales are falling, but Apple is still making record profits because the cost-per-phone is going up.

          Which is unsustainable because it makes unit sales fall faster, as any fool can see. So Apple chose short term pumping over long term stability. Personally, I'm ok with that on the principle that we would all be better off with a greatly shrunken Apple.

          • Re:half of a statement (Score:4, Interesting)

            by ShanghaiBill ( 739463 ) on Thursday November 22, 2018 @02:03AM (#57683338)

            iPhone users are not moving to Android. They are just upgrading less often.

            I have a 4 year old iPhone 6. It works fine. I have no plans to replace it.

            • I know a few iPhone users who did.
              And as long as you only call and use the typical texting apps like WhatsApp and Viber or Line, etc. It hardly matters. I got my iPad stolen and have an android tablet. While it "works" the software integration on it simply does not work as on my iPad, so I hope to find a used iPad 2 ... somewhere and hopefully soon.

          • I'm ok with that on the principle that we would all be better off with a greatly shrunken Apple.
            Well most old german apple breeds get much more tasty after keeping them over the winter in the cellar, they shrink and get wrinkles and intensify their taste.

          • Maybe once iPhone profits start to fall even more they'll start listening to what their Mac users are asking for.

            Nobody asked for thinner laptops. Nobody asked for that fucking butterfly keyboard. Nobody asked to remove all USB-A ports.

    • ... in order to achieve what?...

      In my experience it is usually some board directive that the company "must" do some stupid thing or other.
      Yes, it is often to make more money for the shareholders.
      A couple of times during my career an announcement like this has made me go and look for another job.

  • I guess they can always turn the place into one of those "boutique" breweries...

    • I was thinking the same thing. They've already reduced the scope of the project (after Gov. Scott Walker promised $4B for their trouble) and now I wonder how much of it will ever happen. Foxconn in better times has screwed a city or two in the US before - promising a plant that never happened.

  • Sounds like what every company should do (Score:5, Interesting)

    by SuperKendall ( 25149 ) on Wednesday November 21, 2018 @09:53PM (#57682844)

    the company plans to eliminate about 10 percent of non-technical staff.

    This sounds exactly like what I would say almost every large company that I've ever worked for needed to do very badly.

    Not only do you get rid of the salary and benefit costs from these people, you also can reduce a lot of pointless process overhead and focus on what is more important, delivery of the end result.

    • Re: (Score:2)

      by mikael ( 484 )

      Before digital customer service systems, the manager/worker ratio was something like 1:3 . Whole chains of directors, assistant directors, senior managers, managers, team leaders, lead engineers and engineers all sitting in offices passing line printer dockets to each other up and down, signing them off, filing them away, going into each others office, maintaining their [IN], [OUT] and [PENDING] trays. Once everything was online, they didn't need to print things out, sign them off or even go into each other

    • Comment removed based on user account deletion

  • Could this be a sign of Apple moving production? (Score:4, Insightful)

    by melted ( 227442 ) on Wednesday November 21, 2018 @10:21PM (#57682896) Homepage

    Could this be a sign of Apple moving production to the US I wonder? It'd make sense for them: the production is mostly automated anyway, and manual labor is a minuscule fraction of the overall cost. In fact, humans wouldn't be able to work on much of this stuff even if they wanted to: there are thousands of parts inside the phone, and they are 0.2mm across, hard to see with the naked eye. If it's just screwing the boards into pre-milled chassis, attaching the flexes, and slapping the screen on top, I don't see why it can't be done right here in the US, in e.g. Texas or another business-friendly state.

    • there's still the environmental factors. You can't pollute the way you can in China. Cancer Villages [google.com] haven't been a thing in America since the late 70s.

      I'm guessing they just want to bump their stock price. No new video game consoles, the latest phones have been a bust and the cat's out of the bag on fixing your old iPhone's performance by replacing the battery. Their raw sales are probably just down.

    • Re:Could this be a sign of Apple moving production (Score:5, Interesting)

      by ShanghaiBill ( 739463 ) on Wednesday November 21, 2018 @10:56PM (#57682984)

      Could this be a sign of Apple moving production to the US I wonder? It'd make sense for them

      It actually makes little sense. Most of the components are made in China, and many right in Shenzhen. If you run out of 0.2mm screws in Wisconsin, you shut down the assembly line. If run out in Shenzhen you send a guy on a bicycle over to the screw factory and he is back in 20 minutes.

      Also, US tariffs on components are often higher than on finished products, and the paperwork and delay will be way worse on 100 components than on one phone.

      • Re: (Score:1, Interesting)

        by Anonymous Coward

        It actually makes little sense. Most of the components are made in China, and many right in Shenzhen. If you run out of 0.2mm screws in Wisconsin, you shut down the assembly line. If run out in Shenzhen you send a guy on a bicycle over to the screw factory and he is back in 20 minutes.

        Funny. I have done just that in Detroit. Except the quarter million screws being used that day wouldn't fit on my bicycle, so instead I used a truck.

      • But if demand rises in America due to production lines opening...you'll be able to send someone out for screws. Capitalism is like that. There's no reason why we have to waste tons of CO2 on dirty cargo vessels to ship parts from one end of the world to another. To say nothing of Foxconn's slave labor issues. Why did we ever let China into the WTO?

        • Re: (Score:2)

          by AmiMoJo ( 196126 )

          That doesn't work, because it's a chicken and egg problem. If you build the factory first it will take years for local supply chains to catch up and supply it, during which time you have to import and warehouse everything. If you build the supply chain first it will sit mostly idle for years while demand ramps up.

          And even if somehow that was overcome, it would be competing against an established manufacturing base with an established global market.

          As for why you "let" China join the WTO, it's because if you

          • Wha...? China was poor as shit before the WTO. It gave them access to our markets and made them into the titan they are today. We could have locked them out and kept them powerless and they wouldn't be the gigantic threat they are today. We built them up, we can tear them down.

      • Generally assembly lines don’t “run out” of stuff, because at those quantities it’s bought months in advance. I’m sure Cook could convince Trump that US manufacturing jobs need lower component tariffs. One phone call should be enough, in fact.

        • I’m sure Cook could convince Trump that US manufacturing jobs need lower component tariffs. One phone call should be enough, in fact.

          Do you mean like the way that American manufacturers easily convinced Trump that tariffs on Canadian steel and aluminum were stupid and counterproductive?

        • Comment removed based on user account deletion

    • Could this be a sign of Apple moving production to the US I wonder?

      No, it is a sign of falling iPhone demand [bloomberg.com], between 20 and 30% fewer units.

    • trump tariff are good at makeing US have production!

    • Could this be a sign of Apple moving production to the US I wonder?

      If they do, they'll just move it to the new Foxconn plant going in here. They're not gonna change suppliers at this point, because who would they change to? They could afford to build their own plants, but I don't think they will until they can make them more automated than they could today. Maybe in the next decade, but not right now.

    • Comment removed based on user account deletion

  • Competing with who? (Score:3)

    by rsilvergun ( 571051 ) on Wednesday November 21, 2018 @10:27PM (#57682910)
    They make damn near everything electronic.
  • Interesting name for a company FoxCon Foxes connotation clever if not somewhat devious , or sexy. Con has many meanings... use your imagination. Fun aside, raises questions if this is unique to their scale and iPhone reliance, chance to automate as labor gets more expensive or broader declines in global economy.
  • This should be a warning sign to anyone who thinks Foxconn operating plants in the US will mean lots of local jobs and/or extra tax dollars. The company operates on razor thin margins and works it's employees under conditions to the absolute legal limit it can get away with. If opening a plant in the US comes with lots of tax breaks and cash rewards then of course they'll do it, but that's money coming directly out of the taxpayer's pocket. It will probably be a mostly automated factory with small numbers o

  • robot worklines are comeing and china is going to (Score:4, Insightful)

    by Joe_Dragon ( 2206452 ) on Thursday November 22, 2018 @12:46AM (#57683210)

    robot work lines are coming and china is going to have to deal with it.

  • I wondered why all those managers took pay cuts to $149,999 a year. Then I read:

    ..the company will conduct an in-depth review of managers with an annual compensation of more than $150,000,

  • Foxconn the iPhone Supplier (Score:5, Insightful)

    by quenda ( 644621 ) on Thursday November 22, 2018 @01:12AM (#57683258)

    We make Blackberries - do they call us the Blackberry maker? No.
    We make Nokia phones - do they call us the Nokia supplier? No.
    We make Nintendos, Xboxes and Playstations, but do they call us the console supplier? No.
    But you build one fucking iPhone ...

  • Given that their workers are making around $3/hour, why would they even have $150k/year managers? Never mind the fact that virtually every company in the world has a larger manager/employee ratio than what is healthy...

  • Evers will git 'em (Score:3)

    by AndyKron ( 937105 ) on Thursday November 22, 2018 @09:02AM (#57684052)
    Thank God Scooter Walker gave them billions of our tax dollars to burn through here in WI. I voted for Tony Evers. Don't let the door hit you on the way out Walker!
    • Before Walker was elected governor, Wisconsin had a massive budget deficit with out of control spending on special interest groups. People were fleeing the state, especially young, recent college graduates. By placing in several reforms, the state turned around to running a budget surplus and experiencing an economic boom.

      You voted him because "Orange Man bad," and he shared the same letter in group of association. Your vote had nothing to do with policy, logic, or even rational self interest. You are th

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