I, For One, Welcome Our New Robot Overlords

Foxconn announced this morning that it is going to add 1 million robots to its assembly lines to help with production of products such as the Apple AAPL iPad, iPhone and other products manufactured there. There are supposedly 10,000 robots working at the factory now, and that number is supposed to be increased to 300,000 next year. Foxconn CEO Terry Gou plans another million robots by 2014. On the human side of things, Foxconn has 1.2 million human workers. As Foxconn hires more and more robots, it will continue to squeeze the repetitive tasks being done by humans, such as placing components, closing cases, applying decals and paint. This is going to continue to squeeze the lower and middle classes, and it looks as if we are seeing another Industrial Revolution here. We could see the unemployment rate in China go up, and elsewhere, as robots continue to take over jobs in manufacturing plants. There are plenty of companies, such as General Motors GM, Ford F, Toyota TM and other manufacturers that use humans on assembly lines, in conjunction with robots. As robots and automated processing becomes cheaper and easier to implement, manufacturing jobs will continue to shrink, and there will continue to be class warfare between the executives in this country that are making millions, to those who are working 9-5 in the factories helping to make the products that we love and use nearly every single day. Companies like Microsoft MSFT, iRobot IRBT may benefit from the moves into more robotic manufacturing. ACTION ITEMS:

Bullish:
Traders who believe that robots will take over might want to consider the following trades:

• Robot overlords. Robots will continue to take over assembly line jobs. iRobot could benefit, as it looks for ways to diversify its business from U.S. army contracts, Roombas, Scoobas and other products. Microsoft, with its Xbox Kinect, could benefit as new uses for the Kinect are found.

Bearish:
This is bearish for the middle and lower classes, as human jobs are going to be taken and unemployment will continue to move higher around the world as assembly lines around the world become close to 100% automated.

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