Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Dyson splits with Malaysia supplier, stoking concern over migrant worker treatment

Stock MarketsDec 05, 2021 12:01AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
3/3 © Reuters. A security guard stands near the gate of Dyson office in Senai, Johor State, Malaysia, November 28, 2021. Picture taken November 26, 2021. REUTERS/A. Ananthalakshmi 2/3

By A. Ananthalakshmi and Liz Lee

JOHOR BAHRU, Malaysia(Reuters) - A short drive across the border from Dyson's new headquarters in Singapore is the boomtown built around its business: a Malaysian industrial area dominated by its biggest supplier, ATA IMS Bhd.

ATA, one of Malaysia's top electronics manufacturing services providers, rode Dyson's success in high-end vacuum cleaners and air purifiers, supplying parts for a company that came to account for 80% of its revenue.

Ten current and former employees, and a former ATA executive, say the growth came at an unseen cost: its mostly migrant work force worked up to 15 hours a day, were often asked to skip rest days to keep up with demand, and were coached to hide true working and living conditions from labour inspectors and Dyson.

In interviews over the last two months, the employees also say ATA, which analysts say is Dyson's biggest global contract manufacturer, hired thousands of foreigners without work permits.

After questions from Reuters on Nov. 18, Dyson last month said it would pull its business from ATA in six months, citing a recent independent audit on conditions for workers and allegations by an unidentified whistleblower.

ATA said in a statement it was audited by the Responsible Business Alliance (RBA), a body widely engaged by electronics firms to conduct factory audits. RBA hires third-party auditors for the inspections. It declined to comment.

On Nov. 29, ATA said it had seen the summary of Dyson's audit, which found poor living conditions, concerns of retaliation and unpaid allowances, among other issues. It described the findings as "non-conclusive" and said it was reviewing them. Reuters has not seen the audit.

ATA declined to comment, and referred Reuters to its recent public statements.

Dyson said on Tuesday it wouldn't comment because the accusations related to ATA.

Malaysia on Wednesday said it would charge ATA over complaints it had received through the labour department. It did not say what the charges or complaints were about or whether they related to the workers' accusations about its Dyson factories.

The country's human resources minister, M. Saravanan, said forced labour allegations at Malaysian companies were hurting foreign investors' confidence in products manufactured there. He had earlier said the government was investigating Dyson's decision to split with ATA.

After Dyson's move, ATA shares dropped 60%. Some analysts have raised doubts about ATA's ability to attract new customers, and on Nov. 29 a statement from the firm forecast revenue declines and cost cuts.

With Dyson's departure, six workers and shopkeepers interviewed in the Johor Bahru industrial area said they feared they might lose their livelihoods.

"There is no guarantee of a job here anymore," said one off-duty ATA worker, wearing his royal-blue factory work shirt on a recent Sunday. Like others, he asked not to be identified for fear of reprisal.

ATA officially employs around 8,000 workers, although four ATA workers and the former executive estimated its workforce had been as high as 17,000 until recently, including those without permits. Most of 17,000 were from Bangladesh and Nepal, according to the workers and executive.

RECORD REVENUE

ATA's factories are concentrated in adjacent industrial parks in suburban Johor Bahru, a 30-minute drive to Singapore, where Dyson is headquartered.

ATA posted record revenue of 4.2 billion ringgit ($991.74 million) for the fiscal year that ended in March. Dyson, owned by British billionaire James Dyson, accounted for nearly $800 million of that.

Analysts say the increased scrutiny of Malaysia could increase production costs and deter investors. The United States has banned six Malaysian firms in the last two years over accusations of forced labour.

"Cost will definitely move up because a lot more care has to be taken into account, not just on recruitment but also worker accommodation. The ramifications are significantly higher costs for labour," said Vincent Khoo, head of Malaysia research at brokerage UOB Kay Hian.

Malaysia, which makes everything from iPhone components to semiconductors, is reliant on electrical and electronics manufacturing in particular for exports and economic growth. Between January and October 2021, such products accounted for 36% of total exports.

Foreigners make up about 10% - 1.48 million - of Malaysia's work force, according to government data, though that percentage is higher in the manufacturing sector. The government and labour groups estimate millions more undocumented migrants.

'WE NEED YOUR COOPERATION'

Until recently, audits of ATA had not revealed any issues, according to ATA and Dyson. A 2020 audit gave ATA a perfect score on working conditions, ATA said in May. Dyson did not confirm that score.

The employees told Reuters that ATA supervisors coached factory staff on what to tell auditors. Two said supervisors told them that if they told the truth about working conditions, Dyson would cut its orders with ATA.

In July, an ATA supervisor instructed workers in a WhatsApp group to tell auditors they did not work on Sundays and worked no more than three hours of overtime per day. The supervisor has not responded to repeated calls from Reuters. According to workers and payslips seen by Reuters, workers regularly worked Sundays and up to six hours of overtime.

"We need your cooperation… Please brief all the employee… to avoid issue during audit," read the message, dated July 2 and seen by Reuters.

Employees also said the plant had been cleaned and safety equipment distributed ahead of audits, and that workers without permits were asked to stay away.

When Dyson officials visited, ATA stopped Sunday work and cut back on overtime, the employees said. ATA and Dyson declined to comment.

U.S. PROBE

The U.S. Customs and Border Protection (CBP) opened an investigation into ATA in April over unethical recruitment practices and poor working and living conditions, according to independent labour rights activist Andy Hall, who sought the inquiry. He showed Reuters a letter dated April 19 from the agency informing him of the investigation. CBP declined to comment.

Nepalese national Dhan Kumar Limbu, 32, said people working with Hall contacted him in April as part of his investigation into ATA, and Limbu said he shared details about working and living conditions with them. Hall confirmed Limbu's account.

Limbu said that in June, ATA officials took him to a police station, where he was questioned about sharing information with activists, then beaten by police. He fled Malaysia and is now back in Nepal. Limbu told Reuters he told Dyson's lawyers about the ATA working conditions in an interview on Oct. 1.

Dyson did not identify the whistleblower by name but said in a statement to Reuters last month that "We immediately commissioned an international law firm to undertake a full investigation and provided the whistle-blower with support that enabled them to assist with the investigation." Dyson did not say which firm it had retained.

ATA also hired a law firm to review Limbu's claims and said in a statement last week that preliminary findings indicate "the allegations may be unjustified." The police have said they are investigating whether officers beat Limbu.

Employees said ATA started to make some changes since the accusations came to light in May, when it first publicly denied the allegations. The company reimbursed some workers 7,000 ringgit in July for what they paid labour brokers in their home countries, according to Limbu, other workers and payslips seen by Reuters.

ATA also stopped employing foreign workers without permits and closed a crowded dorm that had housed 60 people to a room, workers said.

Limbu and other employees Reuters interviewed said Dyson should have stayed to ensure working and living conditions improved for migrant workers.

"My intention to share information was to improve conditions for the workers and get rest days. But now with Dyson's decision, people will lose jobs," Limbu said.

Dyson splits with Malaysia supplier, stoking concern over migrant worker treatment
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email