Dyson splits with Malaysia provider, stoking concern over migrant employee therapy By Reuters
© Reuters. A security guard stands near the gate of the Dyson office in Senai, Johor state, Malaysia on November 28, 2021. Photo taken on November 26, 2021. REUTERS / A. Ananthalakshmi
By A. Ananthalakshmi and Liz Lee
JOHOR BAHRU, Malaysia (Reuters) – A short drive across the border from Dyson’s new Singapore headquarters is the boom town built around their business: a Malaysian industrial area dominated by its largest supplier, ATA IMS Bhd.
ATA, a leading electronics manufacturing service provider in Malaysia, drove Dyson’s success in high-end vacuum cleaners and air purifiers, and supplied parts for a company that accounted for 80% of its sales.
Ten current and former employees and one former ATA executive say the growth came at an unmistakable cost: the predominantly migrant workforce worked up to 15 hours a day, often asked to skip rest days to keep up with demand , and have been coached to hide the real working and living conditions from labor inspectors and Dyson.
In interviews over the past two months, employees also said that ATA, Dyson’s largest global contract manufacturer according to analysts, has hired thousands of foreigners without work permits.
Following questions from Reuters on Nov. 18, Dyson said last month it would be ceasing https://www.reuters.com/business/exclusive-dyson-terminates-relationship-with-malaysian-supplier-ata-over-labour – 2021-11-25 from ATA in six months, citing a recent independent review of employee conditions and allegations of an unidentified whistleblower.
ATA said in a statement that it has been audited by the Responsible Business Alliance (RBA), a body widely used by electronics companies to conduct factory audits. RBA engages external auditors for the inspections. It declined to comment.
On November 29, ATA announced it had seen the summary of Dyson’s exam, which found poor living conditions, concerns about retaliation, and unpaid allowances, among other things. She described the results as “inconclusive” and said she was reviewing them. Reuters did not see the exam.
ATA declined to comment, referring Reuters to its recent public statements.
Dyson said Tuesday he would not speak up as the allegations related to ATA.
Malaysia said on Wednesday it would be going to https://www.reuters.com/business/malaysia-charge-dyson-supplier-ata-over-labour-complaints-minister-2021-12-01 because of complaints it was about the ATA Labor department. She did not say what the allegations or complaints were about, or whether they related to the allegations made by workers about their Dyson factories.
The country’s Minister of Personnel, M. Saravanan, said allegations of forced labor at Malaysian companies undermined the confidence of foreign investors in the products they manufacture. He had previously said the government was investigating Dyson’s decision https://www.reuters.com/markets/europe/analysts-see-years-losses-malaysias-ata-after-major-client-dyson-cuts-ties-2021- 11-26 for splitting with ATA.
After Dyson’s move, ATA shares fell 60%. Some analysts have expressed doubts about ATA’s ability to attract new customers https://www.reuters.com/markets/europe/malaysias-ata-falls-analyst-airs-concern-after-dyson-rift-2021-11 -30, and on November 29, a statement by the company predicts sales declines and cost reductions.
Following Dyson’s departure, six interviewed workers and shopkeepers in the Johor Bahru industrial area said they feared losing their livelihoods.
“There is no more job guarantee here,” said an off-duty ATA employee in his royal blue factory shirt on a Sunday. Like others, he asked not to be identified for fear of reprisals.
ATA officially employs around 8,000 people, although until recently estimated four ATA employees and the former manager at 17,000, including those without permits. Most of the 17,000 were from Bangladesh and Nepal, according to workers and executives.
ATA’s factories are located in adjacent industrial parks in the suburb of Johor Bahru, a 30-minute drive from Singapore, where Dyson is headquartered.
ATA achieved record sales of 4.2 billion ringgits ($ 991.74 million) for the fiscal year ended March. Of that, nearly $ 800 million went to Dyson, owned by British billionaire James Dyson.
Analysts say increased control of Malaysia could increase production costs and scare off investors. The US banned six Malaysian companies on charges of forced labor in the past two years.
“The costs will definitely go up because a lot more care has to be taken, not only in recruiting but also in housing the workers. The consequences are significantly higher personnel costs,” said Vincent Khoo, head of Malaysia research at brokerage firm UOB Kay Hian. .
Malaysia, which manufactures everything from iPhone components to semiconductors, relies on electrical and electronics manufacturing especially for export and economic growth. Between January and October 2021, these products accounted for 36% of total exports.
Foreigners make up about 10% – 1.48 million – of the Malaysian workforce, according to government figures, although the proportion is higher in manufacturing. The government and unions value millions more undocumented migrants.
“WE NEED YOUR COOPERATION”
According to ATA and Dyson, audits by ATA had not revealed any problems until recently. An audit in 2020 gave ATA a perfect score on working conditions, ATA said in May. Dyson did not confirm this result.
Staff told Reuters that ATA supervisors were training factory workers on what to say to auditors. Two said supervisors told them Dyson would cut orders at ATA if they told the truth about labor conditions.
In July, an ATA supervisor ordered workers in a WhatsApp group to tell auditors that they were not working on Sundays and that they were not doing more than three hours of overtime a day. The manager did not respond to repeated calls from Reuters. According to information from workers and pay slips, which Reuters saw, workers regularly worked Sundays and up to six hours of overtime.
“We need your cooperation … Please inform all employees … to avoid problems during the audit”, read the message from July 2nd, which Reuters saw.
Workers also said the factory was cleaned and safety equipment distributed prior to the audits, and workers were asked to stay away without permission.
When Dyson officials came to visit, ATA stopped Sunday work and cut overtime, staff said. ATA and Dyson declined to comment.
The US Customs and Border Protection (CBP) opened an investigation into ATA in April for unethical recruitment practices and poor working and living conditions, according to independent labor rights activist Andy Hall, who petitioned the investigation. He showed Reuters an April 19 letter 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 had given them details of working and living conditions. Hall confirmed Limbo’s account.
Limbu said ATA officers took him to a police station in June where he was questioned about sharing information with activists and then beaten by police. He fled Malaysia and is now back in Nepal. Limbu told Reuters that he told Dyson’s lawyers about ATA’s working conditions in an October 1 interview.
Dyson did not name the whistleblower but said in a statement to Reuters last month: “We immediately hired an international law firm to conduct a full investigation and assisted the whistleblower to assist with the investigation.” Dyson didn’t say which company kept it.
ATA has also hired a law firm to review Limbo’s allegations, and said in a statement last week that preliminary results suggest that “the allegations may be unfounded”. The police have announced https://www.reuters.com/world/asia-pacific/malaysia-police-look-into-claim-ata-whistleblower-beaten-by-police-2021-11-27 to investigate whether Officials beat Limbu.
Staff said ATA has started making some changes since the allegations came to light in May when it first publicly rejected the allegations https://www.reuters.com/article/us-malaysia-labour-ata-idUSKCN2D21D2. The company reimbursed some workers 7,000 ringgit in July for what they paid to recruitment agencies in their home countries, according to Limbu, other workers, and pay slips that Reuters saw.
ATA also stopped employing foreign workers without a permit and locked an overcrowded dormitory that housed 60 people in one room, workers said.
Limbu and other employees interviewed by Reuters said Dyson should have stayed to ensure that working and living conditions for migrant workers are improved.
“My intention to share information was to improve conditions for workers and get rest days. But now, with Dyson’s decision, people are going to lose their jobs,” Limbu said.