© Reuters. FILE PHOTO: A Dyson brand is seen on fifth Ave in New York, New York, U.S., March 19, 2019. REUTERS/Carlo Allegri/File Photo
By A. Ananthalakshmi
KUALA LUMPUR (Reuters) -High-tech house equipment maker Dyson Ltd advised Reuters it had minimize ties with supplier ATA IMS Bhd following an audit of the Malaysian firm’s labour practices and allegations by a whistleblower, sending ATA shares plunging.
ATA, which is already being investigated by the United States over pressured labour allegations, confirmed Dyson has terminated its contracts and that it has been in talks with its buyer over the audit findings.
Shares in ATA, which makes components for Dyson’s vacuum cleaners and air purifiers, tumbled 30% to their lowest since April 2020 after the Reuters report. According to ATA, Dyson accounts for nearly 80% of its income.
The termination can also be a major blow for Malaysia, a serious electronics manufacturing hub that has confronted scrutiny this 12 months over claims migrant employees are being subjected to abusive working and residing circumstances.
Dyson, privately owned by British billionaire James Dyson, stated it acquired the outcomes of an audit of working circumstances at ATA in early October. It stated it had realized in September about allegations from a whistleblower at an ATA manufacturing facility and had commissioned a legislation agency to research these claims.
“Despite intense engagement over the past six weeks, we have not seen sufficient progress and have already removed some production lines,” Singapore-headquartered Dyson stated in response to questions from Reuters.
“We have now terminated our relationship with six months’ of contractual notice. We hope this gives ATA the impetus to improve, and enables an orderly withdrawal in the interests of the workers that they employ.”
ATA, in an announcement to the nationwide inventory trade, stated it is going to proceed to fabricate and provide for Dyson till June 1, 2022, and that its board was wanting into the validity of Dyson’s termination discover.
ATA additionally stated it had taken speedy steps to have interaction Dyson and advisers after it was notified of the abstract of the labour audit. It added it is going to proceed to actively look into the findings.
ATA had in May denied allegations of pressured labour at its factories after a outstanding rights activist stated U.S. authorities had been going to scrutinise the corporate’s work practices.
The activist, Andy Hall, shared a letter the U.S. Customs and Border Protection (CBP) had despatched him informing him it had agreed to research an ATA unit after he flagged complaints acquired from employees.
The CBP has banned six Malaysian companies within the final two years from promoting their merchandise to the United States after discovering proof of pressured labour.
In July, the U.S. State Department put Malaysia on an inventory with greater than a dozen international locations together with China and North Korea, saying it had not made progress in eliminating trafficking of employees.
Foreigners type a major a part of Malaysia’s workforce. Most migrant employees in Malaysia come from Bangladesh and Nepal, and are employed in factories, plantations and development websites.
Over half of ATA’s 8,032 staff are foreigners, in response to the agency’s newest annual report.
ATA posted report income and revenue for fiscal 12 months ended March 2021 as COVID-19 induced lockdowns boosted demand for house home equipment equivalent to Dyson’s stick vacuum cleaner.
Dyson rejected allegations earlier this 12 months concerning extreme hours and cramped residing circumstances for ATA employees, citing a number of prior audits it stated had not discovered any points concerned in its provide chain.
Activist Hall stated Dyson’s choice to terminate the connection would have big implications for the hundreds of employees employed at ATA and Dyson ought to remediate ATA employees.
The Malaysian authorities should additionally bear some accountability, Hall added, saying he had made a number of complaints prior to now 12 months to the federal government about ATA.
Malaysia’s labour division didn’t instantly reply to a request for remark.
Social audits – the principle type of due diligence performed by the world’s greatest manufacturers – are supposed to monitor labour and different moral requirements within the provide chain. However, critics say some firms have turned them right into a perfunctory tick-boxing train https://www.reuters.com/world/asia-pacific/an-audit-gave-all-clear-others-alleged-slavery-2021-05-19.
Dyson stated the latest audit findings it acquired in October had been from a “comprehensive” audit that interviewed over 2,000 members of ATA workers.
It didn’t disclose the findings of the audit.