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Exclusive-Dyson fires Malaysian ATA supplier over work concerns Reuters

© Reuters. FILE PHOTO: The Dyson logo is seen on 5th Ave in New York City, New York, USA on March 19, 2019. REUTERS / Carlo Allegri / Photo File


Author: A. Ananthalakshmi

KUALA LUMPUR (Reuters) – High-tech home appliance maker Dyson Ltd told Reuters it had severed ties with supplier ATA IMS Bhd as a result of an audit and complaint of the Malaysian company’s work practices, plunging ATA shares.

The ATA, which is investigating allegations of forced labor by the United States, has confirmed that Dyson has suspended his contracts and held talks with his client about the consequences of the audit. He had previously denied allegations of labor abuse.

Shares of the ATA, which makes parts for Dyson’s vacuum cleaners and air purifiers, fell 30 percent from April 2020 after the Reuters report. According to the ATA, Dyson accounts for nearly 80% of revenue.

The end is also a major blow to Malaysia, a major electronics manufacturing site that has come under control this year as it alleges that migrant workers are being subjected to abusive working and living conditions.

Dyson, the private owner of British billionaire James Dyson, said he received the results of an audit of ATA’s working conditions in early October. He said in September he had been informed of allegations of “unacceptable action” by ATA staff and had ordered a law firm to investigate those allegations.

“Despite intense engagement over the last six weeks, we have not seen enough progress and have already removed some production lines,” Dyson said of Singapore’s headquarters in response to questions from Reuters.

“We have now ended the relationship with a six-month contract notice. We hope this will give the ATA a boost to improve, and allow for an orderly side to the interests of the employees it employs.”

Dyson’s comments came after contacting Reuters with staff, including one complainant, about ATA’s working conditions.

In interviews with Reuters, seven current and former ATA employees said they worked overtime beyond the limits of Malaysian law and paid hiring fees in their countries to labor brokers, a practice criticized by activists as debt bondage.

Employees also worked at the ATA plant and on holidays that were supposed to be days off, according to staff and payrolls surveyed by Reuters.

Malaysian law allows you to work an additional 104 hours a month. A payroll reviewed by Reuters showed that an employee worked 126 hours in May.

Former ATA employee Dhan Kumar Limbu told Reuters that ATA officials took him to a police station in June, where he was asked to share information about the conditions at the plant with activists and then beaten by police.

Limbu said Nepalese citizens fled Malaysia after the incident, fearing further reprisals. In an interview with Dyson’s lawyers, he told Reuters about his experience of being taken to the police station.

The ATA denied all employee allegations and declined to comment. Malaysian police did not respond to questions from Reuters.


The ATA, in a statement to the national stock exchange on Thursday, said it had taken action against Dyson and his advisers after announcing a summary of the labor audit. He said he would look into the findings.

The company also said it would continue to manufacture and supply Dyson until June 1, 2022, and that its board was considering the validity of Dyson’s termination notice.

ATA manufactures parts for vessel bases, battery covers, brush bars, boosters, harness covers and other Dyson vacuum cleaners, and parts for Dyson’s hot and cold air purifiers, the May-June production schedule seen by Reuters, and according to photos inside the factory. .

The ATA in May denied allegations of forced labor in its factories, a prominent rights activist said U.S. authorities would look into the company’s work practices.

The activist, Andy Hall, shared a letter sent to him by the U.S. Customs and Border Protection (CBP) informing him that he had agreed to investigate an ATA unit after complaining about complaints received from staff.

CBP has banned six Malaysian companies from selling their products to the United States in the past two years after finding evidence of forced labor.

In July, the U.S. State Department put Malaysia on a list of more than a dozen countries, including China and North Korea, saying it had made no progress in eliminating worker trafficking.

Foreigners make up an important part of Malaysian workers. Most of Malaysian migrant workers come from Bangladesh and Nepal and work in factories, plantations and construction sites.

More than half of ATA’s 8,032 employees are foreigners, according to the company’s latest annual report.

The ATA recorded revenue and earnings for the year ended March 2021, as blockages caused by COVID-19 increased the demand for electrical appliances such as Dyson’s stick absorber.

Dyson earlier this year dismissed allegations of overtime and tight living conditions for ATA employees, citing numerous prior audits, saying it found no problems in its supply chain.

Activist Hall said Dyson’s decision to terminate the relationship would have major consequences for the thousands of employees working at the ATA and Dyson would have to fix the ATA staff.

The Malaysian government must also be held accountable, Hall added, saying it had made several complaints about the ATA over the past year.

The Malaysian labor department did not immediately respond to a request for comment.

Social audits – the main form of diligence required by the world’s largest brands – are to monitor labor and other ethical standards in the supply chain. But they are not always effective work hazards, and even obscured, two dozen inspectors, supervisory bodies, factory workers and labor rights groups told Reuters.

Dyson said the results of the last audit he received in October were from a “comprehensive” audit that interviewed more than 2,000 members of ATA staff.

He did not disclose the results of the audit.

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