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Thursday, December 9, 2021

Dyson scraps Malaysian supplier ATA over job concerns

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KUALA LUMPUR – High-tech appliance maker Dyson Ltd told Reuters it had cut ties with supplier ATA IMS Bhd following an audit of the Malaysian company’s labor practices and allegations by a whistleblower, prompting the ATA shares will plummet.

ATA, which is already under investigation by the United States for forced labor allegations, confirmed that Dyson has terminated its contracts and that it has been in discussions with its client about the audit findings.

Shares in ATA, which makes parts for Dyson vacuum cleaners and air purifiers, fell 30% to their lowest level since April 2020 after the Reuters report. According to ATA, Dyson accounts for almost 80% of its revenue.

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The layoff is also a significant blow to Malaysia, a major electronics manufacturing hub that has faced scrutiny this year over claims that migrant workers are being subjected to abusive living and working conditions.

Dyson, privately owned by British billionaire James Dyson, said it received the results of an audit of working conditions at ATA in early October. He said that he had learned of allegations from a whistleblower at an ATA factory in September and had commissioned a law firm to investigate those allegations.

“Despite intense engagement over the last six weeks, we have not seen enough progress and we have already phased out some production lines,” said Dyson, who runs Singapore, in response to questions from Reuters. “We have now terminated our relationship with six months of contractual notice. We hope this will give ATA the impetus to improve and allow for an orderly withdrawal in the interest of the workers they employ. “

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In May, ATA had denied allegations of forced labor at its factories after a prominent rights activist said US authorities were going to examine the company’s labor practices.

The activist, Andy Hall, shared a letter that Customs and Border Protection (CBP) had sent him informing him that it had agreed to investigate an ATA unit after noting complaints received from workers.

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

In July, the US State Department listed Malaysia on a list of more than a dozen countries, including China and North Korea, and said it had made no progress in eliminating trafficking in workers.

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MIGRANT WORKERS

Foreigners make up a significant part of the Malaysian workforce. Most of the migrant workers in Malaysia come from Bangladesh and Nepal and are employed 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.

ATA posted record revenue and earnings for the fiscal year ending March 2021, as COVID-19-induced lockdowns fueled demand for home appliances like the Dyson stick vacuum.

Dyson rejected allegations earlier this year about excessive hours and tight living conditions for ATA workers, citing multiple previous audits that it said had not found any issues involved in its supply chain.

Activist Hall said that Dyson’s decision to end the relationship would have huge implications for the thousands of workers employed at ATA and Dyson should remedy the ATA workers.

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The Malaysian government must also take some responsibility, Hall added, saying that it had submitted multiple complaints in the past year to the government about ATA.

Malaysia’s labor department did not immediately respond to a request for comment.

Social audits, the main form of due diligence carried out by the world’s leading brands, are intended to monitor laboratories and other ethical standards in the supply chain. However, critics say that some companies have turned into a superficial exercise in tick boxing https://www.reuters.com/world/asia-pacific/an-audit-gave-all-clear-others-alleged-slavery -2021-05 -19.

Dyson said the recent audit findings it received in October were from a “comprehensive” audit that interviewed more than 2,000 ATA staff members.

It did not disclose the audit findings. (Report by A. Ananthalakshmi; additional report by Liz Lee; Lincoln Feast edition).

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