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EXCLUSIVE Dyson Drops Malaysian Supplier ATA Due to Labor Issues


  • Workplace audit, whistleblower allegations leading to dismissal
  • ATA already under US investigation into labor practices
  • ATA shares dip 30% to lowest since April 2020

KUALA LUMPUR, Nov. 25 (Reuters) – High-tech home appliance maker Dyson Ltd told Reuters it severed ties with ATA supplier IMS Bhd (ATAI.KL) following an audit of Malaysian company labor practices and a whistleblower’s allegations, sending ATA shares plunging.

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

Shares of 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 nearly 80% of its revenue.

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The termination is also a blow to Malaysia, a major electronics manufacturing hub that has come under scrutiny this year over allegations that migrant workers are subjected to harsh working conditions and conditions. abusive life.

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 he learned of the allegations of a whistleblower at an ATA factory in September and tasked a law firm to investigate the allegations.

“Despite intense engagement over the past six weeks, we haven’t seen enough progress and have already phased out some production lines,” Singapore-based Dyson said in response to questions from Reuters. “We have now ended our relationship on six months’ contractual notice. We hope this will give ATA the momentum to improve and allow for an orderly exit in the interests of the workers they employ.”

In May, ATA denied allegations of forced labor at its factories after a prominent human rights activist said U.S. authorities would review the company’s labor practices.

The activist, Andy Hall, shared a letter that U.S. Customs and Border Protection (CBP) sent him informing them that they had agreed to investigate an ATA unit after reporting complaints received of workers.

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

In July, the US State Department put Malaysia on a list with more than a dozen countries, including China and North Korea, saying it had not made progress in eliminating trafficking. workers.

MIGRANT WORKERS

Foreigners constitute a significant part of the Malaysian workforce. Most 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 profits for the fiscal year ended March 2021, as lockdowns induced by COVID-19 boosted demand for home appliances such as Dyson’s upright vacuum.

Dyson dismissed allegations earlier this year about excessive hours and cramped living conditions for ATA workers, citing several previous audits that he said had found no issues in his supply chain.

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

The Malaysian government must also take some responsibility, Hall added, saying he has filed several complaints with the government over the past year about the ATA.

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

Social audits – the primary form of due diligence conducted by the world’s biggest brands – are meant to monitor labor and other ethical standards in the supply chain. However, critics say some companies have turned into a superficial exercise in checkboxes.

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

He did not disclose the findings of the audit.

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Reporting by A. Ananthalakshmi; additional reports from Liz Lee; Editing by Lincoln Feast.

Our Standards: Thomson Reuters Trust Principles.