NEW DELHI / BENGALURU (Reuters) – Apple Inc has put supplier Wistron Corp on trial and said on Saturday that it would not award the Taiwanese contract manufacturer any new business until it discussed the way workers were treated at its factory in South India.
Early findings of an Apple audit in the wake of violence at the Wistron factory in Karnataka, India, revealed violations of the “ Supplier Code of Conduct, ” the Cupertino, California-based tech giant said in a statement.
Indentured servants angry about unpaid wages destroyed property, equipment and iPhones on December 12, causing Wistron to lose millions of dollars in losses and forcing the company to close the factory.
Apple said Wistron had failed to implement proper work-time management processes, which “resulted in late payment for some employees in October and November.”
Wistron admitted on Saturday that some workers at the Narasapura factory in Karnataka had not been paid properly or on time, and that it was removing a top executive who would oversee Indian operations.
Apple said it will continue to monitor Wistron’s progress on corrective action.
“Our primary goal is to ensure that all employees are treated with dignity and respect and are fully compensated immediately,” Apple said, adding that it continued to investigate issues at the plant, located about 50 km outside of southern engineering. center. from Bengaluru and compiles one iPhone model.
“This is a new facility and we recognize that we made mistakes during the expansion,” Wistron said in a statement. “Some of the processes we’ve put in place to manage job centers and payments need to be strengthened and upgraded.”
Wistron said it is restructuring its teams and establishing 24-hour hotlines where employees can file anonymous complaints.
“Apple has sent a strong signal to its suppliers, unequivocally telling them to stick to the standards,” said Neil Shah of Hong Kong-based tech researcher Counterpoint.
“In the long run, it should make suppliers more cautious and likely to cause fewer public relations problems for Apple.”
MANUFACTURE SETBACK
Apple’s probationary period will slow Wistron’s smartphone production and hurt manufacturing pressures in India, where it had invested about 13 billion rupees ($ 177 million) over the next five years as part of New Delhi’s production-related stimulus plan for smartphone production.
Wistron had plans to make another iPhone model at its Narasapura plant and planned to hire up to 20,000 workers within a year, a source previously told Reuters.
But it couldn’t handle the rapid increase in manpower and violated several laws, Karnataka state officials discovered after an inspection of the factory after the violence.
The number of workers has risen to 10,500 from the 5,000 allowed in a short period of time, the Karnataka factories division said in a report reviewed by Reuters.
“The HR department is not adequately equipped with personnel with solid knowledge of labor law,” concluded the inspection report, which was conducted on December 13.
Wistron did respond to emails from Reuters to comment on the reported violations.
Other violations identified in the report included underpayment of wages to indentured servants and domestic workers, and overtime of female workers without legal authorization.
The findings of this inspection, and another preliminary government check, corroborate grievances about unpaid wages and poor turnout registration systems told Reuters in interviews by at least half a dozen Wistron workers.
Wistron’s probation is also likely to dent Apple’s plans to scale up in India, a market in which it has bet to expand its manufacturing base outside of China.
Apple began assembling its first iPhone model in India through Wistron in 2017. It has now ramped up assembly, with Foxconn in South India and another top supplier Pegatron will start local operations.
($ 1 = 73.5700 Indian Rupees)
Reporting by Chandini Monnappa in Bengaluru and Sankalp Phartiyal in New Delhi; Edited by Shri Navaratnam and Alexander Smith