Wistron’s India episode may land Apple in hot waters

The factory damaged by violence this month at Wistron’s new India facility may have minor impact on iPhone’s local production, but Apple may come under the local authorities' lens for working with suppliers with questionable labour practices

Wistron’s India episode may land Apple in hot waters
Men wearing protective face masks walk past broken windows of Wistron's damaged India plant. Photo: Reuters

(ATF) In the past, the US technology giant Apple, has faced several allegations of labour law violations against its suppliers and vendors in China, and now Apple may have to take responsibility for the violence at its contract manufacturer Wistron's India plant, say sources.

A report by the Karnataka government has found rampant violations of labour laws at Apple contract manufacturer Wistron’s iPhone manufacturing plant with wide gaps between practices followed at the factory and legal requirements in India.

Wistron was unable to cope up with the rapid scaling up of manpower, and an inspection by the Government revealed breaching of several laws, added the report.

Apple, which is also investigating the incident at the contract manufacturer’s plant, said its own review has found violations in the supplier code of conduct.

“Indian labour laws hold the primary employer responsible for any violation, which means that along with Wistron, the state government could seek Apple’s explanations and details of its investigation,” a legal expert told Asia Times Financial, requesting anonymity.

Many past rulings by the Indian courts have held both the contractor and the primary employer responsible for similar incidents, the expert added.

Peeved labour

Violence erupted at Wistron’s Bengaluru-plant when several thousand contract labourers on December 12, enraged over non-payment of wages and poor working condition, destroyed property, factory gear and iPhones at the plant causing about $7 million worth of damages, and forcing Wistron to shut the plant.

While the police arrested some 150 protesting workers and Wistron in its initial statement said it had followed all laws, the government report alleged that the Taiwanese firm’s human resources department had poor knowledge of labour regulations and did not have enough personnel to manage the labour force.

The factory employed 10,500 workers, of which about 8500 were contractual employees through outsourcing arrangement, about 1350 permanent staff, and the balance fleeting labourers.

According to The All-India Trade Union Congress allegations, the incident was the direct result of the exploitative, illegal practices of the employer, and sweatshop-like working conditions.

Wistron on Saturday admitted some workers at the plant had been mistreated, and said it was removing a top executive overseeing its India business.

Past problems

And, Apple on Saturday said it had placed Wistron on probation and the contract maker would not get any new business until it took corrective action.

“Apple employees, along with independent auditors, will monitor their progress,” it said in a statement.

While that may not be surprising, this is not Apple’s first instance of landing in hot waters for working with suppliers who mistreat employees.

Outside US, China has remained one of the largest workplaces for Apple, where three of its biggest vendors, Pegatron, Foxconn and Wistron have huge factories dedicated exclusively to the manufacturing and assembly of a range of Apple products.

Since 2010, China Labour Watch, an independent not-for-profit organisation, has tracked Apple and its vendors’ labour practices and repeatedly raised questions about the working conditions inside the factories of these companies.

In 2013, for instance the agency had found that the working hours at Pegatron, Apple’s second-largest contract manufacturer, were long with no overtime to turn out a scaled-back, less expensive version of an iPhone version and flagged the manufacturer.

In fact, recently, having discovered that Pegatron had violated Apple’s student-worker program and forced students to work night shifts and even overtime in some instances, and suspended its business with Pegatron altogether.

Minor impact

However, “deeply regretting the incident and apologizing to all its Indian workers, Wistron said in a statement that is “removing the Vice President who oversees our business in India.”

“We are also enhancing our processes and restructuring our teams to ensure these issues cannot happen again,” the company added.

The company has been cooperating with the local government investigation into what happened and "will cooperate with customers on carrying out the improvement and restoration of work plan", Wistron added.

The plant produces the iPhone -SE (2020) and the iPhone-7 models for Apple.

And, Apple’s decision to put Wistron on probation over labour practice lapses will not derail the local manufacturing and supply of its products, said sources.

“Manufacturing of iPhones by Wistron in India was low and the plant damage is not expected to impact supply. But it could create a short-term supply imbalance that may end up in some impact of iPhone handset prices going forward,” Manish Khatri, a Mumbai-based Apple reseller told ATF.

Besides, according to one of its local distributors, whatever supply issues Apple resellers were facing in India were due, to some extent, caused by the pre-Christmas demand in US and Europe where Apple channelled a large part of its global production because of the peaking Christmas demand in those markets.

“That demand is more or less over, so much of the stock shipped to those markets could now be shipped to India to meet its growing demand,” the distributor source said requesting anonymity since he is not an authorised spokesperson.

“The supply for Macbooks and Ipads are already back to normal,” he added

Meanwhile, in a statement to the Taiwan Stock Exchange, Wistron said: “As the Narasapura (Bangalore) facility is a new operation and the shipment quantity is still small, the incident will not cause significant impact to Wistron."

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