Liz Lee and A. Ananthalakshmi

JOHOR BAHRU (Malaysia) – Just ten minutes from Dyson’s Singapore headquarters is the Boomtown, a Malaysian area dominated and financed by ATA IMS Bhd.

ATA Malaysia, a leading provider of electronics manufacturing services, benefited from Dyson’s successes in vacuum cleaners and purifiers. ATA supplied parts to a company which accounted for 80%.

Ten former and current employees and a former ATA executive say that the growth was not without cost. The majority of its migrant workers worked as many hours per day and often had to work overtime to meet demand. They were also instructed to conceal their true living and working conditions from Dyson and labour inspectors.

Interviews over the past two months have revealed that employees at ATA (an analyst says Dyson’s largest global contract manufacturer) hired thousands of foreigners, without them having to obtain work permits.

After questions from Reuters on Nov. 18, Dyson last month said it would pull its business https://www.reuters.com/business/exclusive-dyson-terminates-relationship-with-malaysian-supplier-ata-over-labour-2021-11-25 from ATA in six months, citing a recent independent audit on conditions for workers and allegations by an unidentified whistleblower.

ATA stated in a statement that it had been audited and certified by Responsible Business Alliance (RBA), a group widely used by electronic companies to perform factory audits. RBA uses third-party auditors in its inspections. It refused to comment.

ATA stated that it had reviewed Dyson’s summary. It found poor living conditions and concerns about retaliation, as well as unpaid allowances. The findings were not conclusive and ATA said that it is currently reviewing them. Reuters has yet to see the audit.

ATA declined comment but referred Reuters for its latest public statements.

Dyson claimed Tuesday that the company would not comment due to the accusations regarding ATA.

Malaysia on Wednesday said it would charge ATA https://www.reuters.com/business/malaysia-charge-dyson-supplier-ata-over-labour-complaints-minister-2021-12-01 over complaints it had received through the labour department. The company did not specify the nature of the complaints or charges, nor whether the allegations were related to Dyson factory workers.

M. Saravanan (the country’s human resource minister) stated that forced labour claims at Malaysian firms were affecting foreign investors’ trust in Malaysian products. He had earlier said the government was investigating Dyson’s decision https://www.reuters.com/markets/europe/analysts-see-years-losses-malaysias-ata-after-major-client-dyson-cuts-ties-2021-11-26 to split with ATA.

After Dyson’s move, ATA shares dropped 60%. Some analysts have raised doubts https://www.reuters.com/markets/europe/malaysias-ata-falls-analyst-airs-concern-after-dyson-rift-2021-11-30 about ATA’s ability to attract new customers, and on Nov. 29 a statement from the firm forecast revenue declines and cost cuts.

Six shopkeepers and workers interviewed by Johor Bahru industrial area expressed concern about Dyson’s departure.

One off-duty ATA worker said, “There’s no guarantee that a job here any more,” while wearing his blue factory shirt as a work shirt. For fear of reprisal, he requested not to be identified.

Although ATA has approximately 8,000 employees, the former executive and four ATA workers estimate its current workforce to be as high as 17,000. This includes those who have not been granted permits. According to workers and executives, the majority of those 17,000 came from Bangladesh and Nepal.

RRECORD REVENUE

ATA’s factories cluster in the suburb of Johor Bahru. They are a short drive away from Dyson’s headquarters in Singapore.

For the March fiscal year, ATA had a record-breaking revenue of 4.2 Billion Ringgit ($991.74 Million). Dyson was owned by James Dyson (British billionaire). It accounted for almost $800 million.

Analysts warn that the increasing scrutiny placed on Malaysian companies could lead to higher production costs and disinclination of investors. Six Malaysian companies have been banned by the United States in recent years due to allegations of forced labor.

The cost of labour will rise because there is more to consider, both in terms of worker accommodations and recruitment. Vincent Khoo (head of Malaysia research for brokerage UOB Kay Hian) said the consequences are substantially higher labor costs.

Malaysia is dependent on electronics and electrical manufacturing for its exports. These products made up 36% of all total exports between January 2021 and October 2021.

Malaysians employ about 10% of the total workforce. This figure is based on government data. But, this percentage may be higher for those working in manufacturing. Both the government and labor groups have estimated that millions more migrants are undocumented.

We need your cooperation

Dyson and ATA stated that audits by ATA hadn’t revealed any issues until recent years. According to ATA’s May statement, ATA scored a perfect score in 2020 on conditions for workers. Dyson didn’t confirm this score.

Reuters was told by employees that ATA supervisors instructed factory workers on how to inform auditors. They claimed that two supervisors advised them to tell the truth about work conditions or Dyson will cut their orders from ATA.

Workers were instructed by an ATA supervisor in a WhatsApp Group to notify auditors that they do not work Sundays or perform more than three hours overtime each day. Reuters repeated phone calls to the supervisor have not been answered. The workers’ payslips, as well the pay slips of workers seen by Reuters show that workers worked up to six hour overtime and Sundays.

“We need your cooperation… Please brief all the employee… to avoid issue during audit,” read the message, dated July 2 and seen by Reuters.

The employees also stated that safety equipment was distributed to the plant before audits began and that no permits had been issued. They were told by workers not to return.

According to Dyson employees, ATA cut overtime and stopped Sunday work when Dyson officials visited. ATA and Dyson refused to comment.

U.S. PROBE

Andy Hall, an independent labour rights activist, requested that the inquiry be opened by U.S Customs and Border Protection. It was launched in April to investigate ATA’s unethical hiring practices and poor living conditions. He presented to Reuters a April 19th letter from the agency, informing him about the investigation. CBP refused to comment.

Dhan Kumar Limbu, a 32-year old Nepalese national, claimed people with Hall contacted Hall in April for his investigation into ATA. Limbu stated that he shared details with them about living and working conditions. Hall verified Limbu’s story.

Limbu stated that ATA officials had taken him to a local police station last June. There, he was interrogated about information shared with activists. Then, he was beaten and beaten by the police. Limbu fled Malaysia, and is currently back in Nepal. Limbu said to Reuters that he spoke with Dyson’s lawyers on October 1st about working conditions at ATA.

Dyson didn’t name the whistleblower, but it said last month in a statement that it “immediately commissioned a law firm from abroad to do a complete investigation. We also provided support for the whistleblower that allowed them to aid with the investigation.” Dyson didn’t say who it retained.

ATA also retained a legal firm to investigate Limbu’s claims. The company stated last week in a statement that preliminary findings suggested “the allegations may not be justified.” The police have said they are investigating https://www.reuters.com/world/asia-pacific/malaysia-police-look-into-claim-ata-whistleblower-beaten-by-police-2021-11-27 whether officers beat Limbu.

Employees said ATA started to make some changes since the accusations came to light in May, when it first publicly denied https://www.reuters.com/article/us-malaysia-labour-ata-idUSKCN2D21D2 the allegations. Limbu, others and Reuters workers reported that the company paid 7,000 ringgit to workers in July for labor brokers they had received in their countries.

Workers said that ATA had also closed a crowded dormitory, which housed 60 people in a single room.

Limbu, Limbu, and others interviewed by Reuters said Dyson should’ve stayed in order to improve living and working conditions for migrant workers.

“My intent to share information was improve the working conditions of workers and to get more rest days. However, Dyson’s decision means that people may lose their jobs,” Limbu stated.