Apple puts supplier Wistron on probation

Apple Inc has placed supplier Wistron Corp on probation, saying on Saturday it would not award the contract manufacturer new business until it addressed the way workers were treated at its southern India plant.

Early findings of an Apple audit in the wake of violence at the Wistron plant in India’s Karnataka state showed violations of its ‘Supplier Code of Conduct,’ the Cupertino, California-based tech giant said in a statement.

Contract workers angry over unpaid wages destroyed property, gear and iPhones on December 12, causing millions of dollars in losses to Wistron and forcing it to shut the plant.

Apple said Wistron had failed to implement proper working hour management processes, which “led to payment delays for some workers in October and November.”

Wistron on Saturday admitted some workers at the plant in Karnataka’s Narasapura had not been paid properly or on time, and it was removing a top executive overseeing its India business.

Apple said it will continue to monitor Wistron’s progress on corrective action.

“Our main objective is to make sure all the workers are treated with dignity and respect, and fully compensated promptly,” Apple said, adding that it continued to investigate issues at the plant, which is located some 50 kilometers outside of the southern tech hub of Bengaluru and assembles one iPhone model.

“This is a new facility and we recognize that we made mistakes as we expanded,” Wistron said in a statement. “Some of the processes we put in place to manage labor agencies and payments need to be strengthened and upgraded.”

Wistron said it is re-structuring its teams and setting up 24-hour hotlines for staff to make anonymous complaints.

“Apple has sent a strong message to its suppliers, telling them unequivocally that they need to adhere to its standards,” Neil Shah of Hong Kong-based tech researcher Counterpoint said. “In the long-run it should make suppliers more cautious and likely create fewer such public-relations headaches for Apple.”

The Apple probation will delay Wistron’s smartphone production and hurt its manufacturing push in India where it had committed to invest some 13 billion rupees (US$177 million) over the next five years as part of New Delhi’s production-linked incentive plan for smartphone manufacturing.

Wistron had plans to make another iPhone model at the Narasapura plant and was planning to hire up to 20,000 workers in a year’s time, a source said previously.

But it could not cope with the rapid scaling up of manpower and breached several laws, Karnataka state officials found after an inspection of the plant following the violence.

The number of workers rose to 10,500 from the permitted 5,000 in a short span of time, the Karnataka factories department said in a report.

“The HR (human resources) department has not been adequately set up with personnel of sound knowledge of labor laws,” the report of the inspection, which was conducted on December 13, concluded.

Wistron did not respond to emails seeking comment.

Apple began the assembly of its first iPhone model in India via Wistron in 2017. It has now ramped up assembly operations, with Foxconn in southern India and another top supplier Pegatron set to begin local operations.