Taipei: Apple Inc.’s effort to expand the manufacturing of its products in India ran into trouble after workers at a supplier’s plant rioted over unpaid wages, with many arrested for violence and vandalism.
Hundreds of workers entered Wistron Corp.’s facility in the southern city of Kolar over the weekend, damaging the property and looting thousands of iPhones and laptops, according to local media. More than 150 people were arrested, the Times of India reported.
Wistron estimated damages at as much as NT$200 million ($7.1 million) and said it’s doing its best to resume operations at the factory. The Taiwan-based company has said the protesters are not its own workers, suggesting they may have been hired by employment agencies, though it’s not clear who is responsible for paying them. Shares fell as much as 3.4%.
“There should be limited fundamental impact in 2020,” analysts Howard Kao and Sharon Shih at Morgan Stanley wrote in a research note. “However, we plan to monitor the situation closely – key factors will be the length of the production halt, possible changes in Wistron’s relationship with Apple after this incident, and the progress of Wistron’s Phase II capacity expansion.”
The clash is part of a broader geopolitical challenge for Apple, the most valuable company in the world with a market capitalization of $2 trillion. The Cupertino, Calif.-based company has long had its iPhones and iPads made in China by contractors such as Wistron and Hon Hai Precision Industry Co., but the political tensions between China and the U.S. have raised the risks and costs of dependence on a single production base.
In addition, India, under Prime Minister Narendra Modi, has pushed policies to build its own manufacturing base, aimed at creating good-paying jobs for workers. This year, Apple’s iPhone assemblers were among the companies on track to win approval to participate in a $6.6 billion stimulus program, Bloomberg News reported.
The protests were sparked Dec. 12 as workers stormed the Wistron facility because they hadn’t been paid, according to the media reports. So many people were arrested that they overwhelmed Kolar’s jail and some were sent elsewhere, the local superintendent of police said.
Alleging unpaid salaries, workers vandalize iPhone manufacturing unit near Bengaluru pic.twitter.com/pbW6xAwA0I
— The Indian Express (@IndianExpress) December 12, 2020
Apple has said it is investigating the incident and whether Wistron adhered to its labor practices. It sent staff and auditors to the site, in cooperation with the local police.
Wistron said in its own statement that it’s committed to following and implementing all local labor regulations, and will resume production as soon as possible to protect employees’ right to work.
The Morgan Stanley analysts wrote the immediate impact for Apple is likely to be negligible because the Kolar complex had started up only in past months with a capacity for just 5 to 10 million iPhones yearly. It is Wistron’s second production site in the country and handles older phones, rather than the latest iPhone 12, they wrote. But the incident could affect the Taiwanese assembler’s relationship with Apple, which has shown greater willingness to clamp down on labor violations at its hundreds of suppliers.
In China — where Apple suppliers are among the country’s largest private employers with upwards of a million people assembling gear from iPhones to Macs — state media wasted no time in highlighting the troubles in India.
“This is a potential risk when manufacturers consider moving their production lines out of #China where they have most stable labor market supporting the nation to become the largest manufacturing hub,” one reporter at the country’s Global Times said on Twitter.- Bloomberg
Also read: Apple suppliers’ exodus from China won’t slow down under Biden
Looting iphones and laptops by hitting back at the employer..Karnataka’s working class youth should be ashamed of such behaviour. Did the Labour department receive any complaint from these contract workers?
Whatever may be the reason they should not have resorted to this vandalism.
Where are the non-violent principles in the working classs youth of Karnataka today which were espoused by the Father of our Nation, Mahatma Gandhi? Who are their role models today? Does not look like Gandhi is their role model, would like to know who it is.
This is indeed criminal and our Govt. needs to reimburse Wistron in full and take responsibility for this incident. No questions whatsoever! This is looking more and more like a Chinese play by influential Labour Unions.
This has deeply hurt our manufacturing reputation and our Govt needs to investigate to prevent such incidents from happening again!
The Karnataka State Labour Department seems to be in Comatose. The problem from reports seems to be brewing for last several months.
These are critical times and it is absolutely essential that the State Labour Department is on an active mode and prevent such ugly incidents. This incident will reflect poorly on India’s efforts to get more Foreign investments. The Chief Minister must personally look into this matter and try and lay down proper guidelines to prevent such happenings.