KUALA LUMPUR: High-tech home appliance maker Dyson Ltd told Reuters it had cut ties with supplier ATA IMS Bhd following an audit of the Malaysian company’s labour practices and allegations by a whistleblower, sending ATA shares plunging.
ATA, which is already being investigated by the United States over forced labour allegations, confirmed Dyson has terminated its contracts and that it has been in talks with its customer over the audit findings. It had previously denied allegations of labour abuse.
Shares in ATA, which makes parts for Dyson’s vacuum cleaners and air purifiers, today tumbled nearly 30% to their lowest since April 2020 after the Reuters report. According to ATA, Dyson accounts for almost 80% of its revenue.
Dyson, privately owned by British billionaire James Dyson, said it received the results of an audit of working conditions at ATA in early October. It said it had also learned in September about allegations from a whistleblower about “unacceptable actions” by ATA staff and had commissioned a law firm to investigate those claims.
“Despite intense engagement over the past six weeks, we have not seen sufficient progress and have already removed some production lines,“ Singapore-headquartered Dyson said in response to questions from Reuters.
“We have now terminated our relationship with six months’ of contractual notice. We hope this gives ATA the impetus to improve, and enables an orderly withdrawal in the interests of the workers that they employ.”
Dyson’s comments came after being contacted by Reuters about claims by workers, including a whistleblower, about working conditions at ATA.
ATA denied all allegations by the workers and declined to comment.
ATA, in a statement to the national stock exchange today, said it had taken steps to engage Dyson and advisers after it was notified of the summary of the labour audit. It said it would look into the findings.
The company also said it will continue to manufacture and supply for Dyson until June 1, 2022, and that its board was looking into the validity of Dyson’s termination notice.
ATA makes bin bases, battery covers, brush bars, impellers, harness covers and other parts for Dyson’s vacuum cleaners, and parts for Dyson’s hot and cold air purifiers, according to a May-June production schedule seen by Reuters and photos from inside the factory.