KUALA LUMPUR (REUTERS) - Dyson supplier ATA IMS said on Friday (Nov 26) it is taking seriously allegations of forced labour in an audit summary it received from the high-end home appliance maker, and claims of physical abuse raised by a former worker.
ATA's statement came after Reuters on Thursday reported major client Dyson was cutting ties with the Malaysian company, sending its shares tumbling.
The manufacturer said as soon as it was notified of Dyson's audit, it immediately appointed a firm of consultants to review and verify the findings and to take any necessary remediation steps. It did not detail whom it hired.
ATA said it has also appointed a law firm in Malaysia to conduct an independent review of the allegations of physical abuse by the former worker, and a detailed report and the findings will be finalised soon.
"The preliminary findings of the independent law firm indicate that the allegations may be unjustified," it said.
Former ATA worker Dhan Kumar Limbu told Reuters that officials took him to a police station in June where he was questioned about sharing information on the conditions at the factory with activists and then beaten by police. Malaysian police did not respond to a request for comment.
Mr Limbu told Reuters he had recounted his experience about being taken to the police station in an interview with Dyson's lawyers.
ATA said it is subject to regular audits and inspections of the working and living conditions of its workers.
"In none of these audits and inspections were issues of forced labour found in the company," it said.
Shares in ATA, which makes parts for Dyson's vacuum cleaners and air purifiers, plunged a further 36.6 per cent on Friday and have lost more than half their value since the Reuters report on Thursday.
Analysts forecast years of losses at ATA and challenges in securing new customers following these revelations, which dented the company's reputation, and an ongoing labour shortage crisis.
AmInvestment Bank said in a note that the full impact of Dyson's withdrawal is expected in the 2023 financial year, which would "severely impact" ATA's earnings that year and beyond.
Dyson contributes to around 80 per cent of ATA's revenue.
ATA may have enough time to replace some of its lost orders with other existing customers, AmInvestment added.
Another analyst covering the company also forecasts two to three years of losses and said ATA may face "quite a lot of obstacles" ramping up output for other customers given the allegations.
Rival electronics manufacturing services providers SKP Resources and VS Industry could benefit from Dyson's withdrawal from ATA, the analyst said, declining to be named due to sensitivities.
"The electronics manufacturing service business is lucrative. There are lots of products that they can look into especially with the rising Internet of Things trend. However, ATA might face difficulty getting new customers," said the analyst.