Pegatron's alleged labour violations may hurt its Apple supply plans

Pegatron's hope to grab business from Foxconn at risk from allegations it, too, abused workers

PUBLISHED : Tuesday, 30 July, 2013, 12:00am
UPDATED : Tuesday, 30 July, 2013, 3:13am

Pegatron, the second-biggest electronics manufacturing contractor for Apple, could see its plans to snatch more contract work from rival Hon Hai Precision Industry laid to waste by allegations of labour violations at its mainland factories.

Taipei-based Pegatron had been working to win more business from Apple after the technology giant shifted more of its iPhone and iPad mini production orders to the firm beginning late last year.

China Labour Watch, which, among others, created a brouhaha over allegations of labour abuses against Foxconn Technology, Hon Hai's trading name, has now accused Pegatron of at least 86 labour rights violations at its three factories in Shanghai and Suzhou, which were the subject of its investigation from March to July this year.

In a 60-page report released yesterday, the New York-based workers' advocacy group said the violations fell into 15 categories: dispatch labour abuse; hiring discrimination; women's rights violations; underage labour; contract violations; insufficient worker training; excessive working hours; insufficient wages; poor working conditions; poor living conditions; difficulty in taking leave; labour health and safety concerns; ineffective grievance channels; abuse by management; and environmental pollution.

Jason Cheng, the president and chief executive at Pegatron, said in a statement that the company would fully investigate the allegations and "take immediate actions to correct any violations of Chinese labour laws and our own code of conduct".

Asked to comment on whether the issues could undermine the company's plans to get more business from Apple, a Pegatron spokesman yesterday said:

"Employees are the important part of the company's operation, and the company will do its best to improve any labour issues."

Alberto Moel, a senior analyst at Bernstein Research, said in a report this month that Pegatron had increased its workforce by 40 per cent, which could enable it to pick up "roughly an incremental 10 per cent of Apple's 2013 iPhone and iPad business".

Bernstein's current estimates see Hon Hai continuing to maintain 80 per cent of Apple's iPhone and iPad contract manufacturing business, Moel added.

In a statement, Apple said that its audit teams would inspect the three Pegatron plants identified in the report this week.