Rapid expansion, random wage cuts: behind the Wistron violence

Production at the plant at Narasapura in Kolar district around 60 km from Bengaluru, employing 1,343 regular workers and 8,490 contract workers, was suspended following the violence.

Worker unrest following the non-redressal of payment and overtime issues at a new factory of Wistron Infocomm Manufacturing India Pvt Ltd, a subsidiary of Wistron Corporation, the Taiwan-headquartered computers and computer peripherals firm that manufactures iPhones for Apple and other products, resulted in a riot at the plant on December 12.

Production at the plant at Narasapura in Kolar district around 60 km from Bengaluru, employing 1,343 regular workers and 8,490 contract workers, was suspended following the violence.

Wistron’s investment

Wistron, which makes devices and peripheral systems for major global tech companies, has manufacturing facilities and R&D centres at two dozen locations around the world. The company started a small pilot plant in Bengaluru in 2017 to make the iPhone and, in 2018, decided to make a large investment in Karnataka for a full-fledged plant.

Wistron Infocomm Manufacturing India Pvt Ltd was incorporated on February 18, 2018 with the pilot plant at the Peenya Industrial Estate in Bengaluru as its official address. Initially the company supplied the iPhone SE and 6s from the Peenya facility. In January 2019, Wistron announced that it was looking to invest as much as Rs 3,000 crore in its Indian subsidiary.

“Given the consideration of long-term development of Wistron Group in India, the subsidiary of the company Wistron InfoComm Manufacturing (India) Private Limited has raised its authorised capital to INR 30 billion at once,” the firm said in a statement to the Taiwan stock exchange in January 2019.

The Karnataka government allocated 43 acres in Narasapura for Wistron to build a larger plant. The company got environmental clearance in mid-2019 and, in 2020, announced investments to the tune of Rs 1,220 crore in equipment and machinery for the Kolar plant, which is designated as a service and manufacturing centre. In August 2020, the plant became fully operational, with around 5,000 employees to manufacture the iPhone SE (2020) and iPhone 7 models.

That same month, Wistron said it “intends to build a factory building” at a cost of Rs 550 crore including a civil construction contract of Rs 250 crore in an expansion of its Narasapura facility. According to Karnataka government officials, the company has sought more land near its current plant. “They wanted to expand but we have to now see their revised plans [after the December 12 incident]. Earlier we had identified another 65 acres because they wanted to increase the built up area,” a senior government official said.

‘Running a sweatshop’

According to investigations by police, trade unions, and the state government, a pressure-cooker situation had built up in the factory due to anomalies in the wage payment system after Wistron rapidly scaled up its contractual employee strength from around 3,000 to nearly 8,500 between September 2020 and December 2020.

“They scaled up very fast. This facility became operational only in August. Before August, the plant was not in existence. All the recruitment has happened in the last three or four months. They sought initial permission for 5,000 people, and then went to 9,000 at their level. Maybe there was more demand. This was when they moved from eight-hour to 12-hour shifts,” said Gaurav Gupta, principal secretary of the commerce and industries department in Karnataka.

The contract employees were hired and paid through six manpower supply contractors, but their work was supervised and managed by Wistron officials. “In two months, we provided 2,300 workers to the firm; nearly 1,600 were young people from Kolar itself,” said A N Srinivas, a recruiter for Creative Engineers, a local labour contractor.

Initial police investigations have revealed that the contractors were not paying the workers their full wages as per their contracts, or for overtime work. “The factory was being operated like a sweatshop,” police sources said. While wages were slashed from Rs 22,000 to Rs 8,000 in some cases, wages for November were not paid until December 12, contract employees have said. Workers were working in two compulsory 12-hour shifts. With no employee grievance redressal system in place at the firm or a union, workers were constantly asking company officials for their dues, the All India Central Council of Trade Unions has said in a report.

An official of the labour department said the trigger for the violence during a 6 am shift change on December 12 was an argument over the attendance system not capturing the exact work hours logged by the workers. Wistron officials initially estimated the damage at Rs 437 crore, but later revised it downward to about Rs 43 crore saying the “violence did not cause any material damage to major manufacturing equipment and warehouses”.

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Wistron, Apple reaction

Wistron has sent audit teams to estimate the damage, see how fast the factory can be restored, and understand the lacunae in the payment system. “They have done their internal audit and I think they will be taking remedial measures,” Industries Secretary Gupta said.

Wistron has acknowledged there were problems: “…We have been investigating and have found that some workers were not paid correctly, or on time. We deeply regret this and apologize to all of our workers,” it has said.

“…We recognize that we made mistakes as we expanded. Some of the processes…to manage labour agencies and payments need to be strengthened and upgraded. We are taking immediate action to correct this, including disciplinary action.”

Apple has put Wistron on probation, and said the company will get no more orders until it fixes the problems. “…We have placed Wistron on probation and they will not receive any new business from Apple before they complete corrective actions. Apple employees, along with independent auditors, will monitor their progress,” Apple has said.

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