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Business News/ Industry / Manufacturing/  Wistron set to reopen strife-hit Karnataka factory

Wistron set to reopen strife-hit Karnataka factory

iPhone maker says it has put in place new hiring, payroll systems

The development has also come as a relief to the contract workers.ptiPremium
The development has also come as a relief to the contract workers.pti

Wistron Corp., the largest assembler of Apple Inc.’s iPhones in India, said it will restart operations at its factory near Bengaluru after being forced to shut it down in December because of rioting by workers over unpaid wages.

Though Tuesday’s statement did not give a timeline for reopening the plant, two people aware of the developments said it could happen within a week. Wistron said it has now put in place new hiring and payroll systems.

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Apple decided to suspend new business to Wistron until it fixed the problems that led to the December violence after an initial investigation by the US tech giant found several lapses by the Taiwanese company that delayed payments to some employees. Wistron produces Apple’s iPhone 7 and iPhone SE, among other products at the plant in Narasapura.

In a separate statement, Apple said, “For the past eight weeks, teams across Apple, along with independent auditors, have been working with Wistron to make sure the necessary systems and processes are in place at the facility."

Apple said that Wistron has completed corrective actions and restructured its recruiting team, but the iPhone assembler will continue to remain on probation and its progress in implementing changes will be monitored closely.

“As Wistron begins the process of hiring team members and restarting their operations, everyone at the facility will undergo a new training programme to ensure they understand their rights and how they can raise any concerns. Apple employees and independent auditors will remain on-site to validate that the new processes are effective," the statement said.

Senior Karnataka government officials said that police verification of around 6,000 employees was completed and licences have been reissued to Wistron.

The restarting of the Wistron facility will be significant for Apple, which has been pushing hard to boost its market share in India. As part of the company’s efforts, Apple launched its official online store in India in September and may later open physical stores.

Industry experts said that the urgency shown by Apple in resolving the issues at the facility near Bengaluru was driven by the need to restore supply at a time its market share was on the upswing.

“India is now a serious destination on Apple’s radar, not only as a market but also from an ecosystem development point of view. This move clearly outlines their intent that they want to grow and have a stable base out of India," said Faisal Kawoosa, founder and chief analyst, techARC.

The American tech giant’s efforts to introduce cheaper models such as iPhone SE and iPhone XR and iPhone 11 in a price-sensitive market have paid off, with Apple’s market share in India doubling to 4% in the December quarter.

iPhone SE (2020) was the most shipped iPhone in the December quarter, accounting for 30% of all iPhone shipments, while iPhone 11 with 27% and iPhone XR with 14% shipments were the other two sought-after models in India, according to Counterpoint Research.

Apple started making iPhones in India in 2017 with Wistron as the primary supplier. In 2019, Foxconn started making iPhone XR units at its Chennai plant. iPhone 11 was added to the production line in 2020.

Tarun Pathak, associate director at Counterpoint Research, said Apple’s efforts to resolve the problem quickly point to its growing ambitions in India. “This is more of a statement of Apple’s strong India ambitions and willingness to overcome any challenges. Apple has several products other than iPhones, and they are likely to come here too," said Pathak.

Pathak added that the incident gives Apple the opportunity to learn about India-specific challenges and apply the learning across suppliers.

Having a dependable manufacturing base in India also reduces Apple’s over-dependence on China.

At least two Karnataka government-commissioned reports had pointed out serious irregularities by Wistron and its workforce contractors who were blamed for taking the lion’s share of workers’ wages that eventually led to the crisis.

The suspension of new business had given an unexpected lift to rival suppliers Foxconn and Pegatron, who are angling to capture a larger share of Apple’s business orders in India as well as from other companies.

The development has also come as a relief to the contract workers, many of whom were in hiding after Wistron made a police complaint against more than 7,000 people for the violence.

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Updated: 10 Feb 2021, 06:13 AM IST
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