Apple Reviewing Claims of Labor Violations at Supplier in China

Sep 05, 2014 2:13 am ET

Sept. 5 (Bloomberg) -- Apple Inc., which is planning to unveil new iPhones in less than a week, is dispatching a team to investigate claims of unsafe labor practices at a Catcher Technology Co. factory in China that makes aluminum enclosures for iPads and MacBooks.

A report by China Labor Watch and Green America found that Tainan, Taiwan-based Catcher Technology had 22 labor violations. They documented forced, unpaid overtime and improper handling of hazardous materials at a factory in Suqian in eastern China, where about 20,000 workers produce metal casings for Apple and other electronics companies. The investigation was conducted in August.

“The investigation of Catcher Technology raises serious concerns around working conditions in Apple’s second-tier supplier factories,” Todd Larsen, corporate responsibility director for Green America, said in a statement yesterday.

Apple designs its products at its headquarters in Cupertino, California, and uses a global network of suppliers and contract manufacturers to build them, including new iPhones that are due to be unveiled on Sept. 9. Apple’s suppliers have faced accusations of mistreating laborers in the past, and the iPhone maker has sought to fix any transgressions.

“We are deeply concerned about the claims made by China Labor Watch, and we take the report very seriously,” Catcher’s Chief Financial Officer James Wu said in an e-mailed response today. “We are committed to following Apple’s supplier code of conduct and will investigate thoroughly.”

Routine Inspections

Apple had already been working with Catcher to address concerns following routine inspections, according to Chris Gaither, a spokesman for Apple. Apple conducted a quarterly fire inspection last week and Catcher made same-day fixes to address a number of issues, he said. An annual audit in May also uncovered “some concrete areas for improvement,” and Apple worked with the supplier to develop a corrective action plan, Gaither said.

“We had scheduled a follow-up visit next month to review their progress, but have dispatched a team there immediately to investigate this report,” Gaither said in an e-mailed statement. “Apple is committed to ensuring safe and fair working conditions for everyone in our supply chain.”

Shares of Catcher declined 1.5 percent to close at NT$303.50 today in Taipei, while the benchmark Taiex index lost 0.2 percent.

New Products

“From the angle of human rights, we agree with China Labor Watch that manufacturing factories in China have rooms to improve, including Catcher,” Birdy Lu, a Taipei-based analyst at Deutsche Bank AG wrote in a note today. “From the business fundamental view, this is a non event. This is just one of another regular report from CLW that is pinpointing Apple supply chain.”

Apple, which tracks weekly hours of more than 1 million workers, said that through August, Catcher had averaged 95 percent compliance with the company’s 60-hour workweek limit.

Apple’s planned product introduction this month is in keeping with a strategy of releasing new iPhone models in September, kicking off a broader reboot of its lineup in time for the holiday shopping season. The company is set to introduce two new iPhone models: one with a 4.7-inch screen, and another with a 5.5-inch display, as well as a new wearable device, which would be the company’s first new product category since the iPad’s debut in 2010, people with knowledge of the matter have said. Apple is also due to unveil a new mobile-payments system, the people said.

--With assistance from Tim Culpan and Adela Lin in Taipei.