November 26, 2021

Is This The Malaysian ATA Response To The Issue Of Forced Labor?

The ATA alert has already begun an investigation.

ATA IMS Bhd, Dyson's supplier company, took seriously the allegations of forced labor practices and claims of physical abuse against its former employees reported in the audit summary received from the home appliance maker.

Earlier, Dyson had terminated his relationship with the ATA over allegations of forced labor practices.

The company said as soon as it was informed of the Dyson audit, the ATA immediately appointed a consulting firm to review and confirm the findings and take any necessary remedial measures but they did not detail who it hired.

The ATA has also appointed a law firm in Malaysia to investigate allegations of physical abuse by its former employees and a detailed report and findings will be finalized soon.

Meanwhile, ATA shares fell sharply by 36.6% on Friday and lost more than half of their value since the issue of the allegations spread.

Analysts predict years-long losses at ATA and the company will face major challenges in gaining new customers due to its damaged reputation as well as the ongoing labor shortage crisis.

AmInvestment’s note states the full impact of Dyson’s production is expected in financial year 2023 which will ‘severely impact’ ATA’s earnings in that year and beyond.

Dyson has accounted for about 80% of ATA revenue and ATA may have enough time to replace some of its lost orders with other existing customers.

Another analyst predicted a 2 to 3 year loss and said ATA may face ‘many hurdles’ in increasing production for other customers given the allegations.

Meanwhile, competitors ATA, SKP Resource and VS Industry could benefit from Dyson’s withdrawal from the ATA.