Apple supplier Wistron quadrupled workers in India in only eight months, ramping up production just as Apple began direct online sales in India. The only problem: Wistron Corp.’s systems weren’t robust enough to handle the deluge. Fed up workers revolted.
Anto Antony and Shruti Srivastava for Bloomberg:
The number of workers at the Taiwanese company, the first Apple supplier to produce iPhones in India, surged to about 9,000 in November from some 2,000 just before the pandemic, according to people with knowledge of the matter.
The rapid expansion stretched the company’s systems and sapped the bandwidth of its management team, one of the people said. Its employee access system soon foundered, leaving it with patchy attendance records, delaying wages and overtime pay. Wistron’s human resource team — comprising about three people — just couldn’t cope up with the workers’ grievances. On Dec. 12 many workers — promised roughly 15,000 rupees ($200) a month — rioted over unpaid salaries.
As the night shift crew finished on the morning of Dec. 12, workers streamed into the human resources department to ask for their salaries, according to a statement by the All India Central Council of Trade Unions. The workers were turned away. The violence started soon after, according to the AICCTU, which visited the area after the riots… Apple has said it is investigating the incident and whether Wistron adhered to its labor practices. It sent staff and auditors to the site, in cooperation with the local police.
The incident holds lessons for host countries as well as companies looking to relocate facilities out of China, according to Guoli Chen, professor for strategy at INSEAD in Singapore… U.S. and Japanese companies have over the years understood how to set up subsidiaries in foreign cultures, while Chinese and Taiwanese firms are new to this — so they should take more time to identify potential weak links and proactively work to mitigate risks.
MacDailyNews Take: The solution to this is to make sure the workers are paid in full for their work while sitting down with them, explaining the issues and solutions, and then following through. Over-deliver, in fact. We trust Apple and the Indian government will watch Wistron closely here to make sure it does the right things.
Huge ramp ups bring a whole host of problems other than those listed in the article.
As just one example…
About five decades ago I was working for a small construction company as an iron worker. That company quickly got several large contracts and over the course of a few months and had to increase worker head count by over a factor of 10. The company very quickly became what was called “payroll poor”. Projects were progressing on schedule, but the payments from prime contractors on the projects lagged behind efforts. Thus the cash available to pay workers became non existent. Normally this can be handled by standard cash flow methodologies, but such a huge ramp up made banks and other lending institutions extremely nervous to make bridge loans to cover ongoing expenses. The company was on the verge of bankruptcy when pressure from the property developers and the prime construction companies finally changed the attitudes of the lending institutions and the company survived, projects were completed (often ahead of schedule), and everyone got paid.
India like Brazil will not work out too much corruption at all levels.
Uhm, if you quadruple line workers, don’t you think it’s a good idea to, you know, increase the number of people working human resources? Three people in HR, is not enough for even a 100 person company.
Isn’t it really simply called: management? Apparently, keeping a pulse on bank rolls, orders and agreements with employees went south. Apple is the manager of the manager and lost the pulse…it appears. Bottom line; it’s an Apple deficiency.
I don’t understand the belief that a certain country can’t “do it,” be it India, Brazil, or That-a-land.
Each country has its challenges, but each has people that would embrace the opportunity and would perform as needed.
Meanwhile China tortures its own and rips blind the country needing their service, but otherwise manufactures without a hitch. What’s a manufacturing company to do?
Make more at home like Germany and Japan?
I think your question is a good one, but could you imagine the cost of the item and, or the margin Apple (and shareholders) would would lose? AAPL margins of 35+% would disappear and it’s a nut Apple has always held close.
You obviously think India is a mistake for such a thing. I can’t put 1.5 billion people into the loser bucket…especially when droves of Indians come here for tech study and entrepreneurial ventures and do exceedingly well. There may be initial bumps, but it’s a fairly young and upwardly changing demography.