If you want to secure a manufacturing contract with Apple, a Supplier Code of Conduct needs to be followed. Supply partner Pegatron violated that code and is now suffering the consequences.
As Reuters reports, Taiwanese electronics manufacturing company Pegatron is one of Apple’s iPhone supply partners. However, Apple discovered the company had both falsified paperwork and mis-classified student workers. In a statement Apple said, “Several weeks ago, we discovered Pegatron – one of Apple’s suppliers in China – violated Apple’s Supplier Code of Conduct in its administration of a student work study programme.”
This wasn’t a simple mistake on Pegatron’s part, with Apple going on to state, “The individuals at Pegatron responsible for the violations went to extraordinary lengths to evade our oversight mechanisms.” The consequence of this behavior is also clear, “Apple has placed Pegatron on probation and Pegatron will not receive any new business from Apple until they complete all of the corrective actions required.”
In response, Pegatron has fired the executive “with direct oversight of the programme” and also removed student workers from the Shanghai and Kunshun production lines who do not comply with local rules and regulations. It’s unclear if that’s enough to cover the corrective actions, but for now Pegatron can’t secure new business from Apple. The main consequence so far has been Pegatron’s share price dropping by over two percent.
