Apple supplier Pegatron hit by China plant blast.
Posted 19 December 2011 - 02:59 PM
(Reuters) - Apple Inc supplier Pegatron Corp reported an explosion at a subsidiary's plant in Shanghai over the weekend that it said had injured 61 workers, the latest in a series of incidents that have spotlighted safety concerns at factories in China.
Pegatron Chief Financial Officer Charles Lin told Reuters on Monday that the explosion at the plant, which belongs to Riteng Computer Accessory Co and is located in Shanghai's Songjiang industrial park, had not caused a fire, but 23 of the injured workers needed to be hospitalized.
"The factory has not started operations yet. Part of the facility is still under pre-operation inspection and part is running trial production," Lin said.
Apple said it was investigating.
"Our hearts go out to the people who were hurt in Songjiang. We are working closely with Pegatron to understand the cause of this accident," said spokeswoman Carolyn Wu.
The accident brings the spotlight back onto safety concerns over factories in China that make most of the world's computers and other electronic devices, and over Apple's supply chain, which has come under criticism from the Chinese government, and labor and environmental groups.
Hon Hai Precision Industry Co Ltd, Apple's top manufacturing partner, has had two incidents at China plants this year.
In May, an explosion at its electronics polishing facility in the western city of Chengdu killed three and injured 15. In September, electrical cables on a building rooftop at a plant in the eastern Shandong province caught fire but caused no casualties.
The company also had a rash of suicides at its plants last year, blamed by labor groups on overwork and poor conditions.
Chinese state broadcaster CCTV aired a program on Oct 16 in which its reporters visited suppliers that Chinese environmental groups had said in August were thought to be doing business with Apple and had lax environmental standards.
The August report, by a coalition of Chinese environmental organizations including Friends of Nature and the Institute of Public & Environmental Affairs, said 27 companies thought to be Apple suppliers had severe pollution problems, from toxic gases to heavy metal sludge.
Taiwan's Catcher Technology Co Ltd, a casing supplier for Apple, was ordered in October to close a plant because of complaints about pollution.
But the companies are not the only ones to blame.
"I don't think the international corporates are doing any better or worse than the local companies," said labor activist Han Dongfeng of China Labor Bulletin, a non-governmental organization in Hong Kong.
"It's the many shortcomings in the Chinese labor laws and institutions that lead to poor welfare of the workers."
Pegatron said in a weekend statement that there was some damage to machinery but it could make adjustments to the facility to minimize the impact on operations and revenue.
Riteng Computer declined to comment.
In its own statement on Sunday, the Shanghai city government said the explosion occurred at about 3:40 p.m. on December 17 at a workshop on the fourth floor of the facility. It put the number of injured at 57, of whom 23 had burns and were hospitalized for further observation, but none had life-threatening injuries.
Shares of Pegatron ended down 1.71 percent on Monday, trimming losses from a 6.7 percent decline at the open. The broader market fell 2.2 percent.
According to China's Yi Cai Daily, the plant would produce back panel parts for the iPad 2 and if the safety issue could not be quickly resolved, Apple's supply chain would be affected next quarter.
Pegatron declined to disclose details of the plant's customers. A source with knowledge of the matter said the facility would be partly used to make products for Apple.
Lin said resumption of operations would depend on the government's decision, and an investigation report by the Shanghai city government was expected later on Monday.
(Additional reporting by Samuel Shen in Shanghai; Editing by Jonathan Standing)
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