Seagate Unveils New Labor Health Guidelines
Company Sets Rules For Factories After Alleged Violations In Asia
by Karl Schoenberger, Mercury News
12 December 2002 –
On its first day of trading after returning to Wall Street as a public company, Seagate Technology on Wednesday unveiled new standards for its environmental health and safety practices, setting strict rules for its major manufacturing facilities in Asia.
Seagate made the disclosure on its Web site in response to questions from the Mercury News. The company, the world’s largest maker of computer disk drives, has been beset by allegations of health and safety violations in its overseas factories since the early 1990s, when it was accused of exposing workers in Thailand to harmful levels of toxic lead.
Last month, in a series examining environmental and labor conditions involved in computer production and recycling, the Mercury News published an account of low-paid Chinese employees working excessive overtime to meet Seagate’s production demands, a violation of China’s national labor law. Some of these workers also complained of having been shortchanged by the company on their pension accounts after being laid off.
Brian Ziel, a Seagate representative, said Wednesday that the company had no comment on the disclosure of the new health and safety guidelines (www.seagate.com/newsinfo/ community/ehs/D5b1.html).
The company’s revised policy comes as high-tech companies are feeling increased pressure for accountability in their environmental and workplace practices overseas, on issues that range from recycling hazardous waste to labor standards at their own or contractor factories in the developing world.
Chief executive Stephen J. Luczo outlined the new policy in an open letter, saying Seagate would “provide employees and contractors with a safe workplace by identifying and eliminating the causes of occupational injuries and illnesses,” as well as “support sustainable economic growth,” minimize environmental impact, develop safe products and manufacturing processes, and monitor compliance with local laws.
Recent stock debut
Seagate grew up in Scotts Valley, but in a $1.7 billion leveraged buyout two years ago it became a subsidiary of the privately held Seagate Holdings of the Cayman Islands. The parent company went public Tuesday in a $870 million initial public offering, one of the few successful IPOs in the technology sector this year.
Shares slipped Wednesday and closed at $11.50 on the New York Stock Exchange, down from the $12-per-share offering price that itself was discounted. Wednesday’s closing price values Seagate at $4.9 billion.
Luczo, a former investment banker, is best known for his work to restructure the company, cutting 40,000 jobs—half the workforce—during the two years that Seagate was private. In a letter that had been posted on Seagate’s Web site until Wednesday, Luczo said the company had recently “laid the foundation for transforming” its environmental health and safety practices.
Allegations of labor violations at Seagate’s factory in Shenzhen, China, first surfaced in July. An article by the Mercury News Beijing Bureau cited a report from a Chinese think tank that said Seagate workers each had worked an average of 150 hours of overtime a month during the past two years. A company official denied the allegation, saying the overtime average was 66 hours and voluntary, and that company policies ensured “a safe and positive work environment.”
In November, however, the Mercury News interviewed Chinese workers who recently had been laid off from the Shenzhen factory. They claimed that during the past two years they typically had worked a minimum of 12 hours a day and had been expected to work seven days a week for long stretches.
In response, Seagate issued a statement, saying: “It came to our attention that there were circumstances in connection with our operations in Shenzhen that were not in compliance with overtime requirements. We are taking aggressive action to correct any issues, and are committed to maintaining compliance and continuing to ensure a safe and positive work environment for our employees.”
Pension-fund dispute
Seagate has not commented publicly on allegations by Shenzhen employees that they also were shortchanged on their pension-fund accounts when the company closed its largest factory in Shenzhen. Nor did the company respond to direct appeals for compensation by the Chinese workers and their attorney, who found no record of their accounts at the Shenzhen Social Insurance Bureau.
In an internal company document obtained by the Mercury News, Seagate executive Don Waite told employees that the company had immediately addressed the problems of overtime and said the company expects to be “in full compliance in the near future.”
He added that “earlier this year, as a result of concerns raised by some former Seagate employees, the company requested a review of our pension-fund practices by the Shenzhen Social Insurance Bureau. In April, the bureau advised us that our practices were in compliance with the pension-fund regulations.”
Seagate’s problems in Thailand emerged in 1991 when employees at the company’s assembly plant in the Bangkok suburb of Teparuk complained of health problems, such as respiratory ailments, that they attributed to poor ventilation at the plant.
At the time, Seagate was the largest private employer in Thailand, with six assembly and testing plants. After five workers at the Teparuk plant died of unknown causes, employees sought help from Bangkok physician Orapun Methadilokkul at the National Institute of Environmental Medicine in Bangkok. She tested blood samples and found high levels of lead poisoning and attributed illnesses to industrial solvents.
It was never established whether lead contamination was the cause of illness at the plant.
Seagate officials did not comment Wednesday about the case.
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