Hyundai will “sever ties” with some U.S. suppliers that have employed child labor, the automaker’s global COO said.
José Muñoz responded to an escalating scandal first triggered by an investigative report by Reuters. It found a South Korean-operated parts plant in Laverne, Alabama was employing immigrant children, at least one as young as 12 years old. The executive said he has ordered a full investigation into operations at SMART Alabama LLC, which is controlled by Hyundai. But state and federal regulators are looking into reports of child labor at another regional Hyundai supplier.
In an interview with the news service, Muñoz said he has ordered an even more extensive investigation of Hyundai’s entire U.S. parts supplier network looking for potential violations of state and federal labor laws.
The goal is to “ensure compliance,” according to the executive who joined Hyundai in April 2019.
Among the steps underway, Hyundai will “sever relations” with both SMART Alabama and SL Alabama “as soon as possible.” The latter firm was reportedly employing children as young as 13 years of age.
The automaker already stopped using a labor recruiting firm that reportedly was hiring child migrants from Guatemala. But other recruiters are now coming under investigation by Hyundai and government authorities.
The highest-ranking Hyundai executive to address the scandal, Muñoz said “Hyundai is pushing to stop using third party labor suppliers, and oversee hiring directly.”
An open secret
SMART Alabama has yet to make a public statement on the child labor violations, though SL Alabama — which is also controlled by Hyundai — put the blame on contractors. The company said in a statement it has launched “aggressive steps to remedy the situation.”
In an interview with NPR, Reuters reporter Mica Rosenberg said, “We did speak to former workers who were working alongside some of these younger minors and told us that there was no way that they looked old enough to work, even if they might not, you know, admit their age when they’re on the line.”
The scandal broke when Reuters issued a report on child labor at the Hyundai suppliers in August. Subsequently, investigations were launched by Alabama and federal authorities. The automaker has since been facing mounting pressure not only from community groups but also investors.
Long-term damage to Hyundai’s image
SOC Investment Group, which works with union pension funds of more than $250 billion in assets, addressed the issue in a letter to Hyundai Motor Co. In the letter, the group said, “Child labor and poor workplace health and safety have regulatory and legal repercussions for Hyundai in the U.S. and can cause reputational damage across the globe.”
“Your product might be tinged for a long time,” said Dieter Waizenegger, the executive director of SOC.
The use of child labor not only violates state, federal and international standards but also runs counter to Hyundai’s own human rights charter, critics have noted.
Not the only labor scandal
This is just the latest in a series of potential labor law violations involving Hyundai in the U.S. A lawsuit filed earlier this year accused both SMART Alabama and a labor recruiter in Georgia of improperly encouraging Mexican engineers to move to the U.S. Once across the border, the suit claims, they were forced to work extended hours at a fraction of the rates paid to American counterparts.
The two labor scandals center around the $1.8 billion assembly complex Hyundai operates near Montgomery, Alabama. That facility produced nearly half of the 738,000 cars and crossovers the Korean automaker sold in the U.S. last year.