[US] Hyundai investigating child labour violations in supply chain

Hyundai Motor Co, Korea's top auto producer, is investigating child labour violations in its US supply chain and plans to "sever ties" with Hyundai suppliers in Alabama found to have relied on underage workers, Reuters reports.

On October 19 Hyundai's global chief operating officer Jose Munoz told Reuters about the investigation. In July a Reuters investigative report documented children, including a 12-year-old, working at a Hyundai-controlled metal stamping plant in rural Luverne, Alabama, called SMART Alabama, LLC.

Alabama's state Department of Labor, in coordination with federal agencies, reportedly began investigating SMART Alabama following the Reuters report. Authorities subsequently launched a child labour probe at another of Hyundai's regional supplier plants, Korean-operated SL Alabama, and found children as young as 13.

In an interview before a Reuters event in Detroit on October 19, Mr Munoz said Hyundai intends to "sever relations" with the two Alabama supplier plants under scrutiny for deploying underage labour "as soon as possible."

Mr Munoz also reportedly told Reuters that he had ordered a broader investigation into the automotive giant's entire network of US auto parts suppliers for potential labour law violations and "to ensure compliance."

Mr Munoz's comments are Hyundai’s most substantive public acknowledgement to date that child labour violations may have occurred in its US supply chain; a network of dozens of mostly Korean-owned auto-parts plants that supply the automaker's massive vehicle assembly plant in Montgomery, Alabama.

According to company figures, Hyundai's $1.8 billion flagship US assembly plant in Montgomery produced nearly half of the 738,000 vehicles the automaker sold in the US in 2021.

In addition, the executive reportedly pledged that Hyundai would push to stop relying on third-party labour suppliers at its southern United States operations.

As Reuters previously reported, migrant children from Guatemala found working at SMART Alabama, LLC and SL Alabama had been hired by recruiting or staffing firms in the region. In a statement to Reuters this week, Hyundai said it had already stopped relying on at least one labour recruiting firm that had been hiring for SMART.

Mr Munoz told Reuters, "Hyundai is pushing to stop using third-party labour suppliers, and oversee hiring directly."

He did not offer further detail about how long Hyundai's probe of its US supply chain would take, when it or any partner plants could end their dependence on third-party staffing firms for labour or when Hyundai could end commercial relationships with the two existing Alabama suppliers investigated for child labour violations by US authorities.

In an October 19 statement, SL Alabama said it had taken "aggressive steps to remedy the situation" as soon it learned a subcontractor had provided underage workers. It terminated its relationship with the staffing firm, took more direct control of the hiring process and hired a law firm to conduct an audit of its employment practices, it said.

SMART Alabama did not immediately respond to Reuters’ request for comment.

Mr Munoz's comments came on the same day that an investor group working with union pension funds sent a letter to Hyundai, calling on it to respond to reports of child labour at US parts suppliers and warning of potential reputational damage to the Korean automaker.

The letter reportedly said that the use of child labour violated international standards Hyundai committed to in its Human Rights Charter and its own code of conduct for suppliers.

Source: Reuters

(LInks and quotes via original reporting)

Hyundai Motor Co, Korea's top auto producer, is investigating child labour violations in its US supply chain and plans to "sever ties" with Hyundai suppliers in Alabama found to have relied on underage workers, Reuters reports.

On October 19 Hyundai's global chief operating officer Jose Munoz told Reuters about the investigation. In July a Reuters investigative report documented children, including a 12-year-old, working at a Hyundai-controlled metal stamping plant in rural Luverne, Alabama, called SMART Alabama, LLC.

Alabama's state Department of Labor, in coordination with federal agencies, reportedly began investigating SMART Alabama following the Reuters report. Authorities subsequently launched a child labour probe at another of Hyundai's regional supplier plants, Korean-operated SL Alabama, and found children as young as 13.

In an interview before a Reuters event in Detroit on October 19, Mr Munoz said Hyundai intends to "sever relations" with the two Alabama supplier plants under scrutiny for deploying underage labour "as soon as possible."

Mr Munoz also reportedly told Reuters that he had ordered a broader investigation into the automotive giant's entire network of US auto parts suppliers for potential labour law violations and "to ensure compliance."

Mr Munoz's comments are Hyundai’s most substantive public acknowledgement to date that child labour violations may have occurred in its US supply chain; a network of dozens of mostly Korean-owned auto-parts plants that supply the automaker's massive vehicle assembly plant in Montgomery, Alabama.

According to company figures, Hyundai's $1.8 billion flagship US assembly plant in Montgomery produced nearly half of the 738,000 vehicles the automaker sold in the US in 2021.

In addition, the executive reportedly pledged that Hyundai would push to stop relying on third-party labour suppliers at its southern United States operations.

As Reuters previously reported, migrant children from Guatemala found working at SMART Alabama, LLC and SL Alabama had been hired by recruiting or staffing firms in the region. In a statement to Reuters this week, Hyundai said it had already stopped relying on at least one labour recruiting firm that had been hiring for SMART.

Mr Munoz told Reuters, "Hyundai is pushing to stop using third-party labour suppliers, and oversee hiring directly."

He did not offer further detail about how long Hyundai's probe of its US supply chain would take, when it or any partner plants could end their dependence on third-party staffing firms for labour or when Hyundai could end commercial relationships with the two existing Alabama suppliers investigated for child labour violations by US authorities.

In an October 19 statement, SL Alabama said it had taken "aggressive steps to remedy the situation" as soon it learned a subcontractor had provided underage workers. It terminated its relationship with the staffing firm, took more direct control of the hiring process and hired a law firm to conduct an audit of its employment practices, it said.

SMART Alabama did not immediately respond to Reuters’ request for comment.

Mr Munoz's comments came on the same day that an investor group working with union pension funds sent a letter to Hyundai, calling on it to respond to reports of child labour at US parts suppliers and warning of potential reputational damage to the Korean automaker.

The letter reportedly said that the use of child labour violated international standards Hyundai committed to in its Human Rights Charter and its own code of conduct for suppliers.

Source: Reuters

(LInks and quotes via original reporting)