Hyundai Motor Co. announced Friday it will sell its shares in a parts manufacturing enterprise in Alabama after multiple suppliers were found to have used illegal child labor.
The practices were uncovered and first reported by Reuters news agency late last year. According to the December report, children as young as 12 were found working in multiple factories that supplied parts and assemblies to Hyundai and Kia. Hyundai had previously stated its intention to sever ties to the suppliers.
The parts operations found to be using child labor are owned by Hwashin America Corp. and Ajin Industrial Co. One subsidiary that employed children is called SMART Alabama LLC, and produces metal stampings for Hyundai and Kia vehicles. Hyundai Motor Co. currently owns 72% of SMART Alabama LLC.
Multiple child labor violations reported
Jaehoon Chang, president and CEO of Hyundai Motor Co., issued a statement Friday stating the corporation is “implementing new, more stringent workforce standards throughout its supply chain following an investigation into supplier labor practices after discovering two Alabama suppliers had each employed an underage worker.”
However, according to Reuters and government investigators, there were many more than single underage workers employed by Hyundai/Kia suppliers.
An October 2022 report by Reuters noted 10 Hyundai suppliers in Alabama were investigated by Federal agents looking for child laborers, and that several children were removed from the SL Alabama plant by the agents. The plant produces lights and mirrors for Hyundai and Kia.
A total of $35,000 in fines were levied by the Alabama Dept. of Labor for the violations at SL Alabama and JK USA Staffing, a temporary employment firm supplying workers to the factory. According to the Alabama Dept. of Labor, JK USA Staffing is known to have provided five children, aged 13 to 16, to work at the SL Alabama factory. SL Alabama laid the blame for the violations on JK USA Staffing, but also replaced its own president of the facility.
In a statement to Reuters, Kenneth Stripling, DOL’s Wage and Hours Division Director in Birmingham, Alabama, stated, “Our investigation found SL Alabama engaged in oppressive child labor.”
Additionally, products that may have been produced using child labor at SL Alabama were sequestered and the company was prevented from “shipping or delivering” those products by court order. However, it is not known for how long children were employed in the factory, making parts that are already in use.
Hyundai takes action
In response to these discoveries, Hyundai conducted investigations into 29 of its Tier One suppliers. The company says the investigations included dozens of interviews and site visits.
“Upon learning of issues last year at two suppliers doing business with Hyundai Motor Manufacturing Alabama, we took immediate actions, including launching multiple investigations and a broader review of our U.S. supplier network,” Chang said.
“These investigations included requiring Alabama suppliers to submit to independent third-party audits of their operations to ensure complete compliance with underage labor laws and to implement any recommended actions.”
The two suppliers, SL Alabama and SMART, have terminated their relationships with JK USA Staffing and other third-party staffing agencies who falsely certified that they had screened and cleared underage individuals as being of legal age. SL Alabama also agreed to the appointment of an audit committee appointed by Hyundai to ensure its continued compliance with labor laws and best practices. In addition, Hyundai Motor America is in the process of divesting its ownership interest in SMART.
Hyundai is also introducing a compliance training program in collaboration with the U.S. Department of Labor for its suppliers on a variety of employment subjects, including underage labor laws, how to validate applicant identification documents, Hyundai’s Business Partner Code of Conduct, installing anonymous tip hotlines, and discouraging the use of third-party staffing agencies. The training program will begin in March.
“The use of underage labor at a supplier or any operation is unacceptable, and we are committed to making sure non-compliance never happens again,” Chang stated. “This is a zero tolerance issue.
“Even though there were issues with third-party staffing agencies that provided false documentation to these suppliers, ultimately, the responsibility is with Hyundai to make sure all our suppliers understand and meet our high global workforce standards. The results of the investigation show that our suppliers are now in full compliance with underage labor laws, and we are committed to making sure they remain in compliance.”
In the statement, Chang also offered a current audit of Hyundai’s Tier 1 suppliers which states that no underage labor is currently happening in those factories.