Hyundai Motor Co, South Korea’s top automaker, is investigating the use of child labor in its US supply chain, and plans to “sever ties” with Hyundai suppliers in Alabama found to have relied on underage workers, Hyundai global CEO Jose Munoz said on Wednesday.
A Reuters report in July documented children, including a 12-year-old, working at an Alabama metal stamping plant controlled by Hyundai called SMART Alabama LLC.
Following the report, the Alabama Department of Labor, in coordination with federal agencies, began investigating the plant. Authorities subsequently launched a child labor probe at another of Hyundai’s regional supplier plants, Korean-operated SL Alabama, finding child workers as young as age 13.
In an interview before a Reuters event in Detroit, Michigan, on Wednesday, Munoz said Hyundai intends to “sever relations” with the two Alabama supplier plants under scrutiny for deploying underage labor “as soon as possible.”
Additionally, Munoz said he had ordered a broader investigation into Hyundai’s entire network of US auto parts suppliers for potential labor law contraventions and “to ensure compliance.”
Munoz’s comments represent the South Korean automotive giant’s most substantive public acknowledgment to date that child labor violations might have occurred in its US supply chain, a network of dozens of mostly Korean-owned auto-parts plants that supply Hyundai’s massive vehicle factory in Montgomery, Alabama.
That US$1.8 billion flagship US factory produced nearly half of the 738,000 vehicles the automaker sold in the US last year, company figures showed.
Munoz also said that Hyundai would push to stop relying on third party labor suppliers at its southern US operations.
The migrant children from Guatemala found working at SMART Alabama LLC and SL Alabama were reported to have been hired by recruiting or staffing firms in the region.
Hyundai said in a statement this week that it had already stopped relying on at least one labor recruiting firm that had been hiring for SMART.
“Hyundai is pushing to stop using third party labor suppliers, and oversee hiring directly,” Munoz said.
SL Alabama in a statement on Wednesday 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 a request for comment.
Munoz’s comments come on the same day that an investor group working with union pension funds sent a letter to Hyundai, pushing it to respond to reports of child labor at US parts suppliers, and warning of potential reputational damage to the automaker.
The letter said that the use of child labor contravened international standards Hyundai committed to in its Human Rights Charter and its own code of conduct for suppliers.
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