Hyundai to sell Alabama facility after child labor revelations
Technology
29 of direct suppliers in Alabama in full compliance with underage labor regulations, says Chief Executive
(Reuters) - Hyundai Motor said to shareholders on Friday that it will sell its majority ownership in a significant Alabama auto parts facility where Reuters had previously found evidence of minors as young as 12 working there.
Hyundai Chief Executive Jaehoon Chang wrote a letter to shareholders on February 24 in which he expressed the company's confidence that 29 of its direct suppliers in Alabama were currently in full compliance with underage labor regulations as a result of recent audits there.
The audits were carried out by an independent law firm that evaluated papers and performed on-site inspections. They started last August, following Reuters' initial story on the matter.
Reuters received a copy of the letter from Hyundai.
A training program for its components suppliers will start next month in cooperation with the U.S. Department of Labor (DOL) in an effort to stop further instances of child labor breaches, Hyundai also disclosed to investors. A request for comment from DOL was not immediately complied with.
When a 2022 Reuters investigation revealed numerous suppliers to the automaker's sizable Montgomery, Alabama vehicle facility employed migrant laborers who were under the age of 18 to produce parts for its well-liked American-built vehicles and SUVs, Hyundai made a promise to its shareholders.
Smart Alabama in rural Luverne, Alabama, one of the facilities where kids worked, is a direct Hyundai subsidiary. Hyundai owns a 72% ownership in SMART, according to financial reports from the previous year.
According to Chang, Hyundai was "in the process of divesting its ownership interest in SMART," but this procedure would guarantee "the preservation of the economically significant employment in the Luverne, Alabama neighborhood."
Hyundai's letter did not provide a completion date, name a potential buyer, or describe the structure of a sale. The metal stamping facility has produced chassis components for tens of thousands of Hyundai automobiles annually since the early 2000s.
As many as 10 Hyundai suppliers in Alabama have been under investigation by state or federal authorities for child labor violations since Reuters' initial piece on child labor at SMART in July of last year, according to a Reuters report in December.
Chang reaffirmed in a shareholder letter that Hyundai was "discouraging" suppliers from depending on these hiring firms going forward.
He said that recruiting companies had supplied bogus employment documents when they hired kids to work at Hyundai supplier plants. Nevertheless, going forward, Hyundai and its supply chain partners must take further steps to make sure that kids are never forced to labor in their factories, according to the letter.
Anybody under 18 is barred from working in extremely risky positions in automobile facilities, such as driving forklifts or operating metal-cutting and stamping equipment. These occupations are specifically prohibited by U.S. and Alabama law.
33 members of Congress asked DOL earlier this month to pursue severe and prompt sanctions against individuals who engage in child labor.
Chang reaffirmed in a letter to shareholders that Hyundai was "discouraging" suppliers from depending on hiring firms of this nature going forward.
In his article, he claimed that employment agencies had given bogus employee documents when they hired kids to work at Hyundai supplier factories. But, the letter stated that going forward, Hyundai and its supply chain partners must take additional steps to guarantee that minors are never forced to labor in their factories.
By Alabama and U.S. law, anybody under the age of 18 is not allowed to work in industrial production settings or in jobs that are highly dangerous, such operating metal-cutting and stamping equipment or operating forklifts.
33 members of Congress encouraged DOL to pursue severe and prompt sanctions against individuals who engage in child labor earlier this month.
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