South Korean automaker Hyundai Motor Co (005380.KS) on Friday told shareholders that it would sell its majority stake in a major Alabama auto parts plant where Reuters last year reported children as young as 12 were working.
In a Feb. 24 letter addressed to shareholders from Hyundai Chief Executive Jaehoon Chang, the company said recent audits at 29 of its direct suppliers across Alabama made it certain they are “now in full compliance with underage labor laws.”
The audits started last August, after Reuters first documented the issue, and were carried out by an outside law firm that inspected documents and did on-site inspections.
Hyundai gave a copy of the letter to reporters.
Hyundai also told investors it was enforcing sweeping new corporate measures, including a training program for its parts suppliers to start in March in collaboration with the U.S. Department of Labor (DOL), to stave off future child labor violations. DOL failed immediately reply to a request for comment.
Hyundai’s promise to its shareholders comes after a 2022 Reuters investigation revealed several suppliers to the automaker’s huge Montgomery, Alabama vehicle plant employed underage migrant workers to build parts for its popular U.S.-made cars and SUVs.
One of the facilities where children worked, SMART Alabama LLC in rural Luverne, Alabama, is a direct Hyundai subsidiary. According to Hyundai’s financial statements from 2022, the automaker owns a 72% stake in SMART.
Chang wrote that Hyundai was “in the process of divesting its ownership interest in SMART” but it would ensure “that the economically important jobs in the Luverne, Alabama community are preserved.”
Hyundai’s letter failed to say when the transaction would be finalized or name a buyer or the form a divestiture would take. Since the early 2000s, the metal stamping plant has built chassis parts for hundreds of thousands of Hyundai cars per year.
State And Federal Investigations Into Hyundai Subsidiary
Following Reuters’ first story on child labor at SMART last July, around 10 Hyundai suppliers in Alabama have been under scrutiny by state or federal authorities for child labor violations, Reuters reported in December.
One of the plants was inspected last August and authorities found and took away several children from the factory floor, later issuing fines to the plant operator and a third-party staffing agency that recruited them.
“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 wrote in the letter. “This is a zero-tolerance issue.”
As Reuters reported previously, most of the underage workers who worked at the Alabama auto parts plants were recruited by third-party staffing firms, a process that can allow major corporations to look past the illegal employment of minors.
In the shareholder letter, Chang restated that Hyundai was “discouraging” suppliers from depending on such staffing firms in the future.
He wrote that staffing agencies who recruited children to work at Hyundai supplier plants had given false employee documentation. In the future, however, Hyundai and its supply chain partners must do more to make sure children are never employed in their factories, the letter said.
Buy Crypto Now“Ultimately, the responsibility is with Hyundai to make sure all our suppliers understand and meet our high global workforce standards,” Chang wrote.
U.S. and Alabama law forbids people under the age of 16 from being employed in industrial factory settings, and anyone under 18 is forbidden from working in extremely dangerous roles in automotive plants, such as driving forklifts or stamping machines and operating metal-cutting.
Earlier in February, thirty-three members of Congress urged DOL to seek hefty and swift penalties against those answerable for child labor in the Hyundai supply chain.
