Daily Management Review

Child Labour Violations Being Probed In Its US Supply Chain By South Korean Auto Giant Hyundai


Child Labour Violations Being Probed In Its US Supply Chain By South Korean Auto Giant Hyundai
Hyundai Motor Co, Korea's largest automaker, is probing child labor violations in its supply chain in the US and intends to "sever ties" with Hyundai suppliers in Alabama found to have used labourers, according to the company's global chief operating officer Jose Munoz. 
In July, a Reuters investigation found children, including a 12-year-old, working at SMART Alabama, LLC, a Hyundai-controlled metal stamping plant in rural Luverne, Alabama.
Following the Reuters report, the Alabama Department of Labor, in collaboration with federal agencies, launched an investigation into SMART Alabama. Authorities then launched a child labor investigation at another of Hyundai's regional supplier plants, Korean-owned SL Alabama, and discovered children as young as 13 years old.
Munoz stated in an interview prior to a Reuters event in Detroit on Wednesday that Hyundai intends to "sever relations" with the two Alabama supplier plants under investigation for using underage labor "as soon as possible."
Furthermore, Munoz told Reuters that he had ordered a broader investigation into Hyundai's entire network of U.S. auto parts suppliers to look for potential labor law violations and "ensure compliance."
Munoz's remarks represent Hyundai's most substantive public admission to date that child labor violations may well have happened in its US supply chain, which is comprised of a network of dozens of mostly Korean-owned auto-parts firms that provide the huge vehicle assembly plant of Hyundai in Montgomery, Alabama.
According to company figures, Hyundai's $1.8 billion flagship U.S. assembly plant in Montgomery produced nearly half of the 738,000 vehicles sold in the United States last year.
The executive also stated that Hyundai would work to eliminate the use of third-party labor suppliers at its southern U.S. operations.
According to Reuters, migrant children from Guatemala found working at SMART Alabama, LLC and SL Alabama had been hired by regional recruiting or staffing firms. Hyundai said this week in a statement to Reuters 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.
Munoz did not say how long Hyundai's investigation into its U.S. supply chain would take, when Hyundai or any partner plants would be able to stop relying on third-party staffing firms for labor, or when Hyundai would be able to end commercial relationships with two existing Alabama suppliers who are being investigated by US authorities for child labor violations.
SL Alabama said in a statement that it had taken "aggressive steps to remedy the situation" as soon as it learned that a subcontractor had provided underage workers. It said it cut ties with the staffing firm, took more direct control of the hiring process, and hired a law firm to audit its employment practices.
There were no comments on the issue from SMART Alabama.
Munoz's remarks come on the same day that an investor group comprised of union pension funds wrote to Hyundai, urging it to respond to reports of child labor at U.S. parts suppliers and warning of potential reputational harm to the Korean automaker.
According to the letter, the use of child labor violated international standards Hyundai committed to in its Human Rights Charter and its own supplier code of conduct.