Korean auto giant Hyundai is investigating child labor in its US supply chain

DETROIT, Oct 19 (Reuters) – Hyundai Motor Co (005380.KS)Korea’s top automaker is investigating child labor violations in its U.S. supply chain and plans to “sever ties” with Hyundai suppliers in Alabama that allegedly relied on underage workers, said Wednesday the company’s global chief executive, Jose Munoz, told Reuters.

A Reuters investigative report in July documented children, including a 12-year-old, working at a Hyundai-controlled metal stamping plant in rural Luverne, Alabama called SMART Alabama, LLC.

Following the Reuters report, the Alabama State Department of Labor, in coordination with federal agencies, began investigating SMART Alabama. Authorities later launched a child labor investigation at another of Hyundai’s regional supplier factories, Korea’s SL Alabama, finding children as young as 13.

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In an interview ahead of a Reuters event in Detroit on Wednesday, Munoz said Hyundai intended to “sever relations” with the two Alabama supplier factories under surveillance for deploying underage labor ” as soon as possible”.

In addition, Munoz told Reuters he had ordered a broader investigation of Hyundai’s entire network of U.S. auto parts suppliers for possible labor violations and “to ensure compliance”.

Munoz’s comments represent the Korean auto giant’s most substantial public acknowledgment to date that child labor violations may have taken place in its U.S. supply chain, a network of dozens of auto parts factories. mostly Korean-owned who supply Hyundai’s huge vehicle assembly plant in Montgomery, Alabama.

Hyundai’s $1.8 billion flagship U.S. assembly plant in Montgomery produced nearly half of the 738,000 vehicles the automaker sold in the United States last year, according to company figures.

The executive also promised that Hyundai would push to stop relying on third-party labor providers in its southern US operations.

As Reuters reported, migrant children from Guatemala working at SMART Alabama, LLC and SL Alabama had been hired by recruiting or staffing companies in the region. In a statement to Reuters this week, Hyundai said it had already stopped relying on at least one labor recruitment firm that had hired for SMART.

Munoz told Reuters: “Hyundai is pushing to stop using third-party labor providers and directly oversee hiring.”

Munoz did not provide further details on how long Hyundai will investigate its US supply chain, when Hyundai or any partner factories may end its reliance on third-party recruitment firms. for labor, or when Hyundai might end business relationships with two existing Alabama suppliers. for child labor violations by US authorities.

In a statement on Wednesday, SL Alabama said it took “aggressive action to remedy the situation” as soon as it learned that a contractor had provided underage workers. He ended his relationship with the recruiting firm, took more direct control of the hiring process and hired a law firm to audit his employment practices, he said.

SMART Alabama did not immediately respond to a request for comment.

Munoz’s comments come the same day a group of investors working with union pension funds sent a letter to Hyundai, urging it to respond to reports of child labor at U.S. parts suppliers and warning of potential damage to the reputation of the Korean automaker.

The letter stated that the use of child labor violated international standards to which Hyundai had committed in its Charter of Human Rights and its own supplier code of conduct.

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Reporting by Joseph White in Detroit and Joshua Schneyer in New York; Additional reporting by Mica Rosenberg in New York and Kristina Cooke in San Francisco; Editing by David Gregorio

Our standards: The Thomson Reuters Trust Principles.

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