Hyundai Motor Co., the largest carmaker in Korea, is examining allegations of child labour at its Alabama-based suppliers and plans to “sever links” with them, the company’s global chief operating officer Jose Munoz told Reuters on Wednesday.
Children, including a 12-year-old, were found to be working at the SMART Alabama, LLC metal stamping factory in rural Luverne, Alabama, according to a July investigative report by Reuters.
In response to the Reuters report, the state department of labour in Alabama and federal agencies collaborated to launch an investigation into SMART Alabama. Authorities then opened a child labour investigation at another of Hyundai’s local suppliers, Korean-operated SL Alabama, where they discovered kids as young as 13.
Munoz stated that Hyundai plans to “sever links” with the two Alabama supplier plants under investigation for using child labour in an interview before a Reuters event in Detroit on Wednesday.
In addition, Munoz told Reuters that he had mandated a thorough inquiry into Hyundai’s complete network of US car parts suppliers “to assure compliance” and look into possible labour law infractions.
Munoz’s remarks mark the Korean automaker’s most thorough admission to date that possible child labour violations may have taken place in its US supply chain, which consists of a network of dozens of mostly Korean-owned auto-parts factories that feed Hyundai’s sizable vehicle assembly plant in Montgomery, Alabama.
According to corporate statistics, Hyundai’s $1.8 billion flagship US assembly facility in Montgomery produced close to half of the 738,000 vehicles the manufacturer sold in the US last year.
The executive promised that Hyundai will work to have its southern US facilities no longer rely on outside labour providers.
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As Reuters reported, local employment or recruiting companies in the area had employed the migrant youngsters from Guatemala who were discovered working at SMART Alabama, LLC and SL Alabama. Hyundai claimed it had already stopped relying on at least one labour recruiting company that had been hiring for SMART in a statement to Reuters this week.
Hyundai is seeking to avoid utilising third-party labour vendors and manage to hire directly, Munoz told Reuters.
Munoz did not provide any additional information regarding the length of the investigation into Hyundai’s US supply chain, the date on which Hyundai or any partner plants could stop relying on external staffing companies for labour, or the date on which Hyundai could sever its business ties with two current Alabama suppliers who were under investigation by US authorities for using child labour.
In a statement released on Wednesday, SL Alabama said that as soon as it was made aware that a subcontractor had employed minors, it immediately took “active actions to correct the situation.” It said that it cut ties with the staffing agency, took greater direct control over the hiring procedure, and engaged a legal firm to audit its hiring procedures.
An inquiry for comment was not immediately answered by SMART Alabama.
Munoz’s remarks come the same day as a group of investors working with union pension funds wrote to Hyundai, urging it to respond to allegations of child labour at US parts suppliers and expressing concern for the Korean automaker’s reputation.
According to the letter, Hyundai breached the international standards it agreed to uphold in its Human Rights Charter and its own code of conduct for suppliers by using underage labour.
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