Hyundai cuts ties with supplier using Alabama child labour

Article content

South Korean automaker Hyundai on Friday told shareholders that it would divest its controlling stake in a major Alabama auto parts plant where Reuters last year documented children as young as 12 were working. In a February 24 letter to shareholders from Hyundai Chief Executive Jaehoon Chang, the company said recent audits at 29 of its direct suppliers across Alabama made it confident they are “now in full compliance with underage labour laws.”

Article content

We apologize, but this video has failed to load.

Hyundai cuts ties with supplier using Alabama child labour Back to video

The audits began last August, after Reuters first reported on the issue, and were conducted by an outside law firm that reviewed documents and did on-site inspections. Hyundai provided a copy of the letter to Reuters.

Hyundai also told investors it was implementing extensive new corporate measures, including a training program for its parts suppliers to begin next month in collaboration with the U.S. Department of Labor (DoL), to prevent future child labour violations. DoL did not immediately respond to a request for comment.

Hyundai’s pledge to its shareholders comes after a 2022 Reuters investigation showed several suppliers to the automaker’s massive Montgomery, Alabama vehicle plant used underage migrant workers to make parts for its popular U.S.-made cars and SUVs.

Article content

One of the plants where children worked, SMART Alabama LLC in rural Luverne, Alabama, is a direct Hyundai subsidiary. According to Hyundai’s financial statements from last year, the automaker controls a 72-per-cent 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 did not say when the transaction would be completed or identify a buyer or the form a divestiture would take. Since the early 2000s, the metal stamping plant has made chassis parts for hundreds of thousands of Hyundai vehicles per year.

Article content

Following Reuters’ first story on child labor at SMART last July, as many as 10 Hyundai suppliers in Alabama have been under investigation 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 removed several children from the factory floor, later issuing penalties to the plant operator and a third-party staffing firm who 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.”