Unique-Hyundai to divest Alabama subsidiary following baby labor revelations

By Joshua Schneyer, Kristina Cooke and Mica Rosenberg

NEW YORK (Reuters) – South Korean automaker Hyundai Motor Co on Friday instructed shareholders that it might divest its controlling stake in a significant Alabama auto elements plant the place Reuters final 12 months documented youngsters as younger as 12 have been working.

In a Feb. 24 letter to shareholders from Hyundai Chief Govt Jaehoon Chang, the corporate stated latest audits at 29 of its direct suppliers throughout Alabama made it assured they’re “now in full compliance with underage labor legal guidelines.”

The audits started final August, after Reuters first reported on the problem, and have been carried out by an outdoor legislation agency that reviewed paperwork and did on-site inspections.

Hyundai offered a duplicate of the letter to Reuters.

Hyundai additionally instructed traders it was implementing intensive new company measures, together with a coaching program for its elements suppliers to start subsequent month in collaboration with the U.S. Division of Labor (DOL), to forestall future baby labor violations. DOL didn’t instantly reply to a request for remark.

Hyundai’s pledge to its shareholders comes after a 2022 Reuters investigation confirmed a number of suppliers to the automaker’s large Montgomery, Alabama automobile plant used underage migrant staff to make elements for its common U.S.-made automobiles and SUVs.

One of many crops the place youngsters labored, SMART Alabama LLC in rural Luverne, Alabama, is a direct Hyundai subsidiary. In line with Hyundai’s monetary statements from final 12 months, the automaker controls a 72% stake in SMART.

Chang wrote that Hyundai was “within the technique of divesting its possession curiosity in SMART” however it might guarantee “that the economically vital jobs within the Luverne, Alabama group are preserved.”

Hyundai’s letter didn’t say when the transaction can be accomplished or establish a purchaser or the shape a divestiture would take. For the reason that early 2000s, the steel stamping plant has made chassis elements for lots of of 1000’s of Hyundai automobiles per 12 months.

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STATE AND FEDERAL INVESTIGATIONS

Following Reuters’ first story on baby labor at SMART final July, as many as 10 Hyundai suppliers in Alabama have been underneath investigation by state or federal authorities for baby labor violations, Reuters reported in December.

One of many crops was inspected final August and authorities discovered and eliminated a number of youngsters from the manufacturing unit ground, later issuing penalties to the plant operator and a third-party staffing agency who recruited them.

“The usage of underage labor at a provider or any operation is unacceptable, and we’re dedicated to creating positive non-compliance by no means occurs once more,” Chang wrote within the letter. “This can be a zero tolerance subject.”

As Reuters reported earlier, lots of the underage staff who discovered their manner into the Alabama auto elements crops have been recruited by third-party staffing businesses, a course of that may permit huge firms to show a blind eye to the unlawful employment of minors.

Within the shareholder letter, Chang reiterated that Hyundai was “discouraging” suppliers from counting on such staffing businesses sooner or later.

He wrote that staffing corporations who employed youngsters to work at Hyundai provider crops had offered false worker documentation. Sooner or later, nonetheless, Hyundai and its provide chain companions should do extra to make sure youngsters are by no means put to work of their factories, the letter stated.

“Finally, the accountability is with Hyundai to ensure all our suppliers perceive and meet our excessive international workforce requirements,” Chang wrote.

U.S. and Alabama legislation prohibit individuals underneath age 16 from working in industrial manufacturing unit settings, and anybody underneath 18 is prohibited from working in notably harmful roles in automotive crops, equivalent to driving forklifts or working metal-cutting and stamping machines.

Earlier this month, thirty-three members of Congress urged DOL to hunt robust and swift penalties in opposition to these chargeable for baby labor within the Hyundai provide chain.

(Reporting by Joshua Schneyer and Mica Rosenberg in New York and Kristina Cooke in San Francisco; Enhancing by Paulo Prada and Jamie Freed)