South Korean carmaker Hyundai is taking too long to weed out child labor.
The company intends to “sever relations” with two Alabama plants under scrutiny for child labor violations “as soon as possible,” chief operating officer Jose Munoz told Reuters yesterday (Oct. 19). Reading between the lines, it hasn’t cut ties yet—even though the first headlines around the unlawful activity came up three months ago.
With less than a week to go before reporting earnings, Hyundai must take swift action. Not only will working with such suppliers do reputational damage, they can also hurt business by resulting in hefty fines and productivity losses. These are especially unwelcome in a quarter when the company is already burning billions on engine recalls.
Brief timeline of Hyundai’s handling of child labor violations
July 23: A Reuters investigation reports that Hyundai supplier in Alabama, SMART, employed dozens of underaged workers, some as young as 12.
Aug. 22: In a federal lawsuit, the US Department of Labor (DOL) reports minors under the age of 16 working at a second Hyundai supplier’s factory in the state, SL Alabama.
Sept. 22: Alabama Coalition for Community Benefits, a group of more than 20 Alabama-based community activist groups, pens an open letter to Hyundai, demanding that the company stop using child labor and provide “quality jobs and workplace rights” across its supply chain.
Oct. 18: SOC Investment Group published a letter voicing concerns of inaction and demanding stronger oversight of labor and human rights risk. In response, Hyundai spokesperson Ira Gabriel points to a federal settlement reached between the labor department and SL Alabama, adding that the supplier changed its leadership and introduced additional screening of its labor practices. The other supplier, SMART, has severed all ties with a third-party staffing company, Gabriel adds.
“We did speak to former workers who were working alongside some of these younger minors and told us that there was no way that they looked old enough to work, even if they might not, you know, admit their age when they’re on the line.” —Reuters reporter Mica Rosenberg, part of the team that worked on the Hyundai exposé, told NPR
By the digits
$30,076: Civil penalty paid by the Alabama facility investigated by the DOL
20%: US share of Hyundai’s global vehicle sales
$10 billion: Hyundai’s committed investment in the US, focused on EV and battery manufacturing
$2 billion: The massive hit Hyundai and Kia is already taking in the third quarter largely due to engine recalls and replacements from years ago
Another vulnerable group: immigrants
Child labor isn’t the only reported labor laws violation. Earlier this year, a lawsuit accused SMART and a Georgia-based labor recruiter to entice Mexican engineers to move to America with the promise of engineering job opportunities, only to make them work long hours on the production line at a fraction of the hourly wages paid to their American counterparts. This factory made parts for Hyundai and its affiliate Kia.
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