A Reuters investigative report dropped a bombshell last week, revealing that at least two Hyundai Kia suppliers employed underage, migrant workers. The discovery affects two suppliers in Alabama with up to a half-dozen more possibly in violation of state and federal labor laws. This isn’t the first-time suppliers for Hyundai and its sister company Kia have found themselves under investigation. The latest finding, though, is likely to yield significant fines and penalties.
The most recent report builds on an earlier Reuters investigation published in July that found underage workers employed by SMART Alabama LLC, a Hyundai affiliate in Lucerne. A factory in Alexander City, managed by SL Alabama LLC, a subsidiary of South Korea’s SL Corp., also employed underage workers. The probe found that a 12-year-old girl was employed by SMART, while a 13-year-old was found working at SL.
In the December report, Reuters noted that Hwashin America Corp, a supplier to Hyundai and Kia, had a 14-year-old Guatemalan girl assembling car parts at its Greenville facility. Further, a former production engineer for Ajin Industrial Co, a Korean auto parts producer, told Reuters that at least 10 minors worked there. Reuters verified with six Ajin employees that they worked beside several minor workers.
After the initial story broke last July, state and federal agents investigated upwards of 10 Hyundai Kia suppliers. Most are in far-flung areas of the state, rural communities far away from city centers.
Statements From Hyundai and Kia
Both Hyundai and Kia have issued statements strongly condemning violations of child labor by their suppliers. They’re now reviewing the hiring practices used by suppliers, including staffing agencies that recruited and hired workers. Labor activists, though, have long opposed such practices as they shift responsibility from companies to third parties.
Are the Alabama labor incidents limited to that area or is this part of a pattern that the company has tacitly if not actively embraced?
That’s a loaded question, but one that apparently dates to the earlier part of this century to a facility situated on the Korean peninsula. Specifically, the Kaesong Industrial Complex (KIC), located in North Korea at its border with South Korea, opened in 2004 to allow North Koreans to work at facilities producing a variety of consumer products, including car parts.
Hyundai Investment in North Korea
Hyundai Asan, a division of the Hyundai Group (owner of Hyundai Motors Corp) invested heavily in Kaesong. With good intentions, South Korea cooperated with North Korea to develop an outpost of capitalism within the latter’s territory. However, the north maintained tight control over its people with labor payments sent to the government with funds (American dollar). North Korea then distributed payments to workers in the country’s own basically worthless currency.
The joint venture lasted for 12 years, even as tensions between the two nations rose and fell. Still, the exploitative nature of the facility largely overshadowed the potential good it produced. In 2016, South Korea withdrew from Koesang and North Korea shut it down. Just how much Hyundai benefited from the arrangement is unknown, but it does demonstrate that the company ceded worker control in exchange for labor that likely cost far less than what workers earned in the south.
Hyundai and Kia find themselves scrutinized for labor practices not directly controlled by them, but rather by suppliers including the companies they operate. Running afoul of labor laws harms workers, including youngsters who shouldn’t be engaged in the production process. Fake IDs, questionable background checks, and even human trafficking are likely among the issues present as investigators examine the Alabama cases.
Rosenberg, M. (2022, December 16). Child workers found throughout Hyundai-Kia supply chain in Alabama. Reuters.
Schneyer, J. (2022, July 22). Exclusive: Hyundai subsidiary has used child labor at Alabama factory. Reuters.
(n.d.). (2019, Jan. 16) Re-Opening the Kaesong Industrial Zone Would Give North Korea Something for Nothing. The National Interest.
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