At least four major suppliers of Hyundai Motor Co and sister Kia Corp have employed child labor at Alabama factories in recent years, a Reuters investigation found, and state and federal agencies are probing whether kids have worked at as many as a half dozen additional manufacturers throughout the automakers’ supply chain in the southern U.S. state.
At a plant owned by Hwashin America Corp, a supplier to the two car brands in the south Alabama town of Greenville, a 14-year-old Guatemalan girl worked this May assembling auto body components, according to interviews with her father and law enforcement officials. At plants owned by Korean auto-parts maker Ajin Industrial Co, in the east Alabama town of Cusseta, a former production engineer told Reuters he worked with at least 10 minors. And six other ex-employees of Ajin said they, too, worked alongside multiple underage laborers.
In two separate statements sent by the same public relations firm, Hwashin and Ajin said their policies forbid the hiring of any worker not of legally employable age. Using identical language, both companies said they hadn’t, “to the best of our knowledge,” hired underage workers.
The employment of children at Hwashin and Ajin hasn’t been previously reported. The news follows a Reuters report in July that revealed the use of child workers, one as young as 12, by SMART Alabama LLC, a Hyundai subsidiary in the south Alabama town of Luverne. In August, the U.S. Department of Labor said that SL Alabama LLC, another Hyundai supplier and a unit of South Korea’s SL Corp, employed underage workers, including a 13-year-old, at its factory in Alexander City.
Since then, as many as 10 Alabama plants that supply parts to Hyundai or Kia have been investigated for child labor by various state and federal law enforcement or regulatory agencies, according to two people familiar with the probes. The investigations are being conducted across small towns and rural outposts where many of the suppliers and the job recruiters that staff them are located. It isn’t yet clear whether the probes will lead to criminal charges, fines or other penalties, the two people said.
On Aug. 22 a team of Labor Department and Alabama state inspectors arrived unannounced at one of Ajin’s plants, according to people familiar with the operation. As the team arrived, workers rushed out the back and left the premises before they could be questioned, one of the inspectors told a meeting of Alabama’s anti-human trafficking task force last month, according to two people who attended. The inspection hasn’t previously been reported.
A Labor Department spokesman, Eric Lucero, told Reuters that the agency’s Wage and Hour Division has an open investigation into Ajin, but declined to confirm whether the probe was related to child labor.
In its statement, Ajin said it “will cooperate fully” with any investigations by regulators and law enforcement.
ECONOMIC ENGINE: Hyundai’s flagship plant outside Montgomery builds vehicles that have helped make its parent company the third-largest carmaker by sales in the United States. REUTERS/Cheney Orr
Hyundai, in a statement, told Reuters it “does not condone or tolerate violations of labor law” and requires that “our suppliers and business partners strictly adhere to the law.” Kia, for its part, said it “strongly condemns any practice of child labor and does not tolerate any unlawful or unethical workplace practices internally or within our business partners and suppliers.”
Hyundai and Kia, South Korea’s two largest automakers, are sister companies controlled by parent Hyundai Motor Group. Both companies told Reuters they are reviewing hiring practices used by their suppliers.
The discovery of child labor at additional plants in Hyundai’s American supply chain could deal a fresh reputational blow to a company whose fast growth and popularity in recent years has led it to become the third-largest automaker by U.S. sales. The earlier reports of child labor drew law enforcement and regulatory scrutiny to the company’s ability to meet its own professed ethical standards and comply with basic labor regulations in the United States.
In-house human rights policies, posted by both brands online, prohibit child labor at Hyundai and Kia facilities and among their suppliers, too. Alabama and U.S. law restrict factory work for people under age 16, and all workers under 18 are forbidden from many hazardous jobs in auto plants, where metal presses, cutting machines and speeding forklifts can endanger life and limb.
After the earlier reporting by Reuters on child labor at suppliers SMART and SL, Hyundai’s chief operating officer, José Muñoz, told the news agency he ordered the carmaker’s purchasing department to cease business with the suppliers named in the news reports “as soon as possible.” He also said the company would investigate all suppliers to Hyundai’s Alabama operations. Hyundai, Muñoz added, would seek to end the use of third-party staffing agencies that many of its suppliers have relied upon to vet and hire workers.
Hyundai is now backing away from Muñoz’s remarks.
In its recent statement to Reuters, Hyundai said it has canceled its plans to cut off suppliers where minors have worked. Two of its suppliers, SMART and SL, have taken “corrective actions” to fire staffing agencies they found problematic, it said. Noting the “important economic role” that parts makers play in many small Alabama towns, Hyundai added, “additional oversight is a better course at this time than severing ties with these suppliers.”
Hyundai declined to make COO Muñoz available for a follow-up interview.
The use of third-party staffing agencies is a common practice among manufacturers and other labor-intensive sectors throughout the United States. The tactic has long been criticized by labor activists because it gives factory owners and other employers the ability to outsource responsibility for the screening, hiring and regulatory compliance of their workforces.
Earlier this year, Reuters showed how staffing agencies in rural Alabama recruited undocumented workers from Central America, including minors who had entered the U.S. without parents or guardians, and supplied them to chicken processing plants. As with those minors, at least some of the children who worked at Hyundai suppliers used false identities and documentation obtained through black-market brokers, sometimes with the help of staffing firms themselves.
To understand how child labor took root in the supply chain of one of the world’s most successful automakers and in the job market of the world’s richest country, Reuters interviewed more than 100 current and former factory workers and managers, labor recruiters, state and federal officials, and others. Reporters spent weeks around auto parts factories in rural Alabama and reviewed thousands of pages of court records, corporate documents, police reports and other records.
“It’s shocking,” David Weil, a former administrator of the Wage and Hour Division of the Labor Department, said of the signs of widespread child factory work. “The ages involved, the danger of what they are being employed to do, it’s a clear violation.”
Across Alabama, a sprawling and partially interconnected network of suppliers and staffing agencies, many Korean-owned, exists to serve the Hyundai brands. Hyundai operates an assembly plant in Montgomery, the state capital. Kia builds cars across the state line in West Point, Georgia. Both states, so-called “right to work” jurisdictions whose laws allow workers to reject unions and thereby undercut the power of organized labor, have attracted numerous automakers and follow-on investments, as recently as this year, granting them billions of dollars in tax breaks and other incentives along the way.
A key element of Hyundai’s supply network is its ability to provide “just-in-time” delivery of parts, a staple of modern manufacturing meant to minimize stockpiles of materials. To avoid halting assembly lines, Hyundai can fine suppliers – sometimes thousands of dollars per minute – for any delay, according to people familiar with its operations. Pressure to deliver, several current and former employees at suppliers told Reuters, intensified in recent years because of the labor and supply shortages that crippled manufacturers during the COVID-19 pandemic.
The struggle to meet demand, labor law experts say, has increased chances that employers cut corners to keep assembly lines staffed, whether employees are legally allowed to work or not. “It seems like the stage was set for this to happen,” said Terri Gerstein, director of the state and local enforcement project at Harvard Law School’s Labor and Worklife Program. “Plants in remote, rural areas. A region with low union density. Not enough regulatory enforcement. Use of staffing agencies.”
“It’s shocking. The ages involved, the danger of what they are being employed to do, it’s a clear violation.”
David Weil, a former administrator of the Wage and Hour Division of the Labor Department
The shortage of labor across manufacturing, and the low pay offered by some plants and agents for factory jobs, often attract job candidates most pressed for work – particularly undocumented migrants and minors. “When you have workers who are desperate for jobs and they’re not empowered and you have a lot of competition, you often see a race to the bottom,” said Jordan Barab, a former deputy assistant secretary at the Occupational Safety and Health Administration, the federal workplace regulator.
So far, SL, the manufacturer in the central Alabama town of Alexander City, is the only Hyundai or Kia supplier charged with violating child labor laws. On Aug. 9, state and federal labor and law enforcement officials found seven workers between the ages of 13 and 16 on the SL factory floor, according to people familiar with the operation and government documents.