Investigation Reveals Child Labor in Hyundai-Kia Alabama Supply Chain

Reports suggest child labor is present throughout Hyundai's and Kia's entire U.S. supply chain.

By Steve Huff

Bloomberg | Getty Images

According to an exclusive report from Reuters, four key Alabama suppliers for Hyundai Motor and Kia Corp. have been using child labor.

The companies deny they hired minors, but Reuters reports this is not the first time these Alabama-based suppliers have been investigated regarding child labor practices.

Citing sources who'd worked for parts manufacturer Ajin Industrial Co., Reuters said the company employed as many as 10 minors at one Cusseta, Alabama, factory alone. Additionally, Hyundai supplier SL Alabama reportedly regularly violated child labor laws by using minors, some as young as 13. Reuters notes there have been past reports about SL Alabama, but the allegations regarding Hwashin and Ajin are new. This suggests that the issue is more significant than child welfare agencies were aware of and hasn't been adequately addressed.

According to employees, minors as young as 16 have worked in Alabama factories for Hyundai's suppliers, welding and even operating forklifts. However, Alabama and the United States prohibit children under the age of 16 from working in automobile plants and those under 18 are not supposed to work in potentially dangerous areas.

Hyundai and Kia have implemented policies prohibiting child labor at their plants and those of their suppliers. Previous child labor allegations prompted Hyundai's chief operating officer to say the company would immediately end business with SL and investigate all of its Alabama operations, potentially ending work with outside employment agencies. The company later walked this back, only indicating it would sever ties with sketchier staffing outfits.

Labor experts believe pressure placed on suppliers by Hyundai and Kia to meet deadlines and avoid late delivery penalties may have factored into using shortcuts like child labor. Delays in delivering parts can be costly. Additionally, the COVID-19 pandemic's impact on supply chains may have played a role in the proliferation of violations.

Terri Gerstein, who directs the state and local enforcement project at Harvard Law School's Labor and Worklife Program, agrees that COVID played a role, telling Reuters, "It seems like the stage was set for this to happen...Plants in remote, rural areas. A region with low union density. Not enough regulatory enforcement. Use of staffing agencies."

SL Alabama, according to Reuters, "is the only Hyundai or Kia supplier charged with violating child labor laws" to date. State and local officials discovered seven workers, ages 13 through 16, working there, and the Labor Department issued a $30,000 fine. Alabama's Department of Labor also fined the company and a connected employment agency around $36,000.

Child labor isn't the only serious issue in play here. Reuters says there are also ongoing investigations into whether some children found working for Hyundai and Kia suppliers were victims of human trafficking.

Steve Huff

Entrepreneur Staff

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