Auto parts giant Hyundai Motor Company selling interest in SMART

Published 3:43 am Saturday, February 25, 2023

Hyundai Motor Company (HMC) announced Thursday the Korean-owned auto manufacturer’s U.S. operation, Hyundai Motor America, is in the process of divesting its ownership in SMART Alabama LLC, a Luverne based auto parts supplier.

The announcement, published in a letter to HMC shareholders Thursday, outlined the decision and described HMC’s commitment to maintaining trust and enhancing transparency to stakeholders.

“Two suppliers, SL Alabama and SMART, have terminated their relationships with the third-party staffing agencies who falsely certified that they had screened and cleared underage individuals as being of legal age,” wrote HMC President and Chief Executive Officer Jaehoon Chang. “We do not condone or tolerate such behavior and are committed to taking further actions as needed. In addition, Hyundai Motor America is in the process of divesting its ownership interest in SMART. It intends to do so while ensuring that the economically important jobs in the Luverne, Alabama community are preserved and that all child labor laws are followed in the future.”

Email newsletter signup

In a release to The Luverne Journal Friday, SMART representatives said another company is buying HMC’s SMART holdings. Nothing will change except the name of the company and the ownership, representatives said.

The announcement comes on the heels of an investigation HMC launched after discovering that SMART and SL Alabama had allegedly employed underaged workers.

“The investigation found that Hyundai’s U.S. tier 1 suppliers were in full compliance with underage labor laws,” Chang wrote. “As a result, Hyundai is confident there are no current underage labor issues at these suppliers.

“Upon learning of issues last year at two suppliers doing business with Hyundai Motor Manufacturing Alabama, we took immediate actions, including launching multiple investigations and a broader review of our U.S. supplier network. These investigations included requiring Alabama suppliers to submit to independent third-party audits of their operations to ensure complete compliance with underage labor laws and to implement any recommended actions.”

According to SMART representatives an investigation by the U.S. Department of Labor is ongoing. The auto supplier also confirmed it had severed all business relations with third-party employment agency, Best Practices Solutions, which allegedly employed one underaged girl to work in SMART’s Luverne plant.

The announcement Thursday and HMC’s investigation into the operations of suppliers came after a Reuters report in July claimed children were working at SMART. HMC made findings from its investigations available in a summary report.

Chang noted HMC is committed to making sure non-compliance with labor laws never happens again.

“Even though there were issues with third-party staffing agencies that provided false documentation to these suppliers, ultimately, the responsibility is with Hyundai to make sure all our suppliers understand and meet our high global workforce standards,” Chang wrote. “The results of the investigation show that our suppliers are now in full compliance with underage labor laws, and we are committed to making sure they remain in compliance. Hyundai is a responsible corporate citizen in Alabama and everywhere we conduct business. We value the strong partnerships and long-term relationships we have developed in the communities where we work and live.”

SMART representatives said operations in the Luverne facility will not be affected by the decision.