For years, foreign automakers have been sending their employees to the US to open advanced manufacturing and battery plants in states like South Carolina, Georgia, Tennessee, and Kentucky. These plants eventually employ thousands of American workers who build vehicles for both the US market and overseas. And they pump billions of dollars into the state and federal economies, providing jobs for Americans in more rural areas.
So it didn’t raise any eyebrows when two South Korean companies, Hyundai and LG Energy Solutions, sent hundreds of their workers to Ellabell, Georgia, to oversee the construction of a $7.6 billion EV battery factory.
But then US Immigration and Customs Enforcement (ICE) came knocking. On September 4th, ICE officers raided the plant, detaining 475 people, mostly South Koreans. The workers, many of whom were here legally, were handcuffed and chained together, spurring calls from South Korea about possible human rights violations. But beyond that, it sent a chilling message to every foreign company looking to invest in the US.
“The US is now seen as very unstable,” says Arthur Wheaton, director of labor studies at the School of Industrial and Labor Relations at Cornell University. When a company like Hyundai starts a plant in the US, it sends its best and brightest employees to get it up and running. To have those employees cuffed, chained, and detained, Wheaton says, “has a cooling effect on something that has been very normal and typical, particularly in the automotive sector for decades.”
A delayed plant opening
On the raid’s heels, Hyundai announced that the battery plant’s opening would be delayed by as much as three months. But in a surprise move, the automaker also committed an additional $2.7 billion to the factory to help fund the second phase of construction. But long-term damage may have already been done.
Wheaton says that the long-reaching impacts of the delay could be profound. Hyundai works with dozens of subcontractors and suppliers who build equipment, tooling, and parts on tight margins. Those companies could be devastated by the slowdown.
To have those employees cuffed, chained, and detained, Wheaton says, “has a cooling effect on something that has been very normal and typical, particularly in the automotive sector for decades.”
“If [an automaker] gets a cold, suppliers get sent to the emergency room with pneumonia,” says Wheaton, who has studied the auto industry for years. “A small hiccup that may not hurt Hyundai can have devastating effects on the supply chain.” A supplier that planned for 10,000 units may only sell three now that the plant is delayed, for example. “They don’t have the deep pockets and resources to absorb the delay,” he adds.
While Trump has expressed measured regrets about the ICE raid, the diplomatic damage is far-reaching. South Korea arranged a charter flight to bring the detained workers home (only to have to Trump try to delay it further with overtures) and is pushing Washington to create clearer visa pathways for the skilled technicians that are required to launch these high-tech factories and train American workers.
... continue reading