Carmaker investigation raises ‘serious questions’ about supplier due diligence

11 April 2023

The US has ramped up its investigation into automotive supply chains after initial investigations “failed” to offer insight into forced labour links, the Senate Finance Committee has announced. 

Senate Finance Committee (SFC) chair Ron Wyden has written to companies including Ford, General Motors, Honda, Mercedes-Benz, Tesla and Toyota demanding information over how they source materials and oversee their supply chains.

Wyden wrote to the manufacturers in December requesting information over their links to forced labour in the Xinjiang region of China, which has been associated with ongoing claims of human rights’ abuses.

However, Wyden said their responses “failed to provide specific details about how corporations oversee supply chains to ensure no goods made with forced labour are used”, and said “the initial stages of the Committee’s investigation raises serious questions about tier one suppliers’ ability to ensure that sub-suppliers do not rely on forced labour”.

He has additionally written to major tier one suppliers including Continental AG, DENSO Corporation, Magna International Inc, Robert Bosch GmbH, and ZF Friedrichshafen AG to give information over their supply chain mapping.

Wyden wrote: “I recognise that tier one suppliers rely on complex supply chains to source thousands of parts from across the world. However, this complexity cannot cause the United States to compromise its fundamental commitment to upholding human rights and US law.”

The SFC had heard testimony last month about Chinese companies faking labour rights compliance, and heard audits of suppliers in China could be unreliable. 

He told automakers that “merely abstaining” from importing goods from Xinjiang, or relying on “cascading promises by suppliers to do the same is insufficient to ensure that supply chains are free of forced labour”. 

“Given the stakes, asking upstream suppliers to adhere to a code of conduct must be the beginning of a continuous process that ensures that no participant in a company’s supply chain produces components using forced labour,” Wyden said. 

The investigation was launched following a report by Sheffield Hallam University and the Helena Kennedy Centre for International Justice, which found all major carmakers have multiple supply chain exposures to goods made with forced labour.

China is one of the world’s top car parts suppliers, exporting more than $45bn worth in 2021, of which the US received approximately a quarter of these imports. 

Over the past five years, the Chinese government has shifted raw materials mining and processing, and parts of the manufacturing process, into Xinjiang.

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