SK Innovation is taking new steps to ensure immigration compliance at its $2.6 billion project in Jackson County amid growing evidence that foreign workers are displacing Americans during the construction process.
The Korean electric-vehicle battery maker instituted daily document checks Thursday, a week after Rep. Doug Collins, a Republican whose district encompasses the plant, first asked Immigration and Customs Enforcement for an investigation into hiring practices there.
In a letter Aug. 19, the congressman cited concern about Korean workers being “imported” to build the plant, especially as job losses in the state mount due to COVID-19.
Thursday he leveled a second broadside against the company via another letter to the heads of ICE and U.S. Customs Border Protection in Washington. He wrote that more than 30 single-family homes were being rented out for Korean laborers, apparently violating local occupancy rules.
More troublingly, local officials and constituents had informed Mr. Collins upon investigating suspected code violations that some 200 workers, apparently all Korean, were being trained on welding techniques at a defunct chicken farm five miles from the SK plant.
“This information also sheds light on rumors I have heard for weeks that American building inspectors had found the work done on the job site insufficient, having failed the welds made on mechanical systems. Experts have said that it is clear that proper welding procedures were not followed,” Mr. Collins wrote.
He urged the U.S. government to suspend visas for SK’s own employees, who have not yet been implicated, until its contractors’ practices were brought into line.
In both letters, the congressman referenced two incidents in May at Hartsfield-Jackson Atlanta International Airport in which customs officials blocked upon arrival a total of 33 Korean workers bound for the much-lauded battery plant, then rescinded Electronic System for Travel Authorization clearance for 25 more.
In a news release, CBP accused these workers of bearing fraudulent employment letters and being part of a “criminal network” aiming to “rob” Americans of their jobs. Without daily flights back to Seoul, they were sent to a detention center in Lovejoy before being deported back to Korea; the first 12 Koreans were held there multiple days.
SK Innovation has maintained that hiring of workers on the site is the responsibility of contractors and it reiterated the need for compliance with local laws after the May incident. SK also noted that more than 1,000 Americans have worked on the site to date.
That said, the company instituted its own checkpoint Thursday to show how seriously it takes the questions being raised at the site. Anyone without clear authorization to work in the U.S. will be barred from entry.
“If any contractor is in violation of such policy, SK Battery America will impose severe sanctions, including possible termination of the contractor. Additionally, SKBA will conduct ongoing inspections to ensure our contractors’ compliance with applicable laws,” the company said in a statement provided to Global Atlanta.
The move come after news reports described grievances from local residents and union leaders decrying the Korean presence at the site at a time when many tradespeople remained out of work or underemployed. A Fox 5 camera crew followed some of the Korean workers to rented homes in the area, implying that their presence was proof they were flouting immigration laws.
Exceptions to Foreign Labor Prohibitions
An examination of some subcontractors shown in the Fox 5 video — like KapJin and Younchang — reveals them to be Korea-based companies that provide clean-room, power-generation and HVAC systems to SK Innovation globally.
That squares with the company’s statement in to the Korea Times newspaper that it’s bringing in workers that have experience with high-tech battery plants, like SK’s new facility in Hungary. The timeline for construction is tight, and SK has deals with Volkswagen and Ford to supply batteries in the U.S.
At least some of the contractors’ workers could qualify for exceptions to rules that block foreign laborers from working on U.S. projects.
At issue is the entry process under the Visa Waiver Program, which enables citizens of 38 countries, mostly in Europe, to travel to the United States for business or tourism purposes for up to 90 days without procuring a visa. Korea, a U.S. military ally and key trading partner, is one of the few member nations in Asia.
For business travelers under the program, purposes like prospect meetings, employee supervision and conference attendance are permitted, while most skilled or unskilled labor is strictly forbidden.
A few exceptions exist: In addition to professionals in narrow fields working on limited assignments, the Visa Waiver Program allows foreign commercial workers engaged in the installation, repair and maintenance of equipment that was purchased overseas (provided the contract for sale of the equipment includes these services in the sales price). The program also arguably allows for them to come in to train Americans to operate or maintain such machines.
It’s unclear whether the blocked Korean workers were qualified in this way. SK declined to make its contractors known or to comment further. Customs Border Protection declined to reveal the specific companies that supplied the fraudulent letters or whose workers were denied access.
Teri Simmons, the immigration and international practice leader at the law firm Arnall Golden Gregory LLP, said the Atlanta Customs and Border Protection officers are accustomed to evaluating requests for exceptions.
Many manufacturing facilities in the Southeast U.S. purchase specialized machinery from foreign suppliers, such CNC machines, conveyer systems, robotics and other automation systems. Knowing that, it’s likely that officers found a real cause for concern, she said.
“CBP in Atlanta is typically fair-minded and business-minded with its application of the law,” Ms. Simmons told Global Atlanta. “Technicians travel frequently for installing equipment and are admitted legally under the Visa Waiver Program each and every day.”
CBP said the Korean workers destined for the Commerce, Ga., plant revealed that they were to be paid $6,000-$7,000 for two to three months of work, raising fears that they would undercut U.S wages.
This wouldn’t be the first time such a scheme has been exposed. German automakers faced similar criticisms when their contractors brought in workers under the Electronic System for Travel Authorization (ESTA) and on B1 visitor visas to build plants in Alabama and South Carolina. Tesla and Volvo contractors have been accused of the same misconduct, which was exhaustively documented by CBS News in a special report.
Ms. Simmons said the recent Korean incident underscores the need for foreign investors to familiarize themselves with the U.S.’s strict rules.
“I would recommend that all inbound companies really understand and study the requirements so they can avoid this type of problem in the future,” Ms. Simmons said.
She noted that workers looking for exceptions to the Visa Waiver Program’s work restrictions should be able to show appropriate documentation including a clear purchase contract from overseas. The workers should also be able to explain their roles as supervisors or installers.
Impact on Future Korean Investment
The need for vigilance on immigration is especially acute now: Travel from most of Europe was banned early in the pandemic, which in turn shut down the consulates and embassies where business travelers would normally apply for coveted “national interest exceptions,” Ms. Simmons said.
On top of that, President Trump in June issued a proclamation that bars through the end of this year non-immigrant visas such as the L-1 for intra-company transfers and the J-1 visa for trainees.
Deputy Consul General Kwangsuk Lee at the Korean consulate in Atlanta, said his boss, Consul General Young-jun Kim, has been actively stressing to Korean companies the need to prioritize compliance.
“It will give us more sustainable prospects for any business thinking about investment here,” Mr. Lee said.
At SK Battery, the latest swell in a growing wave of Korean investment arriving in the state since Kia Motors set up shop here in 2007, the issue has taken on heightened sensitivity given a relatively hefty incentives package worth $300.3 million.
But John Scott, director of economic development at the Jackson County Area Chamber of Commerce, said characterizing this as a handout to foreigners at the expense of Americans doesn’t do justice to how the process works.
For one, the incentives only apply to the first phase of the plant — the initial $1.67 billion, 2,000-job commitment — not the second $940 million project that will create 600 more jobs.
And they don’t come into play during the construction phase; some $53 million in state job tax credits are to be meted out only when the first 2,000 permanent American jobs are created over the next five and a half years. Other than state grants provided for site preparation work, many of the other tax credits are available to all Georgia companies based on spending in such areas as research-and-development.
The largest single item was related to the land — including a purchase that amounts to $28.2 million with interest, plus tax relief totaling $102 million over two decades that will end up making the land effectively free for the company.
Still, Jackson County holds the title to the land and all installed equipment for 20 years, and Mr. Scott points out that even accounting for SK’s savings substantial savings, about $160 million is expected to be generated for local schools from a site that generated almost no tax revenue for the past two decades.
“Keep in mind, most of the $300 million would not exist if SK located in another state,” Mr. Scott said.
If the company leaves or shuts down early, it has to pay the entire cost of the land.
Mr. Scott said he’d not heard anything about the welding operation mentioned by Mr. Collins in the letter; the Jackson chamber has been in constant communication with SK, which has been adamant that none of its workers have entered inappropriately.
From Mr. Scott’s vantage point, the problem looks like an isolated incident. He noted that the SK plant has already become a boon for the local area, with the spillover effects increasingly visible in local neighborhoods and restaurants.
“They’ve spent millions of dollars already with local contractors within Jackson County, Georgia and the United States,” he told Global Atlanta. “They’re spending a lot of money with U.S. citizens, not matter what their ancestry is.”
He said there are plenty of reasons the company would bring over Korean workers, given the highly technical nature of the equipment in the still-sensitive lithium-ion battery sector.
“Sometimes trade secrets are something as simple as settings on the machine,” Mr. Scott said,
SK innovation itself has been accused by crosstown rival LG Chem of violating a patent agreement, according to an initial International Trade Commission determination in February. A Seoul court ruled Friday in favor of LG Chem in a civil suit brought by SK Innovation challenging LG Chem’s action in the U.S. The ITC is slated to make a final ruling in October. SK says construction remains on schedule.
It remains unclear what effects the legal issues and a potential ICE investigation would have on future Korean investment, which the Georgia Department of Economic Development is intensely recruiting.
The department said through spokesperson that it expects all investors to comply with relevant employment rules and laws “without exception,” but that earlier challenges have been overcome:
“Other similar rumors and innuendo occurred a decade ago during construction of the Kia plant. Yet, last year, the company celebrated more than a decade of building some of the highest-rated vehicles in the world, and the creation of tens of thousands of jobs throughout West Georgia both at the plant and suppliers’ locations.”
For its part, SK Battery has already donated more than $500,000 to educational programs and coronavirus response initiatives in Georgia, and it could do for the northern part of the state what Kia did for its western region.
Enchem, a recycler of electrolytes, has already said it would build a $63 million plant near the SK plant. Mr. Scott said more SK suppliers are eyeing the Jackson County area, along with unrelated Korean prospects who have now heard of Georgia.
Gov. Brian Kemp traveled to Korea to meet with SK and other companies last summer, and the state shifted resources from its China outreach to cash in on what state officials have described as an opportune moment to recruit Korean firms.