The Secret World of Modern Slavery

Hundreds of thousands of workers toil without pay in Latin America, producing timber, gold and the charcoal used to make steel. Their labor goes into materials bought by major companies--including General Motors, Kohler, Toyota and Whirlpool.

By Michael Smith and David Voreacos
Bloomberg Markets December 2006

Labor inspector Benedito Silva Filho and six armed police officers move cautiously through the gray smoke that hugs the ground in the Carvoaria Transcameta work camp near the city of Tucurui in the Brazilian Amazon. Enveloped in the haze is a solitary man, dressed in soiled red shorts and worn-out plastic sandals.

Alexandre Pereira dos Reis stops shoveling charcoal from a kiln after working for eight hours and, wheezing, walks slowly toward the inspectors. The laborer says malaria, a chronic cough and the 95-degree-Fahrenheit heat have gotten the best of him. ``This hits you hard,'' dos Reis, 32, says. ``I would leave if I could, but I need the work.''

Like hundreds of thousands of workers in Latin America, dos Reis collects no wages. He toils six days a week and can't afford to leave; he doesn't have enough money to get back to his home in Teresina, 500 miles (805 kilometers) away in northeastern Brazil. Dos Reis lives next to the brick kilns at Transcameta in a shack with no ventilation, running water or electricity.

The charcoal he and the other laborers produce by burning scraps of hardwood will be trucked south to a blast furnace that's six hours away. It will be used there to make pig iron, a basic ingredient of steel.

That pig iron will be purchased by brokers, sold to steelmakers and foundries and then purchased by some of the world's largest companies for use in cars, tractors, sinks and refrigerators made for U.S. consumers.

Nearly 1 Million Slaves

``This is slavery,'' Silva, 49, says. His eyes tear from the acrid smoke. Silva has descended unannounced in September on this charcoal-making camp -- one of about 1,000 in the Amazon -- to investigate reports that it uses unpaid labor. The policemen who flank him wield automatic weapons, ready to fend off the deadly violence that Silva says is part of his job.

They determine all 29 workers are slaves who haven't been paid in months.

More than a century after Brazil became the last country in the Americas to abolish slavery, in 1888, nearly 1 million men and women work for little or no wages as forced laborers in Latin America, according to the Geneva- based International Labor Organization (ILO), a United Nations agency that tries to improve working conditions.

The products of Latin American slave labor end up in cars and trucks made in the United States by Ford Motor Co., General Motors Corp., Nissan Motor Co. and Toyota Motor Corp. Pig iron that goes into steel used by Whirlpool Corp., the world's largest appliance maker, and is used in foundries at Kohler Co., which makes sinks and bathtubs, can be traced back to slaves in Brazil.

 Charcoal Camp in Brazil

Ford Stops Buying

Nucor Corp., the second-largest U.S. steel company, buys pig iron made with charcoal produced by slaves. In Peru, slaves mine gold that ends up at the world's biggest banks. Other Peruvian slaves log mahogany that's been used in Andersen Corp. windows and C.F. Martin & Co. guitars.

Three companies -- Ford, General Motors and Kohler -- say they didn't know that steel they were using was made from material produced with the help of slaves. Ford and Kohler have bought pig iron from importer National Material Trading Co., which is supplied by a charcoal camp that Brazilian officials say uses slaves.

Dearborn, Michigan-based Ford, the world's third- largest automaker, and Kohler, Wisconsin-based Kohler say they stopped buying pig iron from National Material Trading immediately after being asked by Bloomberg News about the Brazilian findings.

``We wanted to suspend the shipments until we understand exactly what is going on and if in fact this material is making its way into our supply chain,'' says Tony Brown, Ford's senior vice president for global purchasing. ``We take this matter very seriously.''

Kohler Starts Probe

If National Material Trading can't certify that the charcoal in its pig iron was produced without slave labor, Ford will use alternate suppliers, he says.

Kohler says it will conduct its own investigation. ``It is clearly disappointing to find that our broker's supplier's supplier employed slave labor practices,'' says Steve Cassady, director of global procurement at Kohler. ``The use of slave labor is an illegal, unethical and abhorrent practice.''

Whirlpool opposes involuntary labor and complies with laws in all countries, spokeswoman Jody Lau says. She says Whirlpool relies on suppliers to ensure proper work practices.

National Material Trading, based in Elk Grove Village, Illinois, imports 1.5 million metric tons of pig iron a year from Brazil, General Manager Tim Hogan says. He says one of its major suppliers is Cia. Siderurgica do Para SA, or Cosipar, Brazil's third-largest pig iron exporter. Hogan declined to comment about slavery.

GM Takes Action

Brazilian pig iron is part of almost any product in the U.S. that uses steel, says Hogan, who's been trading scrap metal and pig iron for 30 years. ``It could be in your car, your refrigerator,'' he says. ``It could be in beams for the roadway, any kind of construction, any kind of oil industry stuff. Everything.''

National Material Trading sells pig iron to Intermet Corp., a Fort Worth, Texas-based auto parts producer that makes components for General Motors.

Detroit-based GM, the world's biggest carmaker, stopped using Intermet as a supplier on Oct. 12 after concluding the company wasn't answering questions about slave labor quickly enough, says Bo Andersson, GM's vice president of global procurement and supply.

``Intermet didn't act like they had a sense of urgency,'' Andersson says. Intermet supplies GM with about $3.2 million of engine and transmission components each year and sells other parts to GM's suppliers, GM spokeswoman Linda McGill says.

Page 1 | Page 2 | Page 3 | Page 4 | Page 5 | Page 6 | Page 7   >

		Email this article Printer friendly format