Hyundai raid could leave businesses reassessing their workforces

Last week’s sweeping immigration raid on a Hyundai facility in Georgia could spell trouble for other companies as President Donald Trump cracks down on illegal immigration on a larger scale.

The raid in Ellabell, Georgia, marked the largest single-site enforcement operation in the Department of Homeland Security’s history, according to special agent Steven Schrank. Nearly 500 workers, many of whom were South Korean nationals, were detained at the plant.

The raid was conducted on a site owned by South Korean companies Hyundai and LG Energy Solution, which are jointly building a battery manufacturing plant. The DHS said the arrested workers were employed by contractors or subcontractors, and Hyundai said none of the detainees were direct employees of the auto company. U.S. authorities, who had a search warrant, said the arrested workers were working or living in the country illegally.

White House border czar Tom Homan said Sunday that the raid was just the beginning of what’s to come from the administration.

“We’re going to do more worksite enforcement operations,” he said. “These companies that hire illegal aliens, they undercut their competition that’s paying U.S. citizen salaries.”

Some reactions to the raid’s fallout may already be in motion.

Hyundai told NBC News Monday morning that most of its business travel to the U.S. was remaining in place, but that some trips were subject to internal review.

Tami Overby, a partner at DGA Group Government Relations, said most of the companies she’s talked to are waiting to see what the implications of last week’s raid might be. She also said she believes Trump may understand they’re facing challenges with labor shortages and visa limitations and offer some relief soon.

Foreign companies may also be reassessing their U.S. investments, according to Dean Baker, a senior economist at the Center for Economic and Policy Research. Trump, meanwhile, has been trying to increase U.S. investments with his aggressive tariff policies.

“I think what is clear is that it shows the message that obviously Hyundai would take away — and any foreign investors — that their investment here is very much insecure, to put it as simply as possible,” he told CNBC. “So I think that’s got to be a very big warning sign for any company looking to invest in the U.S.”

Baker said he believes companies will now try to replace as much of their workforce as possible with U.S. citizens, though that could be a tall order depending on people’s skills, labor shortages and other challenges.

For other foreign companies with U.S. operations, Baker said they likely won’t be looking to expand their footprint in the country so as to not put themselves in jeopardy, though they won’t completely shut down. But he said it may raise red flags with the administration, as Trump might start “pointing fingers” at companies if foreign investment falls.

White House Press Secretary Karoline Leavitt said Tuesday that Trump is grateful for foreign companies investing in the U.S., but that he wanted them to hire American citizens.

“He understands that these companies want to bring their highly skilled and trained workers with them, especially when they’re creating very niche products like chips, or in this point, in this case, in Georgia, like batteries,” Leavitt said. “But the president also expects these foreign companies to hire American workers and for these foreign workers and American workers to work together to train and to teach one another.”

The crux of the problem is borne out of many automotive companies setting up U.S. facilities to mimic those that are already working well in their home countries, said AlixPartners Partner and Managing Director Arun Kumar, who focuses on the automotive and industrial practice.

Kumar told CNBC that foreign companies often rely on workers from their own countries at their U.S. sites because those workers are already specially trained — which was likely the case at the Hyundai facility, which was focused on newer electric vehicle technology, he added.

“I think the question to ask is what’s the implication from an automotive manufacturer tier one supplier standpoint,” he said. “I think if those approaches don’t change, it could have huge implications, especially when you’re stopping production.”

Kumar said it’s time for auto companies to rethink their playbooks, because often, the scenario planning happens far too late. Instead, he said foreign companies are likely focusing now on…