Nike is the leading shoe and athletic apparel company in the United States and one of the largest in the world. In 1993, Nikes fiscal revenues were as large as the NBA, NFL, and Major League Baseballs television deals, ticket sales, and paraphernalia sales combined. In addition to their phenomenal sales, Nike has marketed itself so thoroughly that it has literally become a household name. Over 200 of the 324 NBA players wear Nike shoes, with over 80 of them under contract to do so. 275 professional football players and 290 Major League Baseball players join them. Nikes fame however, is not limited to professional sports. Over one half of the NCAA championship basketball teams of the past decade have worn Nike shoes and apparel and the company has endorsement agreements with over 200 colleges and universities.
The scope of this corporation even extends beyond the United States. Nike recently paid an unfathomable $200 million in an endorsement deal with the Brazilian National Soccer Team (State of California v. NIKE, Inc.; Nike).This hefty sum of money seems even more outrageous given the conditions of the factories used to produce these high-dollar goods. Nike does much of its shoe production in China where workers cannot be represented by labor unions. In these factories, workers are paid $1.
50 at best for a pair of shoes that sells for around $100. In attempts to improve its public image, Nike repeatedly makes claims that its workers are paid double the minimum wage. Ironically, in most cases workers actually make less than the minimum wage. In Vietnamese factories, the minimum wage is $35 per month. Most Nike workers contend to make less, and their pay stubs serve as proof.
Some employees actually make as little as 300,000 dong or $25.86 per month. This leaves literally no room for savings and most workers have to seek financial assistance from relatives just to survive (Greenhouse; ORourke ).The same company that paid $200 million for an endorsement cant pay its workers more than the required $35 a month. Dusty Kidd, Director of Nike Labor Practices offered some insight into Nikes philosophy. I am fully cognizant of the call on the part of some for a living wage. That is generally defined as sufficient income to support the needs of a family of four.
We simply cannot ask our contractors to raise wages to that level whatever that may be while driving us all out of business; and destroying jobs, in the process. On the contrary, just one month after that statement was issued, Kathryn Reith, Manager of Womens Sports Issues made a proclamation of her own. Nike is fulfilling our responsibility as a global corporate citizen each and every day by guaranteeing a living wage for all workersand creating opportunity for womens financial independence.
(State of California v. NIKE, Inc.).Nikes female workers have a different view of the situation. The salary they receive cannot even constitute a living wage for a single person, let alone a family of four as Mr. Kidd stated. To eat three meals a day, these women must spend at least $2.
10 per day. The average daily wage for these women is $1.60. A salary too small to provide food for them is hardly a living wage. To counter this, Nike CEO Philip Knight wrote a letter to the New York Times dated June 21, 1996 claiming that Nike provides free meals, housing, and health care to its workers.
A review of check stubs shows that workers are charged nine cents for their lunch each day, bringing their hourly wage down to 16.8 cents per hour. At the typical 267 hours Vietnamese workers put in each month (107 of those hours being overtime by U.S. standards), they bring home an average of $45. In addition, workers themselves pay for their health care and company-funded housing is a fantasy (State of California v. NIKE, Inc.
).Small salaries such as this fall short of justifying the hours workers are forced to put in. Vietnams labor law limits overtime to 200 hours per year on a voluntary basis.
Nike workers however are forced to work overtime, often in excess of 500 hours per year. If these workers refuse, they are usually terminated. Unfortunately, long hours arent limited to the factories of Vietnam. In China, 11-hour days are standard and workers must work an additional 2.4 hours of overtime each day.
This practice violates both Chinese labor laws and Nikes own Code of Conduct. The workers here are given two to four days off per month, again contrary to the laws and Code of Conduct which both call for at least one day of rest per week (Vietnam Labor Watch; State of California v. NIKE, Inc.).It would seem that these illegal practices shouldnt go on undiscovered for long and that the government or Nike would step in.
In many cases though, workers are afraid to report such issues out of fear of losing their jobs. In these underdeveloped countries, there are few other opportunities and a reputation as a troublemaker may follow the worker in the future. Furthermore, in many countries, the workers are not allowed to form unions, so there is no one to look out for their interests.
In Indonesia where a union does exist, workers dont have a choice of what union represents them. The trade union, SPSI has never bargained in favor of the workers. In 1999, the Indonesian government gave a three-month extension for a new collective labor agreement on August 30, just one day before the old one would expire. The problem holding up the new agreement was the workers request of a seniority clause to their contracts.
This clause would give workers a raise of 15 cents per day for each year of service with the company. Had it been granted, this raise would have cost Nike $9000 per day. On the final day of that extension, an agreement was finally signed, but it gave the workers nothing new (Press for Change).According to Nikes own Memorandum of Understanding, it is ethically and legally responsible to ensure that its subcontractors follow governmental health, safety, and environmental standards. Yet thousands of young (18 to 24 year-old) female workers are exposed to harmful chemicals and reproductive toxins on a daily basis. These chemicals are found in the solvents and glues used to produce Nike shoes.
One such chemical is Toluene, which causes vertigo, headaches, and eventually a narcotic coma. Another common chemical in these plants is Acetone. Health problems from acetone exposure can be even worse than that of Toluene and can include headaches, drowsiness, throat irritation, coughing, vertigo, unrest, nausea, vomiting, progressive collapse, coma, and kidney and liver damage (State of California v. NIKE, Inc.).More disturbing is the lack of protection workers have against these chemicals.
In many cases, workers have no protection at all. In areas considered to be the highest danger, workers are provided with thin cotton masks and gloves. According to a fact sheet from the University of Utahs chemical lab, precautions when dealing with Toluene should include a chemical cartridge mask, safety goggles with a face shield, a protective suit, and polyvinyl alcohol gloves. In a report published by Ernst and Young, 77% of the workers in Vietnams production department admit to having respiratory problems. The unbearable heat in the factories does little to help the situation.
In interviews conducted by the Vietnam Labor Watch, it was discovered that its common for workers to faint during their shifts from a combination of heat, exhaustion, and poor nutrition. Several instances have been reported of workers coughing up blood before fainting.Ironically, Nike issued a document entitled Please Consider This which stated: Nike takes full responsibility for working conditions wherever its products are produced(Vietnam Labor Watch; State of California v. NIKE, Inc.
)One would certainly hope Nike didnt mean to include the actions of supervisors in its description of working conditions. Women in Nike factories frequently suffer sexual harassment and severe punishments for their mistakes at the hands of their supervisors. One such incident was reported in a Vietnamese newspaper called Nguoi Lao Dong. On August 18, 1996 a supervisor took two women into a storage room.
He began to touch one woman and tried to remove her clothes. She escaped him and fled the room. The supervisor then grabbed the other woman, took off her clothes, and began to rape her. He was caught in the act by a security guard who had been summoned by the first woman.
The man fled the country immediately. Nikes CEO told stockholders that the supervisor was trying to wake the sleeping women and must have touched them in the wrong place. The Vietnamese government disagreed and began extradition proceedings against the supervisor. On several occasions after the incident was discovered, the company offered the women envelopes of money to smooth over the situation.
One of the women explains her feelings on the attempted bribes, But we refused. I answered them, we will not for money sell our dignity or our honor. (Vietnam Labor Watch).In 1997 Thuyen Nguyen traveled to Vietnam to view the factories for himself. Upon his return, he was very outspoken about what he witnessed. I cannot describe to you these womens sense of desperationmost of the women I spoke to work ten to twelve hour days six to seven days per weekForced and excessive overtime is the normif workers refuse, they are punished or receive a warning.
After three warnings, theyre fired. He also noted Pregnant workers are treated with disrespect and have been, on occasion, unjustly terminated.(State of California v. NIKE, Inc.)There seem to be no rules or limitations on the punishments workers can receive, even for minor offenses. On March 8, 1997, International Womens Day, a supervisor in a Vietnamese factory made 56 women run twice around the 1.2 mile factory because they wore the wrong shoes to work.
Twelve of these women went into shock, fainted, and were hospitalized. On a day when most employers in the country give their female employees flowers and gifts, this factory gave twelve women a trip to the emergency room. Another supervisor ordered 45 workers to kneel with their hands in the air for 25 minutes for what he considered to be poor performance. On November 26, 1996 100 workers were forced to stand in the sun for an hour for spilling a tray of fruit. This is a common punishment called sun-drying.
For 15 women the punishment for poor sewing was a smack in the head. Two of these workers were taken to the hospital and 970 workers went on strike to protest the unfair treatment. In another instance, an American inspector told a supervisor that the wrong color was being used on the outsoles of shoes.
The supervisor later lined up the six employees who made the mistake and hit each one with the outsole. A standard rule in these factories is to limit the restroom privileges of employees. Workers are not allowed to use the restroom more than one time in an eight-hour shift and cannot drink water more than twice (Vietnam Labor Watch).When the Ernst and Young report uncovered the problems Nikes factory workers endured, the company announced that it would be looking into the allegations and would clear up any situations it found to be illegal or unethical.
CEO Philip Knight did this by hiring Andrew Young, former United States Ambassador to the United Nations, to investigate Asian operations. Mr. Young founded GoodWorks International to do this. GoodWorks released a report in June 1997 basically claiming that Nike was innocent of any wrongdoing and that the conditions in the factories were acceptable. However, Andrew Young did not visit all of the factories, therefore his report is incomplete. He failed to address even one single violation mentioned in the Ernst and Young audit which was completed three months prior (State of California v.
NIKE, Inc.).Not only was the GoodWorks report incomplete, it was also very fictitious. Andrew Youngs report lists Anita Chan as a contact. Ms. Chan wrote a letter to the Washington Post denying ever being contacted by Mr.
Young or anyone from GoodWorks. She states that if she had been contacted, she would have brought to his attention numerous health, wage, and safety violations, which were occurring in the Chinese factories. These inaccuracies are not limited to China. Photos were taken of Andrew Young during his trip to Vietnam, one of which was captioned Andrew Young meeting with plant management and union representatives in Vietnam. Nike spokesman Mr.
Vada Manager later admitted that the men in the photograph with Mr. Young were receiving salaries from the company, rather than from the union or the Vietnamese government.In a lawsuit filed by the state of California against Nike, Inc., representatives from the state contend, Nike knew, or should have known, that the GoodWorks report was deficient in its failure to address the potentially life-threatening health and safety violations at the Tae Kwang Vina plant. Despite the inconsistencies in the GoodWorks report, Nike represented it as proof that it was doing a good job and operating morally (State of California v.
NIKE, Inc.).As can be expected, Nike denies wrongdoing in the conditions of its factories and claims to be justified in all of its actions.
There have been numerous, unsuccessful boycotts against the company, and Nike has retaliated with denials and attempts to justify its actions. For example, Nike is a member of the Fair Labor Association, a White House-backed organization, which has apparel companies on its board. Mr. Knight and the shareholders of Nike feel this association is an acceptable effort toward rectifying the situation in its factories.However when the University of Oregon joined a different organization, the Workers Rights Consortium, Nike CEO Philip Knight cancelled his planned $30 million donation to his alma mater.
The billionaire Mr. Knight has previously given a total of $50 million to the University of Oregon – $30 million for academics, and $20 million for athletics. As an explanation for the withdrawal of the promised donation, Nike spokesman Vada Manager said We object to the Workers Rights Consortium because it does not provide a seat on the table for companies. He went on to say The University of Oregon, despite its unique relationship with Nike and Phil, is free to align itself with the Workers Rights Consortium. However, it does not mean that we are required to support those efforts with which we have fundamental disagreements. (Knight; Greenhouse).Randy Newnahm, University of Oregon Senior and Survival Center Coordinator has a different view of Mr.
Knight. Perhaps he sums up the whole situation best. He (Mr. Knight) keeps claiming that his company is socially responsible and that they dont use sweatshop labor. If thats the case, why is he so upset that we joined this monitoring group? It kind of implies that something isnt quite up to par. (Greenhouse).
BibliographyGreenhouse, Steven. USA: Nike CEO Cancels Gift to University Over Monitoring. New York Times 25 April 2000.Knight, Philip.
Statement From Nike Founder & CEO Philip H. Knight Regarding the University of Oregon. Nike. Statement by Nike Regarding an Interim Agreement with the University of Michigan. ORourke, Dara. Comments on the Vietnam Section of the Tuck School Report: Nike, Inc.
: Survey of Vietnamese and Indonesian Domestic Expenditure Levels Press for Change. Dragging Negotiations Cited as Key Factor in Protest State of California. State of California v. NIKE, INC.
Vietnam Labor Watch. Nike Labor Practices in Vietnam: An Open Letter to Concerned Americans, Nike Shareholders, and Consumers.