Essay: Nike: sweatshop debate

Nike: sweatshop debate

Executive Summary

In May 12, 1998, Nike’s CEO and founder Mr. Phillip Knight spoke at the National Press Club in Washington, DC and made what were, in his words, “some fairly significant announcements” regarding Nike’s policies on working conditions in its supplier factories.

The announcements received favorable treatment from the press, with a New York Times editorial suggesting that Nike’s new reforms “set a standard that other companies should match.”

Nike’s critics were more cautious, expressing concern that Knight’s promises represented an attempt to sideline their demands for decent wages and rigorous factory monitoring and replace them with a significantly weaker reform agenda.

This report represents a comprehensive examination of Nike’s labor performance in the three years since that speech was made. That performance is first assessed against the commitments Knight announced and is then compared with the human rights standards and independent monitoring practices labor rights organizations have demanded of the company.

Introduction

Nike, the world’s no: 1 shoemaker. Nike story began in 1957 with a handshake of Phil Knight met his University track coach Bill Bowerman. In 1962 they formed Blue Ribbon Sports to imports athletic items from Japan. Blue Ribbon Sports had a big experience in subcontract on its shoe in 1971. After all in 1978 Blue Ribbon Sports officially known as Nike inc, actually, the company takes this name from the victory of Greek Goddess. Now Nike provides wide variety of athletic shoes, apparel, equipment and accessories in global market. In addition, Nike controls several stores and NIKETOWN shoe, factory outlets, women shops and online shopping. Almost all these products are manufactured by third party. Nike offered 2 million public shares of stock in 1980. In 1993 annual turnover increased from US$750 million to $4 billion. Nike had $10 billion an annual turnover with $571 million net profits for the year ending May 31, 2000. In 2006 Nike sold their products over 140 countries and annual revenue was 15 billons. More than 800 contract factories situated around the world for Nike brand products. Nike Inc is free from manufacturing; there all products are manufactured by independent contract manufacturers. In 1984, 16 countries were introducing footwear but today it is only 8.

In the last two decades Nike footwear industry went through an explosive growth. In 1985, United State consumers bought 250 million pair of shoes. In 2001, consumers spent more than $13 billion. A very few big companies are dominated the branded shoes. Although the Nike is extremely metameric by designs, price and different shoes. Over 70% of global footwear market is controlled by top footwear companies.

The Nike’s code of conduct is developed for improvement of workers condition, labour practices and external media. At the end of the 1991 this original idea came from a meeting. Code of conduct first published in 1992. Until 1995-1996 the code was not fully implemented.

In 2005, the WTO Agreement on Textiles and Clothing quota system is due to end.

Nike’s manufactures are from different countries so the legal challenges are not faced more. The more cultural and ethical challenges are came because they chosen there subcontractors from different countries. Nike has bored several attacks from different organizations in this global world. There are different cases rose against Nike, related to the safety of the employees and wages. At last, Nike developed several tactics to consider the problems in factories.

Nike is the world famous shoe maker in world. This company has a way of success, because the employees are doing piecework for poor pay and are prevented from forming unions. Here, more than 3 examples are against Nike. Now Nike has taken different type approaches for this problem. In 1996 the first example against Nike was a CBS 48 news Report by Roberta Basin. He visited a factory and explains, there are more than 25,000 workers takes for millions of shoes a month. Most of them are young women and they got only $40 per month. He interviewed a young women her name is Lap and she said that, she have to complete her quota before she need to go out relatively sick problem.

Another attack in June 1996, according to Joel Joseph, he is the chairman of the foundation by labor union and domestic apparel manufacturers in 1996, the Nike sneakers were made by 11 year old Indonesia for 14 cents per hour. On that time, Donna Gibbs anticipated that this statement was wrong. And Gibbs also mentioned, every month one average worker earned $103 a maximum 54 hour week. And also the staff members were makes sure that they obeyed local laws.

In 1997 Global Exchange published a news letter criticized against Nike. During this period, the majority of the shoes were made in Korea and Taiwan. And early this year $2.46 was entry level wage. And in Vietnam simple $1.60 a day but in there at least $2.10 need for a simple meal. Global Exchange published a report in September 1997 on working condition. From this report we can know that, Korean subcontractors forced to work as young workers for 10 cents an hour. In 1997 the confidential report leaked by Ernst & Young. The report determined that 77 percentages of young and under age 25 were suffered from skin or breathing problem.

Against this different problem Nike developed different strategic approaches for working condition and pay. After all, Nike responded in 1996 hired one-time U.S Ambassador to the UN. After finishing two week investigation tour, they released a report and that report positive for Nike. In late 1996 Nike designed a task force to find the rout of blackballing sweatshops. Finally, in 1998 May 12 Phil Knight take first step designed to improve the working condition for employees who are working for Nike. [Not finished ]

1. Should Nike be held responsible for working condition in factories that it does not own, but where sub-contractors     make products for Nike?

Although, Nike may be far from some responsibilities in some other areas. Different wages and working condition are negotiated by Nike. If Nike had decided to make an improvement in working condition, then those changes may very helpful for workers. Nike is a public owned firm, and goal is to increase the shareholders wealth. Factories in Asian countries were very happy, because the working condition provided by manufacturer of Nike and those wages were likely same from other sources.

2 What labor standards regarding safety, working conditions, overtime, and the like, should Nike hold foreign      factories to: those prevailing in that country, or those prevailing in the United States.

Directly, Nike has major responsibilities to control supplies to working conditions that dominate only in the supplying countries. Prevailing in the America, there would be a several reason to search contractors from other countries for Nike. (not finished)

3. An income of $2.28 a day, the base pay of Nike factory workers in Indonesia, is double the daily income of about      half the working population. Half of all adults in Indonesia are farmers, who receive less than $1 a day. Given        this, is it correct to criticize Nike for low pay rates for its subcontractors in Indonesia?

For the pay, Nike should not be in responsible of Indonesian subcontractors. The cost of goods and wages are the reason why Nike has deal with subcontractors. Here some major things are not clear .Therefore, to critic about Nike is not fair.

4. Could Nike have handled the negative publicity over sweatshops better? What might have been done differently,     not just from the public relations perspective, but also from a policy perspective?

For handling this negative publicity Nike has different department. As a part of these problems it didn’t deal the whole criticisms, only preferred to answer the age issue and the inferior working condition. On the behalf of policy perspective, training for the workers would be better, supplier changes and improvement of workers plight. There is an agreement for the Improvement of factory working condition may effective by advisory board and different agencies and outside organizations.

5. Do you think Nike needs to make any changes to its current policy? Is so, what? Should Nike make changes     even if they hinder the ability of the company to compete in the market place?

Directly Nike has to change their policy, because their policies are very older and poor. For policy adjustment one strategy will be to involve international agencies. Nike has some obligation to the shareholders and improvement in competitive marketplace. If the new policies are that finally get its business down then it’s not good for workers. Clearly, remain change occur in its workers is redoubtable.

6. Is the WRC right to argue that the FLA is a tool of industry?

Actually, WRC is the independent tool of organized labor. This argument is a part of true because some time FLA is not capable to carrying audits of international sweatshops. But WRC funded by labor union, rejects to make an appointment with companies because it would be ‘”jeopardize its independence.”

7. If sweatshops are a global problem, what might be a global solution to this problem?

In the world sweatshops are a big problem in different firms. The firms are searching for low cost subcontractors in every corner of the world. So the sweatshops are a world problem. The possible solutions are change or modify, with minimum pay and age. The firms can get low cost labor and low cost of manufacturing in certain countries. However, low cost labors are promoting the free trade and improve the quality of life.