Workers In Nike Contract Factories example essay topic

The Nike sporting goods company has been accused of exploiting its workers in Asia. Over time critics have claimed Nike has used unfair and abusive labour practices in order to produce their product at a cheaper cost. While human rights organizations have stepped in to bring the world to the attention of these practices, Nike has continued to remain the number one seller of athletic shoes on the globe. This essay will discuss these claims and how Nike has responded and acted in order to keep their company number one, and why the megastar athletes Michael Jordan and Tiger Woods have remained silent to protect their endorser. Nike sports shoes and clothing are easily identified by its company's distinctive logo, the "Swoosh" and its slogan "Just Do It". (Atkinson, 1996, p 7) Now one of the most worn sports brands globally, the company, which grew from one mans idea to produce shoes to compete with other brands, has become a one of the most well known global enterprises in the world.

Nike was named after the Greek goddess of victory and began in 1964 when American athlete turned businessman, Phillip Knight, hit on the idea of importing running shoes from Japan to compete with the German brands, Adidas and Puma, which were then dominating the US market. (Atkinson, 1996, p 7) The advantage that Knight recognised was that Japanese shoes were much cheaper to produce due to the cheaper labour in Asian countries, thus increasing total company profits. During the 1970's, the company grew as Knight spotted many openings in the market and started targeting not only professional runners, but also the non-professional market, as the shoes were seen to be not just a running shoe but a fashion statement as well. By the end of that decade, Nike had gained half the market in the US and a turnover of US$149 million. (Atkinson, 1996, p 7) In the mid 1980's however the company's position was hit when it failed to recognise the emerging market for women's aerobic shoes and was overtaken by Reebok. (Atkinson, 1996, p 7) But this was short lived, as by 1990 it had regained it's lead due to the introduction of the "Air Jordan" trainer, endorsed and promoted by basketball star, Michael Jordan.

Today Nike continues to retain its position as the market leader in sports shoes, and a major player in sports wear and accessories. In 1994, Nike sales were reported to be at the highest at a US$3790 million making the company profit $299 million. (Atkinson, 1996, p 7) But despite the success of Nike, throughout this time, the company and its founder have always had a reputation for being aggressive and unconventional, the "bad boys" of the shoe industry, built on an "irrelevance for the sporting establishment and for any authority which might cramp the individual's style". (Atkinson, 1996, p 7) Much of this reputation has been owed to the labour practices of the company. Virtually all of the company's footwear is produced by contract suppliers operating throughout Asia. The development of the athletic footwear industry has driven the movement of production from Japan to South Korea and Taiwan, and then to lower wage regions in Indonesia, the People's Republic of China, and Vietnam.

(Goldman, 1998, p 6) Whereas South Korea and Taiwan accounted for a combined 76 per cent of Nike shoe wear production in 1987, by 1997 78 per cent of Nikes shoes came from Indonesia and China while the shared produced by South Korea and Taiwan had shrunk to 7 per cent. (Goldman, 1998, p 7) The following graph demonstrates this and shows the change of contract suppliers in Asian countries from the period of 1989 until 1997. For Nike, production of shoes in these is countries is a major benefit for the company, but overtime there has been much criticism of the labour practices used in these Asian factories. Whilst Nike is not the only company who uses such practices, they have been targeted again and again by community welfare groups who are continually trying to push the company to change their production processes. In these Asian factories where such production is taking place, research has indicated major problems in a number of areas that gives reason for community groups to take action. Workers in these countries in recent years have began to talk more openly about their treatment, but in doing so have taken significant risks.

Workers are risking personal safety and their job through revealing the inside workings of factories, but community groups have encouraged them to do so in an attempt to improve factory operations. While Nike has conducted its own individual studies, it has been argued these cannot be taken as the most accurate and many other individual studies have been done. These studies have found major problems in a number of key areas that provide scope to claim exploitation is occurring in Nike factories. Working hours is the first of these areas. Nike's code of conduct requires that each factory "on a regularly scheduled basis, provides one day off in seven, and requires no more than 60 hours of work per week, or complies with local limits if they are lower".

(Nike Code of Conduct, 1997) Despite this, it was found this was not always the case. Working hours vary according to seasonal fluctuations in orders and from factory to factory across different factory sections. According to a report released by Community Aid Abroad, Like Cutting Bamboo, workers were regularly working more than 60 hours a week and in some factories workweeks of 70 hours and above were common. Workers who refused overtime were subject to a range of punishments and in some factories were given a series of warning letters, which could result in their dismissal. (Community Aid Abroad, 2002.) This was in November 2001, and now much of this has changed, and working hours have been reduced, primarily due to a reduction in orders. The paradox is that with wages so low, most workers are desperate to work as many hours as they can.

Workers in factories have continually emphasised how vital the overtime income was in order to meet basic needs. In February 2001, Nike released a report titled "Workers voices: An Interim Report of Workers' Needs and Aspirations in Nine Nike Contract Factories in Indonesia". The research was funded by Nike, arranged by the Global Alliance for Workers and Communities, and conducted by the Center for Societal Development Studies at Atma Jaya Catholic University in Jakarta. It found that most workers in Nike contract factories were paid at or above the official regional minimum wage. It recognised however, that in most Indonesian provinces the minimum wage was below the government's own estimate of the minimum cost of living, based on the needs of a single, male, forcing workers to rely on income from overtime.

(Community Aid Abroad, 2002) The situation is worse for workers with children. The inadequacy of their wages makes it very difficult for them to support their families. While in some factories workers are supplied with free dormitory accommodation, this is not an option available to workers with children. Approximately 28 per cent of workers in Nike contract factories in Indonesia are parents, 30 per cent of these indicated they have been forced to leave their children in their home village, as they cannot afford to be with them. (Community Aid Abroad, 2002) Those who chose to stay with their children take on a huge financial burden.

A worker interviewed for the purpose of the Cutting Bamboo Report, indicated that in order to cover the living expenses to take care of his 1-year-old son, he and is wife had to take out a loan while she cooked and took care of the baby. (Community Aid Abroad, 2002) While in January this year local governments in Indonesia raised minimum wages, according to workers, cuts in government subsidies meant wage increases were not keeping up with the pace of inflation. These are just two problems evident within Nike factories, and the stories given by workers truly give an inside look to the extent of the situation. But there have also been concerns presented in other areas.

Health and safety is one of these. Unless managed properly, the processes involved in shoe production can pose very serious risks to workers' health. While Nike's code of conduct says, "People deserve safe environments. Work shouldn't make a worker sick - particularly if that work involves the promotion of health and fitness. Nike ensures its own facilities are safe and demands that subcontractors do the same" (Nike Code of Conduct, 1997), evidence suggests otherwise. In March 1999, an inspection of the Tae Kwang Vina factory in Vietnam (a factory which had previously received negative media coverage for allowing workers to be exposed to toxic chemical vapours), found that although the factory had reduced worker exposures to toxic solvents and other chemicals, exposure levels to those chemicals still contravened Vietnamese government standards.

(Community Aid Abroad, 2002) A number of other health and safety concerns were also documented including excessive noise and heat, poor ergonomics, misuse of protective equipment and poor tracking of the causes of illness. These particular claims should give Nike the push to take action, but still little has been done to reduce such health issues. Women also make a huge percentage of the workers in these factories and in regards to health often have in much harder. Under Indonesian law, women are entitled to take a certain amount of unpaid leave when they have their monthly period, but there a reports of women having to prove to doctors they are menstruating in order to take this time off work. There have also been other reports claiming that no matter how ill the worker is, they must still turn up for work, otherwise they risk losing their job. In a report titled, 'Women Workers in Nike factories in West Java,' conducted by Community Aid Abroad, it said that in a particular factory in Indonesia this was particularly evident.

"At Feng Tay if women are sick they must report to work, no matter how serious their illness. If they stay at home and rest, even with a doctors certificate, they are instantly dismissed upon returning to work". (Hancock, 1997, p. 12) Verbal abuse is another problem particularly evident within these Asian factories. The Like Cutting Bamboo Report found that verbal abuse was common and that supervisors routinely shouted at workers if they worked to slowly or made mistakes. The February 2001 Nike-funded Global Alliance report discussed the above and found that 30.2 percent of workers in nine Nike contract factories in Indonesia had personally experienced verbal abuse and 56.8 per cent had observed the problem. (Community Aid Abroad, 2002.) This was again another finding with women workers in particular as the following story indicates.

"A Sundanese man who had worked for Feng Tay as a supervisor, reported being trained in systematic abuse if women by the use of such phases as 'Fuck you' and 'move, hurry up you stupid bitch. ' He resigned as he could not in all conscience do the things asked of him. He felt that such abuse insulted both his culture and the religion". (Atkinson, 1996, p 4) This type of evidence presents another clear case of exploitation within Asian factories. Workers in other countries don't have to tolerate such behaviour in their work places, yet here it appears to be happening on a regular basis, thus supporting community groups' actions in trying to change factory production processes. In Indonesia there is also a long history of soldiers being employed by factory owners during periods of industrial unrest to keep workers on the job and prevent them from striking and in addition to this just being employed as factory security guards.

Abuse has also been evident from this route, not just verbally, physical abuse as well. It is very difficult to compete in today's athletic footwear industry without engaging in the outsourcing of labour to relatively unskilled labourers in these countries. Companies in the athletic footwear industry depend on these poor Asian nations where there is a ready labour force in need of work even if those wages are below the poverty line. (Goldman, 1998, p. 9) Nike too knows that in order to produce their product, these factories are the cheapest and most efficient way. But they also know that problems lie within this production process. While community groups continue to fight against Nike, they say they are trying to improve the issues which exist and provide some justification for their actions.

Last year Nike released its first Corporate Responsibility report and dedicated a large amount of it to their labour practices around the world. According to Director of the Corporate Responsibility Compliance, Todd McKean, no one really knows enough about these practices and more work needs to be done. "How much do we really know about issues in all of these factories? Not enough. Every time we look closer, we find another thing wrong. Too much overtime.

Wage errors. Too much heat. Involuntary pregnancy testing. An abusive supervisor.

Among the most difficult dilemmas is worker rights". (Nike Corporate Responsibility Report, 2001, p 2) So what is Nike doing and to what extent do they agree with the left-wing comments made about their company? Starting with the company's factory monitoring process. "Monitoring involves the use of internal and external resources to judge a factory's compliance with Nike's Code of Conduct". (Nike Corporate Responsibility Report, 2001, p 28) Nike Agrees that presently their monitoring process is not good enough and that it needs to be under constant revision. In Cambodia in 2000, the British Broadcasting Corporation said it had proof that a Nike contractor was using child labour.

It said so on air and showed footage of children claiming they were under the age of 15. While later it was found otherwise, Nike still ceased work in this factory because of the number of compliance issues it raised. (Nike Corporate Responsibility Report, 2001, p 28) To Nike these types of examples are constant reminders that their process is not good enough and a constant review of their system is needed in order to do things differently. While age has been a constant argument used against Nike, they say their standards are the highest in the world: 18 for footwear manufacturing and 16 for apparel and equipment, or local standards whenever they are higher. Nikes argument back is that in some countries, these standards are next to impossible to verify, as records of birth do not exist or can be easily forged, which can leave their company being seen to use child labour. They say, "We put teeth behind the policy with oversight and follow-up.

A Nike contractor found employing any worker under our standards must (a) remove that child from the workplace, (b) continue to pay that worker's basic weekly wage, (c) place that worker in an accredited local school and pay fees to keep them there, and (d) agree to rehire that worker when reaching the Kike minimum age. Factories that refuse to do so we lose our business". (Nike Corporate Responsibility Report, 2001, p 30) Nike say they are trying to continually trying to monitor this process and with this in mind can others to continue to claim Nike are doing wrong. Nike surely recognise what others are saying and are trying to change their processes. Phil Knight said in 1998", Adults should work. Children should study and play.

We do everything we can to ensure this happens. Setting the highest age standards in the industry, and requiring independent certification that factories meet those standards, is our best practice to make it so" Finally, in response to wage. Nike the say, they pay the wage that is due. They pay what is needed, making the comparison between wages and expenditures and make adjustments in these if necessary. For example, in Indonesia where the 1998-99 financial crisis it was clear that inflation was outstripping workers' ability to survive. Nike footwear factories voluntarily raised their minimum wages four times above the nominal minimum wage.

(Nike Corporate Responsibility Report, 2001, p 32.) They say although the wages are low, people want these jobs, often because the alternative is far worse. While these problems are lying in the background, Nike continues to maintain its position as the leading seller of athletic shoes in the world. Much of this is owed to the megastar sports people, like Michael Jordan and Tiger Woods who endorse their products, despite the accusations against their sponsor. Michael Jordan signed with Nike in 1984 to a $2.5 million contract over five years.

At that time, the company was in a period of financial difficulty - their earnings had declined by 65 per cent and in December of that year, 400 employees were laid off, yet Jordan took a gamble and so did the company that both would succeed. (Goldman, 1998, p 47.) To increase Jordan's incentive to promote Nike, they created a brand of shoes carrying his name, the Air Jordan. The Air Jordan line sold over $100 million in its first year, increasing Jordan's sign value, making him a major symbol of Nike. Jordan later commented that, "What Phil and Nike have done is turn me into a dream". (Goldman, 1998, p 48.) With Jordan being such a huge part of Nike's public image, he too was a major part of the problems that the company had to deal with over time.

The media continually placed attacks on Nike, something that endorsers like Jordan had no way of escaping. In the early 1990's, a group named The Made in the USA Foundation began a one million dollar advertising attack on Nike and other firms who produced products overseas. The Foundation mentioned poorly paid, child, or prison labour was occurring in Nike factories abroad. Its ads told readers to send their, "old, dirty, smelly, worn-out Nikes" to Knight so the company would cease overseas manufacturing. (Walter, 1999, p 125) Nike hit back, noting it did no directly hire and pay Asian workers, and instead worked through contractors, who it declared, had to pay the company's minimum wage.

But clearly the Foundation's accusations stung the company. By 1994, Nike television ads began showing Michael Jordan talking seriously to students and adults about the need to support local youth and sports programs. (Walter, 1999, p 126) As arguments were hurled back and forth, Jordan continued to be silent about labour and wage issues, with the repeated response, "he was looking into it" and to this day has continued to do so. (Walter, 1999, p 154) Despite his silence, these issues are something he cannot escape, and will have to deal with as long as he continues to be associated with Nike, as this quote indicates. "He appeared more frequently at his Chicago restaurant to chat up customers, and even moved around area country clubs in a self-proclaimed mission to become immortal gin rummy player.

But he could escape neither the continued frustrations of baseball nor the growing allegations against Nike". (Walter, 1999, p 126.) More recently Nike has signed golf superstar Tiger Woods as a major endorser of their products, and has chosen to foreground race as a category. (Goldman, 1998, p 113.) Over the past few years Woods has rapidly emerged as a sports legend in the media. He has already been named Sportsman of the year in Sports Illustrated, with media representations of Woods focusing on "his athletic ability, his personality and his ethnicity".

An Advertising Age article observes that. ".. as he is only 20, and part African-American, part Native-American, part Chinese and part Thai, Mr. Woods will be used to reach demographic segments most golf marketers don't actively pursue". (Goldman, 1998, p 114) Woods is a minority spokesperson compared to Jordan, but his campaigns draw on a different audience. While Nike labour practices continually get criticized, Nike try's to portray that they do have concerns for minority groups, and primarily use Woods for this image. Nike uses Woods' multiracial background to present Woods as a signifier of universality.

"While Jordan signified physical transcendence, the ability to fly, to do what no man has done before, the ultimate in physical achievement, Woods emerges as a signifier of Humanity itself". (Goldman, 1998, p 114-115) Although Woods' image of symbolizing humanity is evident, he too has remained silent about the Asian sweatshops along with the many other Nike endorsers. Looking at both sides of the issue, we have seen the problem in Asia is complex and to find what is morally right is difficult. What is evident though is that for developing companies to enhance their economic well being and living standards, and in order for their population to survive, they need companies such as Nike. While the major Nike endorsers have remained silent about these labour issues to this day, there is evidently a problem lying in the practices of Nike and more needs to be done to ensure continual improvements. As chairman and CEO Phil Knight said, "We made mistakes, more than most, on our way to becoming the world's biggest sports and fitness company.

We missed some opportunities, deliberated when we should have acted, and visa versa. As a citizen of the world, Nike must do Do the Right Thing - try to be transparent about what they are doing right, and what they are doing wrong; embrace diversity; drive sustainability". (Nike Corporate Responsibility Report, 2001, p 1)

Bibliography

Atkinson, Jeff. (1996) Sweating for Nike: labour conditions in the sports shoe industry, Community Aid Abroad, Victoria.
Community Aid Abroad (2002) We are not machines: Nike and Adidas Workers in Indonesia, Available [online]: web Goldman, Robert (1998) Nike Culture: the sign of the swoosh, Sage, London Hancock, Peter.
1997) Women workers in Nike factories in West Java, Community Aid Abroad, Victoria.
Nike, (2001) Nike Corporate Responsibility Report: Labour Practices, Available [online]: web Nike, (1997) Nike Code of Conduct, Available [online]: web Walter, LaF eber (1999) Michael Jordan and the new global capitalism, W.