Nike: The Sweatshop Debate
Nike is a global corporation that was established by former University of Oregon track star Phil Knight in 1972. It is one of the leading marketers of athletic shoes and apparel in the world. Nike does not engage in any manufacturing in the operation of their business. The company designs and markets its products but they hire subcontractors to manufacture it. They have contracts with about 600 factories all over the globe that employs more than 650,000 people. Despite the company’s success it had been accused that its products are made from “sweatshops” wherein workers, many of which are children are driven to slave working under hazardous conditions for very low compensations (‘Nike’, 154).
The company has been criticized by various non-governmental organizations as it is seen as the symbol of the evils of globalization. Nike is said to exemplify a western corporation that exploits the people of poor countries in order to produce expensive shoes and apparel for their own profit. The CBS 48 Hours news report is among those that made an expose regarding the inhumane labor treatment that is happening in most Nike manufacturing factories. The report focused on a Nike factory in Vietnam wherein workers, some of them are children work six days a week and they are paid only $40 a month which is a mere 20 cents an hour. This clearly shows the exploitative labor that Nike manufacturing companies are practicing. This is also the reason why many groups from various sector of the society are asking for a consumer boycott of all Nike products (‘Nike’, 154). Nike spent substantial amount of money and worked hard to establish the image that they have but this is now threaten due to this issue that they are facing.
In order for the company to save their reputation as well as control the growing criticism against them, they develop possible alternatives in order to address the problem. The first thing that Nike did is to hire Andrew Young, a one-time U.S. Ambassador to the United Nations and also the former Atlanta Mayor to work for the company. He assessed the working conditions of the manufacturing plants of those subcontractors that are affiliated with Nike. He inspected 15 factories in three countries. Young reports showed that Nike was treating its workers properly although there is still room for improvements. He also emphasized that he did not see any sweatshops or hostile working conditions. On his observation, there were crowded dorms but the workers eat at least two meals a day during their shift and they are paid subsistence wages based upon their cultures. Young’s report was widely criticized by human rights and labor groups because of his failure to bring his own translator and for doing slipshod inspections (‘Nike’, 155-156).
In 1996, Nike made another decisive move when it joined a presidential task force that is created to think of ways in order to put a stop to sweatshops in the shoe and clothing industries. The participants of the task force include leading companies in the industry like Nike as well as representatives coming from the human rights groups and labor leaders. The task force declared a worker’s rights agreement that focused on manufacturing practices abroad, which the U.S. companies accepted. Some of its provisions are to limit the workweek to 60 hours and for the companies to pay the local minimum wage I these foreign factories. Furthermore, the task force also consented to establish an independent monitoring association that was referred to as the Fair Labor Association (FLA). The responsibility of the FLA is to make sure that the companies abide by the agreed code of practice (‘Nike’, 156).
This independent monitoring association has indeed grown in its membership as it now includes important and prominent organizations in various sectors of the society. Some of its notable participants are the Lawyers Committee for Human Rights, the National Council of Churches, the International Labor Right Fund, and some 135 universities. The participation of these educational institutions is very vital since companies such as Nike, Reebok, and Levi Strauss have extensive licensing agreement with these universities (‘Nike’, 156).
Nike also made another important action in countering the accusations regarding their adherence to sweatshops when the company commissioned independent organizations like the Ernst and Young to audit the factories of its subcontractors. During September 1997, Nike proved its detractors that they are committed in addressing the issue when they terminated their contracts with four Indonesian subcontractors. The company explained that the subcontractors disagreed in implementing the company’s standard for working conditions and salary levels. Nike even named one the subcontractors, Seyon that is responsible in manufacturing sports glove for the company. Nike elaborated that this subcontractor refused to apply the 10.7 percent increase in their worker’s monthly wage. The Indonesian government already announced that the minimum salary should be $70.30 in April 1997 but Seyon still disobeyed it (‘Nike’, 156).
Nike is determined to solve the problem that is why they decided to take action within their company. Philip Knight explicitly expressed this objective in his speech on May 12, 1998 at the National Press Club. He informed the public of a detailed series of initiatives that his company would pursue in order to enhance the working condition of about 50,000 employees that make products for Nike through its subcontractors. Knight emphasized important actions that the company did and plans to do. First, Nike effectively changed the minimum age limit of those people who would work for their subcontractors’ factories abroad. This is in accordance with the International Labor Organization or ILO. The specified age requirement would be 15 years old in most countries and 14 years of age in developing states. Workers with the minimum age of 18 will be accepted in all footwear manufacturing and 16 years old in other types of manufacturing such as: apparel, accessories, and equipment. Existing employees who are employed before the minimum age requirements were applied would be grand-fathered into the new provisions (‘Nike’, 156).
Another way that Philip Knight discuss to solve the problem is their company’s implementation of a 100 percent factory auditing scheme. The company is already observing this kind of measure for the past 13 months. Every Nike contract factory will be checked annually by the PricewaterhouseCoopers teams. These teams are especially trained with regards to the company’s Code of Conduct Owner’s Manual as well as the auditing and monitoring procedures. PricewaterhouseCoopers had already conducted 300 monitoring visits. In some of their visits, they found out that there are workers in apparel factories that are below the minimum age requirement. These factories have been reprimanded and they were instructed to raise the age limit to 17 years old. Subcontractors of the company should also ask for at least three official and verified documents that will prove the age of their workers. Moreover, they are encouraged to exert more effort in ensuring that employees meet the required standards by means of interviews and records verification (‘Nike’, 156).
The main of goal of the Nike as Philip Knight stated is to make sure that workers in different parts of the world are protected. This could only be achieved by regulating the practices of people responsible in managing factories and its workers. Factories should adhere to the mandates of the Permissible Exposure Limits (PELs). Workers should not be exposed to levels above those permitted by the PELs especially for chemicals prescribed in the OSHA quality standards for indoor air (‘Nike’, 156).
Despite the efforts of Nike, many people still criticize the efficacy of the company’s actions. They pointed out that Philip Knight was not addressing the root causes of the problem. Even the value of the auditors hired by Nike is being questioned because of its incompetence in identifying and focusing the major labor practice issues. Nevertheless, Nike pursues to push forward its own initiatives. The company is constantly updating the developments of their efforts in addressing the issue of sweatshops on its Web site. In April 2000, Nike responded to the continued accusations that it has been receiving. The company expressed a back-up plan that would answer all the allegations against them. It announced that they would show the complete and substantial reports of all the auditing made by independent organizations regarding their subcontractors’ factories (‘Nike’, 157).
The sweatshop debate is indeed a very controversial issue that poses a difficult challenge for the stability of companies like Nike. This kind of problem threatens Nike’s image and reputation. However, this dilemma should be immediately address not only to save the profitability of a giant company but to solve something that is of greater importance, which is the welfare of thousands of workers that are experiencing labor, rights violations.
“Nike: The Sweatshop Debate.”