Nike responds to allegations of exploitation

The opinion piece by J.D. Walker that appeared in The Minnesota Daily on April 3 lobbed some serious criticisms at Nike and rehashed old issues that we have committed a great deal of time and energy to resolve. At Nike our focus is, and must be, on the future. While we support dialogue and constructive criticism, we will not stand for misguided attacks on our corporate character.
Nike has taken significant actions to improve the lives, opportunities and working conditions of the people who make our products around the world. Our success as a company is based on fulfilling our responsibilities to the people who make our products; the communities where our products are made, sold and bought; the environment and natural resources that allow us to be successful; and the consumers who depend on our product excellence.
We provide fair wages — period. The fact is, Nike offers good wages, benefits and desirable jobs in countries where wages are low and jobs are scarce. Wages are determined using the country-mandated minimum wage as a foundation. In most cases, however, entry-level workers earn more in cash and allowances than local governments require. The “hard numbers” cited in Walker’s piece simply are not current. Nike contract-footwear factory owners in Indonesia recently announced an increase in the monthly minimum wage to Rp 300,000 per month, a 13 percent increase. This increase is higher than the newly announced government-mandated minimum wage of Rp 270,000.
In addition to wages, most workers also receive non-cash benefits such as housing, transportation, on-site medical care and meals. Jobs in Nike contract facilities provide opportunities to build a lifestyle and life skills that are not typically available in other wage-earning opportunities in the areas where our products are manufactured.
But don’t just take our word for it. The Los Angeles Times ran a story about global manufacturing (4/18/99) that specifically discussed Nike’s overseas production. “Jobs are scarce in Southeast Asia and getting scarcer because of the continent’s economic crisis, and for millions of unskilled Vietnamese, a job at Nike would seem a prize not much shy of hitting the lottery. Nike’s five Taiwanese and South Korean subcontractors in Vietnam pay an average monthly wage of about $65, more than twice what a teacher earns and considerably above the salary of a young doctor at a state-run hospital.”
We also want to clarify misperceptions about Nike’s production and profit structure. As a general rule, the breakdown for the cost of shoe production is as follows: labor costs equal approximately 15 percent, materials are approximately 65 percent, overhead equals approximately 15 percent and profits equal around 5 percent. The athletic footwear, apparel and equipment industry follows a 1:2:4 cost ratio: 1 represents the cost of production, 2 represents wholesale costs and 4 represents retail costs. For example, if Nike pays $15 for a product from the factory, Foot Locker pays $30 and the consumer pays $60.
Walker’s piece specifically questioned our monitoring efforts. Nike has some of the most comprehensive and independent labor-monitoring programs of any company in the world. We are involved in numerous monitoring systems — both internal and external.
PricewaterhouseCoopers monitors every factory where Nike products are made every year to assess factory conditions. Additionally, internal SHAPE (Safety, Health, Attitude of management, People and Environment) audits measure factory improvements and compliance with Nike’s standards. But it doesn’t stop there. We are also part of the Global Alliance for Workers and Communities. This is a private, public and nonprofit collaboration that uses worker-driven evaluations to improve the workplace and living conditions of young adults involved with global manufacturing.
In terms of worker treatment, we have zero tolerance for abuse and harassment of workers. Our Code of Conduct specifically prohibits it.
Examples cited by Walker are upsetting but old and have been addressed by Nike and our factory partners. Internal evaluation led to our current system for addressing violations of our Code of Conduct. To achieve compliance with our code and working standards, Nike labor-practices managers educate and train factory partners. If factories are found in violation of the code, we work with factory managers to encourage change and compliance. If violations continue however, Nike terminates its contract with these manufacturers. We have terminated 10 contracts in the past two years but use this measure only as a last resort.
I encourage your readers to judge Nike based upon facts and current policies. As quoted in a Nov. 9, 1999, Christian Science Monitor article, “Interviewed outside the factory and away from factory management, a group of workers picked at random say conditions improved markedly. One woman, who asks for anonymity, says workers regularly receive well above the minimum wage. ‘When Nike came, the working conditions became better,’ she says. ‘Before that there were some labor law violations.'”
At Nike we know that globalization and human rights can — and do — co-exist. That’s why we work closely with nonprofit organizations, governmental authorities and other partners to ensure that our workers and their communities benefit from their relationship with Nike.
Please continue to visit our Web site at www.nikebiz.com for the most current information about Nike’s corporate responsibility programs.
Cheryl McCants is the corporate responsibility manager at Nike, Inc. Send comments to [email protected]