During the Nike attempted to lower costs after increasing cost of labor in Korean and Taiwanese factories, Nike began contracting in East Asian countries. It sub-contracted factories without reviewing the conditions, based on lowest bid. It wasn't until 1991, when a report by Jeff Ballinger was published detailing their insufficient payment of workers and the poor conditions in their Indonesian factories, that these sweatshops came under the media and human rights scrutiny that continues to today.
In 1996, Life magazine ran a reportage on child labor that included a shocking photo of a 12-year-old Pakistani boy sewing a Nike soccer ball. Nike has strongly denied the claims in the past, suggesting the company has little control over sub-contracted factories. Beginning in 2002, Nike began auditing its factories for occupational health and safety.
Backlash and its public relations impact forced the company to change methods, improve conditions, and begin implementing social responsibility reports in 2005. Nike has since began a initiatives to improve their factory conditions.
Allegations and the aftermaths
Early in Nike's production, it made use of factories in South Korea, Mainland China, and Taiwan. As their economies developed, the cost of labor in these countries grew rose, leading Nike to open additional factories in less developed countries such as Indonesia and Vietnam. Continuing to the 1990s, Nike experienced rapid growth after they moved their primary branches of production overseas. Record-breaking profits were reported and the number of factories increased to fulfill the consumers’ demand for Nike products.
After initial reports, advocacy groups began looking at the conditions of the factories in which Nike, Inc. products were made. They found that the employees were commonly the poor inhabitants of the area surrounding the factory.
The heads of the factories were typically American or European Nike contractors, who lived outside of the factory country and did not have any sort of relations with their employees. The duty of supervision was given to an upper-level factory worker. The authority of the supervisor included enforcing factory rules and maintaining efficiency standards.
The findings of factory investigations show that the supervisor often oversteps their duties. The laws protecting the workers are ignored in favor of cutting costs and lowering health standards. This is possibly because inspectors and politicians are paid off by factory supervisors in order to limit governmental interference. The leaders relayed messages to military and police units to overlook the conditions in factories so that the illegal environment could remain open and functioning. They also were warned to watch for signs of labor activism near the factories to prevent workers from aligning with one another for better conditions.
In 1991, activist Jeff Ballinger began publicizing the conditions of the Indonesian factories, which lead to larger media coverage of Nike's overseas operations. His reports included claims that a Indonesian worker was illegally working for 14-cents a hour, below national minimum wage.
Protests against Nike
In 2005, protesters at over 40 universities demanded that their institutions endorse companies who use "sweat-free" labor. Many anti-sweatshop groups were student-led, such as the United Students Against Sweatshops. At Brown University, Nike went so far as to pull out from a contract with the women’s ice hockey team because of efforts by a student activist group that wanted a code of conduct put in place by the company.
Several universities, unified by the Worker Rights Consortium, organized a national hunger strike in protest of their school using Nike products for athletics. Feminist groups mobilized boycotts of Nike products after learning of the unfair conditions for the primarily female workers. In the early 1990s, when Nike began a push to increase advertising for female athletic gear, these groups created a campaign called "Just Don’t Do It" to bring attention to the poor factory conditions where women create Nike products.
Team Sweat is one of the largest groups that specifically tracks and protests about Nike. Team Sweat is "an international coalition of consumers, investors, and workers committed to ending the injustices in Nike’s sweatshops around the world" founded in 2000 by Jim Keady. While Keady was conducting his research about Nike at St. John’s University, the school signed a $3.5 million deal with Nike, forcing all athletes and coaches to endorse Nike. Keady publicly refused to support Nike and was forced to resign his position as soccer coach in 1998. Since resigning, Keady has done original research into the conditions in Nike's Sweatshops. He travelled to Indonesia and for a month lived among the Nike factory workers, surviving on $1.25 per day as the workers do.
In 2016, the Worker Rights Consortium (WRC) and Fair Labor Association (FLA) issued reports on working conditions at the Hansae Vietnam factory complex. The reports detailed various violations of labor standards. In response, students at Georgetown University held a sit-in in December to protest their school's contract with Nike. The university allowed the contract to expire. In July 2017, USAS organized a Global Day of Action Against Nike on which protests were held at numerous Nike stores. In August, Nike reached a new agreement with Georgetown University which granted the WRC full access to Nike's factories.
In 2019, Nike received the worst rating inTailored Wages UK report, published by The Clean Clothes Campaign. The report stated: "The brand can show no evidence of a Living Wage being paid to any workers". Moreover, in 2020, the Washington Post reported that Nike purchases from a factory that relies on forced labor from Uyghurs.
Response by Nike
After these reports surfaced of the conditions of the factories, Nike denied the claims.
Later, Nike director Todd McKean stated in an interview that Nike originally did not claim the factories were their own as they had be subcontracted, and admitted the company engaged in irresponsible practices and could have done more to address the issue before.
Nike began to monitor working conditions in factories that produce their products. During the 1990s, Nike installed a code of conduct for their factories. This code is called SHAPE: Safety, Health, Attitude, People, and Environment. The company spends around $10 million a year to follow the code, adhering to regulations for fire safety, air quality, minimum wage, and overtime limits. In 1998, Nike introduced a program to replace its petroleum-based solvents with less dangerous water-based solvents. A year later, an independent expert[who?] stated that Nike had, "substituted less harmful chemicals in its production, installed local exhaust ventilation systems, and trained key personnel on occupational health and safety issues." The study was conducted in a factory in Vietnam.
Nike created a non-governmental organization called the Global Alliance for Workers and Communities that became aligned with several other groups including the International Youth Foundation. The organization releases reports about the corporation and its plans to improve current conditions. The Global Alliance received backlash in 2001 when a report about the Nike Inc. did not include recent events such as strikes, worker terminations, and the lack of collective bargaining in their Indonesian factories.
Between 2002 and 2004, Nike audited its factories approximately 600 times, giving each factory a score on a scale of 1 to 100, which is then associated with a letter grade. Most factories received a "B", indicating some problems, or a "C", indicating that serious problems are not being resolved quickly enough. If a factory receives a "D", Nike threatens to stop producing in that factory unless the conditions are rapidly improved. Nike had plans to expand their monitoring process to include environmental and health issues beginning in 2004.
A study by the Nike-founded Global Alliance for Workers and Communities found that 70% of Nike factory workers in Thailand rated their supervisors as good and 72% thought their income was fair. In Vietnam, most workers "thought the factory was a 'good place to work' and planned to continue at least three years," and 85% of those polled felt safe there. Further, they felt that the factory offered a more stable career and higher income than farm work.
Multiple international organizations work on behalf of Nike factory workers attempting to obtain higher wages, improve the working conditions of the factories, and enable them to organize. Global efforts have increased the information being spread about Nike sweatshop conditions. In countries like Indonesia, Thailand, Mexico, and Cambodia, where factories are common, non-governmental organizations push efforts by informing the community of the workers of the plants. Several well-known advocacy groups are the Global Exchange (United States), Christian Aid (United Kingdom), The Ethical Shopper (New Zealand), and the Clean Clothes Campaign (Europe).
The main focus of political efforts within the countries that house the factories is an increase in the minimum wage for workers. In Indonesia, other legislative efforts included limits on the number of hours a person can work per day, mandated rest periods, minimum age requirements, and a maternity leave for women. Restrictions on labor activism and labor unions limits the amount of unification workers can develop within the factories. When laws in Indonesia were lifted in the late 1980s, factory workers and non-governmental organizations staged many strikes at Nike factories protesting the poor working conditions. The organizations also worked with international allies such as the United States to bring about awareness in foreign, and often wealthier, countries. These allies provided aide for the workers who were not paid while on strike.
In a Vietnamese Nike factory, a worker accused his employer of striking him. After contacting a factory advocate, the worker was interviewed by a news station. The video eventually reached an ESPN affiliate in Vietnam, where it was viewed by millions of people before officials in the United States had formally heard of the incident.
In 2000, Nike chairman Phil Knight planned to donate $30 million to his alma mater, the University of Oregon. When the University of Oregon joined the Worker Rights Consortium (WRC), Knight revoked his donation because the WRC has been blocked by Nike from inspecting its factories. The Fair Labor Association (which was co-founded by Nike in 1980s) is supported by Nike and the United States government, while the Workers Rights Consortium is not. There has been debate between the university and Knight about the legitimacy of the FLA and which labor monitoring organization is more effective.
Another dispute arose from Nike’s personalization system, NIKEiD. MIT graduate Jonah Peretti attempted to order a pair of shoes from Nike. He chose to have the word “sweatshop” embroidered on them. Nike sent Peretti an email explaining that his personalization request could not be granted for one of four things: it contained another party's trademark or other intellectual property, the name of an athlete or team Nike does not have legal right to use, profanity or inappropriate slang, or was left blank. Peretti replied, expressing to Nike that his personalization did not contain content violating the aforementioned criteria. Nike responded by allowing Peretti to alter his personalization and Peretti chose not to change it and cancelled the order. According to the Mises Institute, the publicity led to Nike selling more of the personalized shoes.
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