NIKE DISPUTESWith the University of Oregon

Nike

Founded :24 January 1964 1978

Founder CEO: William J. "Bill" Bowerman Philip H. Knight

Products Athletic shoes, Apparel, Sports equipment and Accessories

CORE COMPETITORS

Philip H. Knight- student of UO- CEO of NIKE(2000)

NIKE breaks r/s with UOPublicly announced that he would no longer

donate money to the University of Oregon.

Worker Rights Consortium(WRC)- engaged in an internal debate over the ethical responsibilities associated with its role as purchaser of goods manufactured overseas.

The university had considered joining two organizations, both of which purported to certify goods as “no sweat”Fair Labor Association(FLA)Apparel Industry Partnership(AIP)

NikeIn 2000 NIKE was the

leading designer and marketer of athletic footwear, apparel, and equipment in the world.

Logo- “Just Do It!”Nike employed

around 20,000 people, 565 contracts factories in 46 countries around the world turning out Nike products.

Owned subsidiariesBauer Nike Hockey Inc.Cole HannNike Team sports

Revenues almost $9 billion(Nov 1999)45% global market share Knight owned 34% of the company

stock and was believed to be the 6th richest individual in the us.

In 1978 revenue-$269 million and 2700 employees

Nike became a publicly traded company

Athlete Endorsements

In 1990’s founder defined Nike as a Marketing-oriented company”

In 1991-revenues $3 billion-beginning stage

“cool shoes”Record breaking-1998-$9.5 billionADIDAS(2nd firm)

Key events1962-BBA-”Blue Ribbon Sports”1963-1st shipment of 200 Tiger shoes

arrived from Japan1966- 1st retail shop was opened1971-Nike and Mexico

contract(production of shoes)-failed1977- manufacturing r/s with the

Japanese firm

Cont..1982- “Pioneer Award” for Philip knight

1986- billion dollar mark1990- growth in international sales($2 billion)

1991-Michael Jordan wears Nike shoes while leading the Chicago Bulls to their first NBA championship($3 billion)

Cont..• 1995-Nike –Air system($4.8 billion)

1996-Gold metallic shoes –Michael Johnson($6.5 billion)

1999-$9.5 billion-”brown shoes”2000-$30 million contribution for the University of Oregon’s football stadium.

Cutting Edge Products• Nike’s Sports Research Lab

• Human movements• Job is to translate activities into a set of

performance-enhancing and injury –reducing needs.

• The specialists developed new polymer materials that would make the shoes lighter, more aerodynamic, or more resistant to the abrasions incurred during normal athletic use.

The Making of Athletic Shoes No manufacturing processOutsourced production to subcontracts

in Southeast AsiaCompany shifting production locations

within the region when prevailing wages rates become too high.

Nike shifted much of its shoe production to Indonesia, daily wages around $1 a day(comp with u.s. shoe industry-$8 an hr)

1995 1996 1997 1998 1999

China 31 34 37 37 40

Indonesia 31 38 37 34 30

South Korea 16 11 5 2 1

Thailand 14 10 10 10 11

Taiwan 8 5 3 2 2

Vietnam 2 8 11 12

Philippines 4 4 2

Italy 2

Nike’s Subcontractor Factories

• Nike contracted factories around the world

• A major subcontractor TKV , made up 5 % of Vietnam’s total exports.

• “Dirty , Dangerous and Difficult”

Nike’s Subcontractor FactoriesChemical Section:

PU plant produces high quality outsoles.

Chemical Composition changes on cutting edge formulations.

Design Teams Beaverton , Oregon is responsible.

The environment was not suitable but allowable by Vietnamese Law.

The chemicals used in TKV was hazardous.

Tracking of illness was not permitted.

Nike’s Subcontractor FactoriesStitching Section:

One thousand stitchers worked in a single floor.

Workers should meet aggressive production else no bonus.

Workers will be working for long hours..

Physical Torture for slower workers.

“Phoi nang”Sun drying.

Nike’s Subcontractor FactoriesAssembly Section:

For joining uppers and outer soles.

They will be working on 120 shoes a day.

Bad Working Environment.

Entry level wages are 1.5$/day.

Dartmouth Research-$545 and $566 compared to $250 and $300.

Campaigns Against NikeWoman workers were paid 14 cents/hr

“The Made in the USA” foundation ”old , dirty , smelly , worn-out Nikes”

Nike Imperialist Profiteer

EVOLUTION OF NIKE’S GLOBALLABOR PRACTICES

Foreign contractors

COMMENTS:

KNIGHT “it never occurred to us that we should dictate what their factories should look like,which really didn’t matter because we had no idea what a shoe factory should look like anyway”

Dave Taylor says “we don’t pay anybody at the factories and we don’t set policy within the factories;its their business to run”

ACTIONS TAKEN:Code of Conduct in 1992.All subcontractor & supplier in Nike network to

honor local govt labor & environmental regulations.Plant inspections were also taken place.Tony Nava,Nike’s country coordinator for Indonesia

insisted the same.

ERNST & YOUNGIn 1994 Accounting firm hired to monitor worker abuse

allegations in Indonesian factories.

A copy of Vietnam audit leaked.

In 1998 steps taken to reduce exposure to toxins.

LABOR PRACTICES DEVLOPMENT headed by Dusty Kidd was established.

Goodworks report.

Nike’s new Vice-PresidentAge Relaxation, Air Ventilation

MEMORANDUM OF UNDERSTANDINGGovernment Regulation of Business

Safety & Health

Worker Insurance

Forced Labor

Environment

Equal Opportunity

Documentation & Inspection

APPAREL INDUSTRY PARTNERSHIP:Participation in AIP:In 1996,President Clinton launched AIP.

GOAL: To develop set of standards to ensure apparel & footwear were made under sweatshop conditions.

Work place Code Of Conduct:No forced labor,Not more than 60 hrs of work a week,Not less than 15 yrs of age ,etc

THE FAIR LABOR ASSOCIATION:In July 1998 industry representatives opposed

proposals.

In November 1998 AIP established new organization ,the FAIR LABOR ASSOCIATION

Benefits

CRITICISM OF FLA:Warnaco quit saying “It reveals competitive

information to outsiders”Position on wages.

Rights to Workers

Worker right consortium

Contd…

Its launched at 2000Antisweat shopPrograms & activities Code of conductElimination SweatshopSchool affliated with the WRC

WRC with Fair labor associationnon profit labor rights organizationend of child labor & other sweatshop practices consortium governance system internal monitoring system external monitoring system

Conclusion