Nike

Facts

The article, “Nike: From Sweatshops to Leadership in Employment Practices”, begins by explaining how Philip Knight is a “self made billionaire”. He is worth $7.3 billion and used to sell shoes out of the trunk of his car in 1964. In the 1990’s Nike combated allegations concerning subcontractor labor and human rights violations. According to the case study, critics viewed Nike’s response as nothing more than a public relations, damage-control stunt, rather than a sincere attempt at labor reform.

Although Nike is known as a footwear company, one-third of its revenue comes from apparel manufactured in Asia. Because of Nike’s increasing size of operations and costs, suppliers in Korea and Taiwan have had to subcontract with cheaper labor markets in third-world countries. The case study states, according to Nike’s corporate responsibility report, the pool of suppliers came from seven hundred factories in fifty countries. Since 1990 labor rights activists and media have criticized Nike for human rights violations. Indiscriminate hiring and firing practices, deficiencies in health and safety conditions, and low wages are some of the accusations faced by Nike. According to the case study, several cases of human rights abuse were revealed in Indonesian factories. In Vietnamese factories, unacceptable standards of chemical levels caused employee health problems.

In 1998, because of boycotts, picketing and universities, Nike’s revenue and stock prices dropped fifty percent. Since Nike had established a code of conduct in 1992, their initial reactions to specific criticisms was laize faire due to the fact the company didn’t own the factories in question. In 1996 Nike chairman Philip Knight claimed responsibility regardless of where Nike products were produced, but denied the sweatshop issue. At this time Nike began an extensive public relations campaign and established a workplace code of conduct. Nike faced additional issues in 1998 when Marc Kasky, a self-styled corporate critic, filed a lawsuit claiming Nike consciously misled the public. In 2002 the California Supreme Court decided against the company and held Nike accountable for deceptive public statements regarding labor practices. The company settled and agreed to pay $1.5 million over three years to the Fair Labor Association. The case study concludes by discussing the numerous changes the company has made. Nike has moved toward establishing and industry code of conduct. The company now uses three types of monitoring systems in its factories; SHAPE inspection for basic compliance, M-Audit for more in depth inspections, and independent monitoring by the Fair Labor Association. Along with this, they have opened their doors for research groups and implemented the balanced scorecard. In addition, Nike has taken a step toward transparency by disclosing its contract factory base and its supply chain. They are looking into new production processes and becoming more aware of it’s’ impact on the environment. As a result of putting corporate responsibility at the forefront, Nike has achieved a ranking number thirteen in Business Ethics Magazine’s “100 Best Corporate Citizens”.

Ethical Issues

The main issue when looking at Nike is the unfair labor practices that occurred in contracted factories. Most of the pressure the company received was for practicing unethical business tactics to enhance profits. One aspect of Nikes practice was using ladies in their factories because they could pay them less. In Pakistan, a factory Nike was contracted with, used child laborers to make footballs. Most factories contracted by the company paid very little attention to worker safety. Workers in these factories stated they were either not informed or were less concerned when faced with the question of their livelihood. Workers were forced to work under great mental pressure and many women were assaulted by their supervisors.

Pay parity was another issue, especially when compared to American standards. Many women fad to put in long hours of work in exchange for less than desirable wages. Nike’s manufacturing plants benefited from human exploitation and economic opportunity to receive great dividends.

The company admitted to widespread problems saying that, particularly in it’s Asian factories, there were cases of abusive treatment both physical and verbal in more than a quarter of its south Asian plants. 25% to 50% of the regions factories restricted drinking water and access to restroom facilities during the workday.

Evaluation

How has Nike responded to the allegations of human rights and health issues? According to the website www.nikeresponsibilty.com they are