BY WENDY BOULDING
Capitalism has its casualities.
That's what critics of Nike want to impress upon the devout shoppers who helped the world's leading footwear company to earn $650 million in profits last year.
Armed with allegations of human rights violations and unfair labor practices, activists are pointing their finger towards Nike and its Asian subcontractors.
More than just shoes are coming out of Indonesia, China, Korea, Thailand, Taiwan and now Vietnam. There are also horror stories seeping out from behind the walls of the sweatshops where workers are paid as little as $0.15/hour to produce a pair of shoes.
There are allegations that workers aren't being paid enough to feed, clothe or house themselves. It has also been claimed that workers within the Nike-affiliated factories, who have taken part in union activities, have been arrested and tortured by the Indonesian military.
Nike tells a different story.
From Nike headquarters in Jakarta, Indonesia, general manager Tony Nava said, "We have been told not to talk about what's going on here."
Nike representative, Martha Benson, who is located in Nike's Hong Kong office, was able to be more outspoken.
"Nike has probably been the most aggressive in the industry in terms of ensuring the work conditions in our factories are some of the best," she said.
"We make no bones that we are on a learning curve. So are our production partners. We know we can do more and we strive to do better. Each new thing we do is an example of us 'raising the bar.'
"Since we first began production in Asia over 20 years ago we have had Nike employees in the facilities making sure our partners were producing in the conditions we were comfortable with."
Jeff Ballinger, a vocal critic of Nike, has been intensely aware of the labor practices endorsed by the Indonesian government for the past seven years.
Ballinger estimates he has spent $40,000 of his personal income to investigate and bring awareness to this issue. He has also founded the international activist group Press For Change.
Press For Change works in conjunction with other concerned and verbose activist groups. Global Exchange, Campaign For Labor Rights, and the Justice! Do It Nike Boycott Group have also shed light on the Indonesian situation.
"Nike has been the most arrogant company involved in this issue," said Ballinger. "Even when they were caught red-handed, it took them years to address the concerns. At least other companies apologized for their actions."
During one of his several visits to Indonesia Ballinger was able to speak to some of the factory workers. One woman told him how she was slapped across the face and called "a dog" for scuffing a shoe. She also told Ballinger the only time workers could take a break is when they literally collapsed while working.
He also heard stories of workers having their fingers cut off while operating dangerous machinery that they were trained to use in less than a week.
"We don't advocate a boycott of Nike. We just want to raise the issues. If Nike is comfortable with the drumbeat of bad publicity coming out about production practices, so be it. We're not trying to stop their rocketing sales. We just want to put information out there that will force the company to address these concerns," Ballinger said.
He continued. "Nike's earlier attempts to address them were clearly PR, but now I think they have gotten more serious. It remains to be seen whether they will fix these problems. But they are feeling the heat now."
Last July, Washington Post reporter Keith Richburg visited the factories and also talked to several workers.
"From what I saw in those factories, I'd have to say that the reports put out by activist groups are highly exaggerated. They are not as bad as people claim they are," Richburg said. "In fact, they are quite above average. And from what I saw 90 per cent of the people working in the factories were happy to be there."
In 1992 Nike created a Code Of Conduct dealing with minimum wage, child labor, health and safety and the non-use of forced labor. Included in the Code Of Conduct is a Memorandum Of Understanding which is to be signed and complied with by Nike's contractors.
Jeff Small, director of public relations at Nike's headquarters in Beaverton, Oregon explained the motivation behind the Code Of Conduct.
"Like in any factory in North America, when you have management and workers working together you are going to have conflict. This is a reality. But we are going to do everything within our power to reduce the chances of conflict happening in our subcontracted factories in Asia."
Ballinger points out that doubling the wages of the workers would have little effect on what the consumer would pay for a pair of shoes. Cost of labor currently ranges from one to four per cent of the wholesale price of the product.
Martha Benson retorted, "We do not accept any flexibility on the Code Of Conduct. The production partners uphold the Code and do a very good job explaining it to all the factory employees."
According to Benson, not only do Nike's contractors maintain Nike's preset standards, they go above and beyond. Some factory owners have built sports facilities for their workers, some offer low-interest loans and other incentive programs have also been created.
Besides the wage concern, Ballinger and other activists are also demanding independent monitoring of the factories. They feel that workers rights can only be maintained if an objective party oversees what goes on while shoes are being made.
In 1994 Nike hired the accounting firm of Ernst & Young to conduct random monitoring of the factories. Their findings, although not available to the public, prompted Nike to finally comply with the minimum wage standard in Indonesia.
But, claims Ballinger, contractors were upset about having to pay their workers minimum wage. To make up for their loss of profit, contractors sped up production. With more production came more mistakes.
More mistakes, Ballinger said, caused more beatings.
"Nike has never restrained these contractors," he says. "This Code Of Conduct is merely a public relations faCade.
"We have been told by our critics that as long as Nike remains a highly-visible company, they will continue to focus on us," said Small. "Nike attracts attention. We're fine with that. We want to do things better. We should be better than anyone else. And we think we are better."
The Canadian Catholic Organization for Development and Peace staged one of the biggest protests of Nike to date. Close to 90,000 people sent protest cards to Nike. Nike will not meet with the Canadian group to discuss their concerns over human rights violations, the need for independent monitoring and the need for better working conditions.
Jacques Betrand, spokesperson for Development and Peace, is suspicious of Nike's Code Of Conduct and their Memorandum of Understanding.
"Nike has power over their subcontractors because in many cases they would not exist without Nike. Years ago Nike had said, 'These are not our employees. This is not our problem.' But now that they have adopted a Code of Conduct they have recognized responsibility. But is that progress?" Betrand asks. "We're still waiting to see independent monitoring. We're still waiting for them to sit down with groups to discuss ways to make things better."
"Traditionally Nike wanted to talk about sports, not production," said Benson. "We're not big on 'corporate speak' I guess."
It was in 1977 when Nike began to slowly move the manufacturing of their shoes out of the U.S and into Asia. The process took place over the next seven years. Sixty-five thousand Americans employed by Nike who had been making $8-11/hour found themselves unemployed. Cheap labor was the primary motivation for the offshore move. Over the next two decades other predominant shoe companies also began subcontracting to Asian sweatshops.
The factories are Korean and Taiwanese owned. Single women between the ages of 17-30 make up 85 per cent of the 120,000 workers who are to produce about five pairs of shoes every day. Most of these women come from poor backgrounds and send a large part of their wages to their poverty-stricken families.
To make foreign investment in the country more inviting, the Indonesian government has set minimum wage six per cent below the poverty line. Statistics show that in Indonesia less than half of the population who are employed actually earn the minimum wage. By Indonesian standards, having a job making Nikes at a sweatshop puts factory workers among the higher-paid Indonesians.
Since Nike and other predominent companies have been in Indonesia, per capita income has tripled.
Dr. Yingfeng Xu, Professor of Economics at the University of Alberta, estimates an Indonesian worker getting paid $42/month is almost the same as a Canadian worker getting paid $1200/month.
"The cost of living in Indonesia is low, you have to keep this in mind," said Dr. Xu. "The Indonesian people can live a much better life than they did previously with these wages."
When contacted, an Indonesian government official within the Department of Foreign Affairs was asked, "Do you believe the present companies such as Nike have benefited the people of Indonesia?" He abruptly hung up.
Nike claims to have improved working conditions and helped to lower the percentage of people living in poverty. They use their past presence in Korea and Japan as examples. They believe they are paving the way for higher-paying industries.
"These companies can make a positive contribution by moving their production to Asia. They employ the unskilled labor and then they can enjoy employment growth and high income and in turn boost the local economy. You can argue if this is good or bad. The local people will experience a rapid income growth, but of course their traditional way of life will be changed. That may be seen as being regrettable, but it's part of the growing pains," said Dr. Xu.
Nike's contractors are paying Vietnamese workers notably less than minimum wage. There have also been well-publicized incidents of brutality within the factories.
One situation involved a factory supervisor lining up 15 workers and beating them all with the sole of a shoe. They were being punished for poor sewing. Two victims were sent to a hospital. In another factory 45 women were forced by their supervisor to kneel down and keep their hands in the air for 25 minutes. In both cases the supervisors were eventually disciplined.
Also, a supervisor fled Vietnam after he was accused of sexually molesting several women workers. He inevitably returned to Vietnam to face criminal charges.
"To say that this is a systematic pattern of behavior is not factual. We have 25,000 employees in Vietnam and only three incidents have been reported. It is three too many. But is it a pattern of negligence on the part of Nike? Absolutely not," said Small.
"We recently set up a labor practices department which will work with each of the factories to increase Nike presence and increase the quality of the working environment," Benson added.
Benson also claims that Nike is open to bringing in non-government groups to share ideas with the company to help strengthen working environments in the factories. Some dialogue has taken place with Nike and Vietnamese groups.
And recent media accounts have uncovered the use of child labor in the Pakistani subcontracted factories where Nike soccer balls are made. Boys as young as nine years old are paid six cents/hour to stitch a product Nike plans to use to tap into the mulitbillion-dollar worldwide market.
"After we became aware of the child labor problem we had put a plan into action to build stitching centres so we can ensure no children are involved in the production of soccer balls," said Benson.
The first stitching centre opened two weeks ago and does involve a contractor.
With Nike's past, present, and future actions seeming murky, it's difficult for consumers to take a stand. Ballinger tries to bring some perspective.
"The global economy is forcing us to treat these factories not like they are 12,000 miles away, but more like 12 miles away. We have no choice. Almost everything is made in Asia, and I think consumers want to know that at least some standards are being lived up to. People are going to have to care. It's becoming a bigger and bigger issue and it's going to be in their face."
Jacques Betrand, spokesperson for Development and Peace, is suspicious of Nike's Code Of Conduct and their Memorandum of Understanding.
"Nike has power over their subcontractors because in many cases they would not exist without Nike. Years ago Nike had said, 'These are not our employees. This is not our problem.' But now that they have adopted a Code of Conduct they have recognized responsibility. But is that progress?" Betrand asks. "We're still waiting to see independent monitoring. We're still waiting for them to sit down with groups to discuss ways to make things better."
"Traditionally Nike wanted to talk about sports, not production," said Benson. "We're not big on 'corporate speak' I guess."
It was in 1977 when Nike began to slowly move the manufacturing of their shoes out of the U.S and into Asia. The process took place over the next seven years. Sixty-five thousand Americans employed by Nike who had been making $8-11/hour found themselves unemployed. Cheap labor was the primary motivation for the offshore move. Over the next two decades other predominant shoe companies also began subcontracting to Asian sweatshops.
The factories are Korean and Taiwanese owned. Single women between the ages of 17-30 make up 85 per cent of the 120,000 workers who are to produce about five pairs of shoes every day. Most of these women come from poor backgrounds and send a large part of their wages to their poverty-stricken families.
To make foreign investment in the country more inviting, the Indonesian government has set minimum wage six per cent below the poverty line. Statistics show that in Indonesia less than half of the population who are employed actually earn the minimum wage. By Indonesian standards, having a job making Nikes at a sweatshop puts factory workers among the higher-paid Indonesians.
Since Nike and other predominent companies have been in Indonesia, per capita income has tripled.
Dr. Yingfeng Xu, Professor of Economics at the University of Alberta, estimates an Indonesian worker getting paid $42/month is almost the same as a Canadian worker getting paid $1200/month.
"The cost of living in Indonesia is low, you have to keep this in mind," said Dr. Xu. "The Indonesian people can live a much better life than they did previously with these wages."
When contacted, an Indonesian government official within the Department of Foreign Affairs was asked, "Do you believe the present companies such as Nike have benefited the people of Indonesia?" He abruptly hung up.
Nike claims to have improved working conditions and helped to lower the percentage of people living in poverty. They use their past presence in Korea and Japan as examples. They believe they are paving the way for higher-paying industries.
"These companies can make a positive contribution by moving their production to Asia. They employ the unskilled labor and then they can enjoy employment growth and high income and in turn boost the local economy. You can argue if this is good or bad. The local people will experience a rapid income growth, but of course their traditional way of life will be changed. That may be seen as being regrettable, but it's part of the growing pains," said Dr. Xu.
Nike's contractors are paying Vietnamese workers notably less than minimum wage. There have also been well-publicized incidents of brutality within the factories.
One situation involved a factory supervisor lining up 15 workers and beating them all with the sole of a shoe. They were being punished for poor sewing. Two victims were sent to a hospital. In another factory 45 women were forced by their supervisor to kneel down and keep their hands in the air for 25 minutes. In both cases the supervisors were eventually disciplined.
Also, a supervisor fled Vietnam after he was accused of sexually molesting several women workers. He inevitably returned to Vietnam to face criminal charges.
"To say that this is a systematic pattern of behavior is not factual. We have 25,000 employees in Vietnam and only three incidents have been reported. It is three too many. But is it a pattern of negligence on the part of Nike? Absolutely not," said Small.
"We recently set up a labor practices department which will work with each of the factories to increase Nike presence and increase the quality of the working environment," Benson added.
Benson also claims that Nike is open to bringing in non-government groups to share ideas with the company to help strengthen working environments in the factories. Some dialogue has taken place with Nike and Vietnamese groups.
And recent media accounts have uncovered the use of child labor in the Pakistani subcontracted factories where Nike soccer balls are made. Boys as young as nine years old are paid six cents/hour to stitch a product Nike plans to use to tap into the mulitbillion-dollar worldwide market.
"After we became aware of the child labor problem we had put a plan into action to build stitching centres so we can ensure no children are involved in the production of soccer balls," said Benson.
The first stitching centre opened two weeks ago and does involve a contractor.
With Nike's past, present, and future actions seeming murky, it's difficult for consumers to take a stand. Ballinger tries to bring some perspective.
"The global economy is forcing us to treat these factories not like they are 12,000 miles away, but more like 12 miles away. We have no choice. Almost everything is made in Asia, and I think consumers want to know that at least some standards are being lived up to. People are going to have to care. It's becoming a bigger and bigger issue and it's going to be in their face."