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Case Summary Nike Essay

575 words - 3 pages

Nike: The Sweatshop Debate

Nike, one of the leading sellers of sports footwear and apparel, was established in 1972 by Phil Knight. By 2001, Nike was selling its products in 140 countries, while its revenue rose to 10 Billion dollars. Instead of manufacturing, the company concentrates on designing and marketing products. Its products are manufactured by around 600 factories scattered around the world, employing 550,000 people. It is because of these factories that Nike is facing such severe criticism. The main criticism that Nike has had to face is that the factories from which the company acquires its products are “sweatshops” where workers (a large portion of whom are children) are paid below minimum living wages. Some of the accusations against Nike are:

• 1996 CBS 48 Hours claimed that a Korean subcontractor in Vietnam pays $0.20/hr, less than ...view middle of the document...

Nike denied allegations.

• Another report by Global Exchange claimed that a Korean subcontractor employed workers as young as 13, who had to work for 17 hours daily. These workers were paid only 10 cents per hour and had to work in complete silence. Nike condemned this saying that the accusations were incorrect.

• In November 1997, Global Exchange obtained and leaked an internal audit by Earnest & Young. The audit revealed hazardous working conditions for the 9200 workers employed there. Nike claimed audit was a sign that self-monitoring was working.

To curb the protests, Nike went on the offensive by coming up with several strategies. These, however, were not flawless, and some of the measures taken by Nike received further criticisms. They are:

• In 1996, Nike hired Andrew Young to assess working conditions of its contractors around the world. The report published by Young, however, was widely criticized by human rights and labor groups for not taking his own translators and for doing careless inspections.

• In 1996, Nike also joined a presidential taskforce to find ways to banish sweatshops in the shoe and clothing industry.

• In 1997, Nike commissioned Earnest & Young to audit the factories of its subcontractors. It also terminated relationships with 4 Indonesian subcontractors who refused to comply with its standards.

• In May 1998, Phil Knight spoke about a series of initiatives aimed at improving the working conditions of the workers employed by its contractors. These include changing of the minimum age limits, full audit schemes and restricting the amount of chemical hazards that workers are exposed to.

The WRC or Workers Rights Consortium was developed as an alternative to the president’s taskforce, as critiques argued that the president’s taskforce was not a truly independent auditor for foreign countries. Against Nike’s wishes, 48 universities joined the WCR. Finally April 2000, Nike announced that it would release complete reports of all independent audits of its subcontractors plants.

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