Nike: Sweatshops and Business Ethics (Adapted/summarised from original)
By Charles Hill*, University of Washington
Nike is a global corporation, founded 1972, and now one of the leading marketers of athletic shoes and apparel. It has a turnover of $10bn and operates in some 140 countries. Nike does not manufacture anything. It focuses on design and marketing and contracts out (outsources) its manufacturing to some 600 factories worldwide, employing over half a million people.
For over a decade, Nike has been dogged by bad publicity and persistent accusations that that its products are made in “sweatshops” where workers, many of them children, slave away in ...view middle of the document...
Like most of the young women who make shoes, she has little choice but to accept the low wages and long hours. Nike says that it requires all subcontractors to obey local laws; but she already put in more overtime than the annual legal limit of 200 hours. Nor is it possible to leave the factory if you haven’t made enough shoes. You have to meet the quota before you can go home.
The clear implication of the story was that Nike was at fault for allowing such working conditions to persist in the Vietnam factory; (which, incidentally, was owned by a Korean company).
* Extracted from “Strategic Management an Integrated Approach” e10, by Charles Hill & Gareth Jones.
Another example of an attack on Nike’s sub-contracting practices was launched by a USA foundation largely financed by labour unions and domestic apparel manufacturers that oppose free trade with low-wage countries. They claimed that Nike’s “Air Jordans” were put together by 11-year-olds in Indonesia earning $0.14 an hour. Nike claimed this was false and that the workers earned $103 per month, equivalent to $0.45 per hour based on a 54-hour week. Nike also claimed it had staff in each factory ensuring the local minimum wage and child labour laws were being observed.
In the 1970s, most Nike shoes were being made in South Korea and Taiwan. When workers in these countries were given freedom to organise, wages rose and Nike moved production to Indonesia, China and Vietnam. These countries prohibited union membership and set the minimum wage at rock bottom. Indonesia admitted that the daily minimum wage of $2.46 is not sufficient to supply the basic needs of one person, let alone a family, where the estimated basic liveable wage is $4.00 per day. In Vietnam the pay is even less at $1.60 per day while 3 basic meals cost about $2.10 a day and then there is rent, transportation, clothing, health care, etc.
Global Exchange (an international human rights organisation) in the late 1990s claimed that in China, Nike and Reebok subcontractors were employing 13 year-olds at $0.10 per hour and worked 17 hours per day in enforced silence. These practices were in contravention of China’s own minimum wage and working hours laws. The claims were condemned by Nike as erroneous and irresponsible. Global Exchange however later got, and leaked, a confidential Ernst & Young report commissioned by Nike which showed that a Nike Vietnamese contractor employed thousands of young women working a 10.5 hour day, 6 days a week in excessive heat, noise and foul air for slightly more than $10.00 a week. It also found that workers with skin or breathing problems had not been transferred to departments free of chemicals, and that more than half the workers who dealt with dangerous chemicals had not been provided with protective clothing. It claimed workers were exposed to carcinogens that exceeded local legal standards by 177 times in parts of the plant, and that 77% of the employees...