Sweaty Sneakers

After Nike CEO Phil Knight angrily withdrew a planned $30 million donation to the University of Oregon, UO President Dave Frohnmayer fell over himself trying to get back on the irascible billionaire's good side.

In interviews, Frohnmayer repeatedly described Nike as a "world leader" in promoting fair labor.

Nike isn't a leader in reforming sweatshops, says Trim Bissell, national coordinator for the Campaign for Labor Rights (CLR). But, he says, the corporation "is a world leader in issuing press releases declaring it's a world leader."

Bissell notes that activists struggled for years to get Nike to even admit that it had any control over working conditions at the 700 third world factories where the $10 billion corporation contracts to make clothes and shoes. It took years more to get the corporation to even give the names of the factories where its products were made. "Any progress they've made, we've dragged them kicking and screaming every inch of the way," says Bissell.

Nike public relations executives have long derided their critics as ignorant or malicious or both. The company says it does far better than its competitors in providing safe and fair working conditions for the half-million third-world factory workers that make its products in factories scattered around the globe.

Jeff Ballinger, director of Press for Change and a Nike watchdog for the past decade, dismisses the company's fair labor claims as "a lot of PR spinning."

For example, Nike recently claimed that it had dramatically increased wages at its Indonesian factories. But Ballinger points out the wage increases fell below what was needed to keep up with massive inflation in the country.

The crash of the Indonesian rupiah versus the dollar meant that Indonesian workers went from earning $2.46 a day to about $1 a day, according to Bissell.

Given that exchange rate, Nike's labor costs in Indonesia actually fell by tens of millions of dollars, even with the new wage increases. Knight, who's personally made an estimated $4 billion to $5 billion off Nike's sweatshops, could have afforded to pay his workers more than 13 cents an hour, Bissell and Ballinger say.

In another example, Nike recently said it would replace toxic glues in its factories with water-soluble adhesives. Labor rights groups had said for years that poorly ventilated factories thick with toluene fumes were putting the company's young women workers at high risk of liver, kidney and central nervous system damage as well as birth defects.

At first, Nike vehemently denied the toxic air charges. But a leaked report from the corporation's accountant Ernst & Young revealed that Chinese workers at one plant were exposed to carcinogens that exceeded local legal standards by 177 times. More than three-fourths of the factory's workers suffered from respiratory problems.

Nike is now trying to take PR credit for clearing the air in its factories, but Ballinger says "it's something they never should have done in the first place."

In a new PR thrust, Nike has also started posting internal audit reports of its factories on its web site. But Ballinger says the reports are "bogus" and "laughable." The reports aren't independent inspections, don't even reveal the identity of the specific plants inspected, and are completely unverifiable, he says. Also, the reports focus on nit-picking regulatory details such as failure to post regulations, but ignore larger issues such as whether or not the workers have been harassed or fired for trying to unionize or for failing to meet harsh production quotas.

In recent independent studies of Nike factories, researchers found workers still have "lots of complaints," Ballinger says.

In April, a coalition of fair labor groups released a report documenting ongoing labor abuses at Nike contract factories in Indonesia, Thailand, Cambodia, and China. A survey of 3,500 workers producing for Nike in Indonesia found serious labor abuses. Punishment for minor infractions included pulling workers' ears, slapping, fining, and forcing workers to stand in the sun or run laps around the factory.

The report found forced overtime in Nike's Chinese factories. Some work weeks were as long as 12 hours a day for seven days in a row. Other interviews with workers in Thailand, Cambodia and Indonesia revealed anti-union crackdowns, low pay and extreme exhaustion from brutal production quotas.

Nike issued a press release denouncing the latest research by labor monitors as "simply not credible." The corporation claimed "no one can dispute" its leadership for fair labor.

Nike's spin on its sweatshops in third-world dictatorships has long claimed that the corporation isn't exploiting workers, but helping foster economic development that will lead to better living standards and a move to democracy. In its 1996 annual report Nike described itself as "U.S. foreign policy in action."

But Ballinger and Bissell say Nike has opened factories in dictatorships to maximize profits with cheap labor and government suppression. They point to a letter last year by a Nike executive to the Vietnamese dictatorship as an example of the corporation's true views of democracy. Nike Vice President Joseph Ha wrote that fair labor activists at the company's factories and abroad are attacking Nike as "the first step for their political goal, which is to create a so-called democratic society on the U.S. model."

A broad spectrum of human rights groups denounced the letter as anti-democratic and authoritarian, and Nike PR people appeared to back away from Ha's claims. But Bissell says Ha was not disciplined by the company. Thirty years ago, Nike pioneered the corporate model of seeking out the world's lowest-wage dictatorships to produce products, says Bissell. "It was Nike that set the standard. They created this mode of corporation -- the virtual corporation that produces image instead of shoes."

Nike first set up shop in Taiwan and South Korea. But soon left for cheaper labor. "When these countries started to democratize, Nike put on its running shoes," Bissell says.

Nike is now in the process of moving its factories from Vietnam and Indonesia to even cheaper labor and harsher dictators in China. The April report by fair labor activists reported that Nike has increased its sneaker production in China from 10 percent to 40 percent in recent years. In China, the corporation can exploit labor for as little as 11 cents an hour and enjoy the support of a repressive government, the report notes. The Chinese will insure little information leaks out about bad working conditions at Nike factories, and the dictatorship has a history of severe repression of independent unions including torturing and imprisoning workers' rights activists, according to the report.

Years of pressure by student and fair labor activists have had an impact on Nike, Ballinger says. The corporation has found from marketing research and falling sales that the brand name it has spent hundreds of millions of dollars to create is now soiled by its sweatshops.

But the corporation has reacted more with spin than with actual reforms, fair labor activists charge. The corporation's new director of labor practices is a former corporate PR executive, they note.

The new Worker Rights Consortium has great promise for using pro-labor sweatshop monitoring to increase pressure on Nike in the media and on campuses to reform, Ballinger says. But after a decade trying to push the Swoosh in the right direction, he says he doesn't expect quick results.

"The progress is so glacial," Ballinger says. "I don't see this company turning around any time soon."

Nike's Track Record

1988

- Newspaper of Indonesian trade union publishes investigative report exposing poor working conditions at a South Korea-based shoe company producing for Nike.

1989

- Articles appear in Indonesian newspapers about wage protests at Nike contractors, Tae Hwa and Pratama Abadi. (Wage at the time, 86 cents a day -- most shoe factories paying illegal "training wage.")

1990

- Rise of Setia Kawan (Solidarity) independent trade union -- subsequently crushed by Indonesian authorities after less than a year.

1991

- Strikes at Hardaya Aneka and Pratama Abadi factories in Indonesia.

- Indonesian daily Media Indonesia runs three-day report on abuses at shoe factories. Headline second day: "World Shoe Giants Rape Worker Rights."

- Thames TV (UK),The Economist and Knight Ridder report on poor working conditions at Nike contractors in Indonesia.

1992

- The Oregonian prints lengthy article on Nike's Indonesia operations -- Phil Knight (Nike CEO) writes angry denunciation.

- U.S. State Department report to Congress on Human Rights highlights shoe factories' refusal to pay Indonesia's minimum wage.

- Nike formulates "Code of Conduct and Memorandum of Understanding" for contractors.

1993

- Sung Hwa protest leaders fired after 10-week investigation by local security forces -- included intimidation and interrogations.

- Critical reports in New York Times, The International Herald Tribune, The Economist and Jakarta Post.

- Sneaker campaigns undertaken in Holland, Italy and Germany

- Strike at Pou Chen Indonesian factory.

- CBS-TV (US) broadcasts highly critical report on Nike-contractors' labor practices in Indonesia.

1994

- Extensive Indonesia sweatshop report in The Rolling Stone.

- Nike hires accounting firm, Ernst and Young to do "social audits" at Indonesia-based contract factories.

- Donald Katz' book Just Do It characterizes Indonesian operations as "management by terror and browbeating." CEO Knight appears with Katz for Portland book-signing.

- Press for Change study in Indonesia documents wage cheating by employers.

- Strikes at Pou Chen, Pratama Abadi, Nagasakiti Paramshoes and Tae Hwa factories in Indonesia.

- Major investigative reports in Boston Globe, Los Angeles Times, and Chicago Tribune expose poor working conditions at Nike's Indonesia factories.

1995

- Manager at Pratama Abadi factory making Nike shoes lines up and slaps 15 women from quality control section.

- U.S. A.I.D.-sponsored research finds that more than 500 workers at Nike-producing factory in Majalaya, W. Java report problems such as forced overtime and illegal wage deductions.

- Strike leads to dismissal of 13 activists at Pou Chen.

- Washington-based Multinational Monitor names Nike to annual "Ten Worst" list.

1996

- Portland organization, Justice, Do It Nike, begins regular protests at Nike store.

- New research by Press for Change in Indonesia uncovers widespread violations of Nike's own "Code of Conduct."

- Fair labor advocates submit "anti-sweat" resolution to Nike shareholders meeting.

- Kathie Lee Gifford controversy brings unprecedented media attention to sweatshop issue.

- White House forms "Apparel Industry Partnership" to deal with sweatshop issues. Fired worker from Nike-producing factory in Indonesia is denied chance to speak at AIP's founding conference.

- The Rev. Jesse Jackson is refused visit to Nike-producing factory while in Indonesia.

- Canadians and French send hundreds of thousands of protest post cards to Nike.

- Brutal political and labor union crackdown in Indonesia.

- Nike sends five-page letter to universities across North America to "explain" child labor controversy.

1997

- Phil Knight, Nike CEO becomes sixth richest person in U.S. with $5.3 billion (all from shoes/apparel).

- Several Nike shoe contractors in Indonesia apply for exemptions from paying new minimum wage in Indonesia. Increase is from $2.25 to $2.46 a day.

- Strikes by thousands of Nike-producing workers in Vietnam.

- Portland's Jobs With Justice helps to organize big May Day protest at Nike store.

- Nike hires former UN Ambassador Andrew Young to tour Asian factories. Young uses Nike translators and his report is viewed by fair labor advocates as shallow and unhelpful.

- Protests conducted at new Nike store openings in Seattle, San Francisco and Boston.

- Massive protest and three-day strike at Garuda Indawa factory in Indonesia.

- Asian economic crisis and crash of Indonesian currency brings Nike contractors' per-day labor cost down from $2.50 a day to $.70 per worker.

- Campaign for Labor Rights organizes world-wide day of protest concerning Nike's labor practices. Actions in 50 cities.

- Berkeley-based Transnational Resource Action Center releases report documenting severe health problems at Nike shoe factory in Vietnam.

- Student protests against Nike links with universities erupt at University of Illinois, Penn State, University of North Carolina, Colorado, Florida State, Michigan and others.

1998

- Phil Knight vows to eliminate hazardous chemicals from shoe production.

- Unions leave White House panel on sweatshops due to irreconcilable differences on monitoring and reporting compliance. Filmmaker Michael Moore interviews Phil Knight for movie, "The Big One."

- Nike announces pay increase (25 percent) for Indonesian shoe workers, but adjusting for high inflation, worker wages are still 30% behind mid-1997 figure.

- Michael Jordan, Nike's premier endorser, makes the first of several promises to visit Asian production facilities.

- Julia, a worker at Nike-producing "Formosa" factory in El Salvador, is beaten and fired for taking a day off to care for her sick child.

- Hero of E. Timor independence struggle, Jose Ramos Horta, likens Nike contractors' operations in Indonesia to Japanese occupation of the archipelago.

1999

- Joseph Ha, a top advisor to Phil Knight, sends letter to highest-ranking labor official in Vietnam portraying "anti-sweat" activists as enemies of the state with a "political" agenda.

- Government survey of 175 businesses in Vietnam shows that shoe factories have largest wage/salary disparities (line workers compared to management).

- Under pressure from students, Nike agrees to disclose factory locations where university-licensed apparel is being produced. Vietnam survey shows that worst manufacturing pay rates are in footwear sector.

- Nike increases advertising spending by 53 percent for coming year.

- Nike factory in Vietnam was scene of country's largest food-poisoning incident of the year.

2000

- Indonesian official links bribe-taking by police and military to low wages paid to factory workers.

- UO joins the Worker Rights Consortium, a sweatshop monitoring group started by labor and student activists.

- Phil Knight angrily cancels planned $30 million gift to UO.

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