Case Summary-Nike

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 minimum wage. There were also some indications of slave labor.

• 1996 Made in USA claimed that “Air Jordans” were made by 11year Indonesian children for $0.14/hr. Nike countered saying that this was a lie; workers make $0.45/hr and work a maximum of 54hrs/week.

• 1997 Global Exchange in 3 reports claimed that, ‘Indonesian government admits minimum wage won’t support a single person. Wages are $2.46/day while a livable wage is $4. In Vietnam wages are $1.60, but $3 is a living wage.’ In China wages similar and child labor laws broken. 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....