Nike - Social and Ethical Issues

Essay by PabloDion November 2008

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Nike has become one of those global companies targeted by a broad range of campaigning pressure groups and journalists as a symbolic representation of the business in society. In Nike's case, the issues are those of human rights and conditions for workers in factories in developing countries. In the face of constant accusations, Nike has developed a considered response but the criticism of Nike still continues.

Nike produces footwear, clothing, equipment and accessory products for the sports and athletic market. It is the largest seller of such garments in the world. It sells to approximately 19,000 retail accounts in the US, and then in approximately 140 countries around the world. Just about all of its products are manufactured by independent contractors with footwear products in particular being manufactured in developing countries. The company manufactures in China, Taiwan, Korea, and Mexico as well as in the US and in Italy.

The Global Alliance report on the factories in Indonesia gave the following workforce profile: 58% of them are young adults between 20 and 24 years old, and 83% are women.

Few have work-related skills when they arrive at the factory.

Nike has around 700 contract factories, within which around 20% of the workers are creating Nike products. Conditions for these workers have been a source of heated debate, with allegations made by campaigns of poor conditions, with harassment and abuse. Nike has sought to respond to these allegations by putting into place a code of conduct for all of its suppliers, and working with the Global Alliance to review around 21 of these factories, and to pick up and respond to issues.

The main concerns expressed by workers relate to their physical working environment.

A further report has been produced relating to a site in Mexico, which has experienced serious problems leading to labour disputes.

In both cases, Nike responded to the audit reports with a detailed remediation plan.

Naomi Klein, in her widely read book "No Logo" deals quite extensively with Nike, accusing them of abandoning countries as they developed better pay and employment rights in favour of countries like China, where these are less of a cost. She points to a photo published in 1996 showing children in Pakistan stitching Nike footballs as an example of the use of child labour. Other critics have suggested that Nike should publicise all of its factories, and allow independent inspection to verify conditions there. Any auditing carried out by Nike should be made public.

Nike accuses Naomi Klein of peddling inaccurate and old information. They point out that they have not abandoned countries as she claims, and remain in Taiwan and Korea despite the higher wages and labour rights. They admit that the 1996 photo documented what they describe as a "large mistake" when they began to order soccer balls for the first time from a supplier in Pakistan. They now operate stitching centres where the non-use of child labour can be verified.

The Global Alliance was quite complimentary. It said "Upon due consideration, members of the Operating Council unanimously expressed their judgement that upon learning of the alleged violations surfaced through the Global Alliance assessment process, that Nike had acted in good faith, and developed a serious and reasonable remediation plan."BibliographyThe Economist (1999), US Edition, Sweatshop wars, 14th February, pp. 62Wheelen, T. L. & Hunger, J. D., (1995), Strategic Management & Business Policy, Addison-Wesley Publishing Company Inc.

Zaino, J., (2001), Companies Give Back to Their Communities, Information Week, 12th March, pp. 163.