CASE STUDY UPDATES 2- NIKE SWEATSHOP DEBATE

Nike has been accused of using "sweatshops" since the early 1970s, when it produced goods in South Korea and Taiwan. As their economies developed, workers became more productive, wages rose, and many workers moved on to higher paying jobs. Labor unions also gained more influence. Nike found cheaper labor offered in Indonesia, China, and Vietnam, which prohibited labor unions. In these countries, when workers demanded additional rights and benefits, the Nike factories closed and moved to a different location that would enable them to continue operating at a low cost. Throughout the 1990s, Nike was heavily criticized for selling goods produced in sweatshops. They originally denied claims against them. However in 2001, Nike director Todd McKean stated in an interview that the "initial attitude was, 'Hey, we don't own the factories. We don't control what goes on there.' Quite frankly, that was a sort of irresponsible way to approach this. We had people there every day looking at quality. Clearly, we had leverage and responsibility with certain parts of the business, so why not others?" The main focus of political efforts within the countries that house the factories is an increase in the minimum wage for workers. In Indonesia, other legislative efforts included limits on the amount of hours a person can work per day, mandated rest periods, minimum age requirements, and a maternity leave for women. These reforms are not always enforced but the introduction of them indicates a movement towards additional workers benefits. Restrictions on labor activism and labor unions limits the amount of unification workers can develop within the factories. These laws prevent workers from being able to hold protests or strikes.

EFFORTS TAKEN BY NIKE

Nike began to monitor working conditions in factories that produce their products. During the 1990s, Nike installed a code of conduct for their factories. This code is called SHAPE: Safety, Health, Attitude, People, and Environment. They spend about 10 million dollars a year to follow the code, adhering to regulations for fire safety, air quality, minimum wage, and overtime limits.

In 1998, Nike introduced a program to replace its petroleum-based solvents with less dangerous water-based solvents. A year later, an independent expert stated that Nike had, "substituted less harmful chemicals in its production, installed local exhaust ventilation systems, and trained key personnel on occupational health and safety issues." The study was conducted in a factory in Vietnam.

Recently, Nike has developed a program to deal with claims of unfair practices. Nike claims to have hired a staff of 97 people to randomly inspect several hundred of their factories each year. Nike also gave the Fair Labor Association, a working conditions watchdog, the privilege to randomly inspect any factory that produces Nike products. Nike created a non-governmental organization called the Global Alliance for Workers and Communities that became aligned with several other groups including the International Youth Foundation. The organization releases reports about the corporation and its plans to improve current conditions. The Global Alliance received backlash in 2001 when a report about the Nike Inc. did not include recent events such as strikes, worker terminations, and the lack of collective bargaining in their Indonesian factories. Between 2002 and 2004, Nike audited its factories approximately 600 times, giving each factory a score on a scale of 1 to 100, which is then associated with a letter grade. Most factories received a B, indicating some problems, or C, indicating serious issues aren't being corrected fast enough. When a factory receives a grade of D, Nike threatens to stop producing in that factory unless the conditions are rapidly improved. Nike had plans to expand their monitoring process to include environmental and health issues beginning in 2004. Monitoring has become the most popular method of enforcing regulations in Nike factories. After studying the results of the audits, this system has been found to be not as effective as authorities expected. When studying the monitoring process, it is important to look at how the monitoring is done, who takes part in it, and the purpose of the check. The person conducting the visit must go in without a bias towards wanting or not wanting to find any flaws in the factory. Inspectors associated with the company have been found to hide errors and those with nongovernmental associations or other interest groups have exaggerated findings. In order to have a fair monitoring process the inspector must be unbiased in either direction. Factories can also vary in their level of performance. The monitoring process must be carried out at each individual unit in order to gain an understanding of the factory system as a whole. Greater involvement of higher-level Nike employees such as those working for the corporate system is seen as a possible solution to labor issues. At the design level, the intricacy of patterns on Nike products has been controlled in order to prevent

factory workers from being unable to complete the merchandise. By diffusing benefits to the factory workers from a powerful position, Nike is able to create a better working environment in production.