Nike will aid overseas workers
Goals - The shoe giant wants better conditions for its factory workers and
will train them how to unionize
Thursday, May 31, 2007
HELEN JUNG
You know labor conditions in overseas factories are bad when a Fortune 500
company decides it needs to help workers learn how to form a union.
Faced with persistent labor violations in contract factories overseas, Nike is
pledging to train factory managers and workers about unionizing, eliminating
excessive overtime and focusing on resolving some "root causes" of labor
abuses by 2011.
Nike announced new environmental goals as well, including reducing waste,
offsetting its carbon emissions and incorporating more environmentally
sustainable materials into its 50,000-plus footwear products a year. The sneaker
manufacturer, based near Beaverton, also said it would ramp up its charitable
giving by donating an additional $315 million in cash and product by 2011 to
sports programs around the world.
The goals, disclosed in a report being released today, outline the corporateresponsibility portion of the company's five-year growth plan. In February, Nike
announced financial goals, including $23 billion in revenue by its 2011 fiscal year.
The goals signify that Nike is moving away from corporate responsibility as "a
risk and reputation management tool," said Hannah Jones, Nike's vice president
for corporate responsibility. The company is now looking to how it can
incorporate it as a business objective and even an impetus to generate new
products -- such as one designer's idea to construct a shoe out of waste on shoefactory floors.
About 800,000 employees -- mostly women between 18 and 24 -- work in Nike's
700-plus contract factories, Nike said.
Audits in the past two years show that despite a decade of efforts, several
factories continue to show violations of Nike's "code of conduct," which could
include falsified records, excessive workweeks, underage workers and physical
or sexual abuse.
Nike is continuing its monitoring. But the company also is trying to identify root
causes of those violations. For example, Nike is considering its own actions -such as last-minute changes to orders and overly complex designs -- that may
lead to excessive overtime.
Excessive overtime is defined as working more than 60 hours in a week or in
excess of local law, whichever is less.
Nike also said it would work with factories and unions to create a freedom-ofassociation and collective-bargaining training for most factories by 2011.
But Nike's commitment also reflects the direness of the situation for workers in
the countries where apparel and footwear manufacturers have chosen to make
their goods, said Charlie Kernaghan, director of the National Labor Committee,
who had not yet seen the report.
"You know you're in trouble when companies like Nike feel they have to start
training workers on how to collectively bargain," he said, adding that labor laws in
many countries are ineffectual. "The problem is you can't get out of a situation
like this if you purposely go to countries where the civil society is weak."
The report reaffirms Nike's position on a practice that some labor-rights groups
have criticized for years: minimum wages for factory workers. The groups,
including Worker Rights Consortium, have called on Nike to increase the
amounts they pay to factories, then require those factories to pay workers a
"living wage."
Minimum wage in China, where Nike contracts with many factories, is 40 cents
an hour -- equivalent to a U.S. worker making $1.58 an hour, according to World
Bank calculations.
Jones said Nike believes wages are best set by the market, not by "arbitrary"
definitions.
While labor conditions remain a major issue for Nike, the company also is looking
to lighten its environmental impact. Among its goals: to incorporate some level of
environmental standards -- reduced waste and use of recycled materials and less
solvents, as it does with its Nike Considered product line -- into all of its footwear
production.
"When you have constraints given to you, you have to be even more creative,"
said John Hoke III, vice president for global footwear design. "It's high
performance with a low footprint."
Designers are already extending some of those ideas into products not marketed
for their environmental characteristics, Jones said. Nike sells its "Soaker" shoe, a
submersible water sneaker that uses fewer toxins and some recycled materials,
for instance.
Nike aims for its offices and business travel to be "carbon neutral" by 2011. The
company has reduced its carbon emissions through offices designed to be more
environmentally friendly, acquiring wind turbines to power its European
distribution center, purchasing renewable energy credits to offset its energy use
and finding more energy-efficient means -- such as biodiesel to fuel landscaping
vehicles.