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March 9th, 2005 David Shafer | Special Section Stories
 

Nike's Achilles' Heel

How activists leveraged a global brand in the battle of the sweatshops.

     
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Thousands of Nike factory workers march toward the U.S. embassy in Jakarta, Indonesia, Aug. 20, 2002. Banging cans and waving anti-Nike banners, about 4,000 footwear workers staged a peaceful protest in the Indonesian capital over the company's plans to cut back production. Posters say "We are Nike Victims."
IMAGE: AP Photo/Dinda

In 1998, a young Thai woman named Lern went to work stitching clothes for the Bed and Bath Prestige company, a garment factory on the outskirts of Bangkok that produced clothes for Nike, Reebok, Adidas and Levi's.

Lern typically worked 15 hours a day, putting in 70 to 110 hours per week. During the busiest periods of the year (the lead-up to Christmas, for example), the factory boss would spike the workers' water source with amphetamine pills. No one complained-it was the only way to keep up the frantic pace needed to fill the orders.

In an interview with the humanitarian group Oxfam Australia, Lern said her boss would grab the women in his factory and yell at them to work faster. He levied outrageous fines: $44 for bringing a lemon to work, $11 for yawning. The work was grueling, the factory goons terrifying, and the boss's capricious rages a constant threat. And every shift, Lern was forced to wear the Nike "code of conduct"-a commitment to decent working conditions-on a string around her neck.

The plight of seamstresses in Thailand seems a world away from Nike's Beaverton campus, a striking green idyll set in the bland suburban sprawl, where all the buildings are named after Nike-sponsored athletes-where a handsome wooden bridge crosses a quiet fen between Tiger Woods and Dan Fouts.

But in the late 1990s, Nike found itself caught in the crossfire of the struggle over globalization. Activists accused the company of shamelessly exploiting cheap third-world labor. Free-marketeers responded that vilifying the Swoosh was naive, and that globalization was actually the best way to lift the developing world out of crushing poverty. Despite the horrendous conditions in her factory (which Nike denied knowing about but didn't dispute), Lern made anywhere from $7 to $16 a day-far above Thailand's minimum wage of $3.70 a day.

Nike proudly traces its roots to the University of Oregon running program, where storied track coach Bill Bowerman crossed paths with an accounting student and middle-distance runner named Phil Knight. In 1962 Knight founded a company called Blue Ribbon Sports, which imported running shoes from Japan. Bowerman joined Knight two years later, and in a breakthrough moment in 1970, used his wife's waffle iron to design a sneaker sole.

The sneakers were a hit with runners, and the company, renamed Nike, went public in 1980. But it was the Air Jordan shoe, released in 1985, that sent Nike into the next realm. In 1986, the company's revenues topped $1 billion. Except for a few lean years in the '80s (when America seemed to think that aerobics was an acceptable form of exercise, and flocked to Reebok-the lady shoe), there's really been no letup since.

Together with local advertising powerhouse Wieden & Kennedy, Nike built a brand that seemed unstoppable-but which also proved to be its Achilles' heel.

In 1996, Kathie Lee Gifford, embarrassed by revelations that children were stitching her Kmart handbags for 13 cents a day, wept on TV, and Americans began to wonder exactly where their clothes came from.

That's what activists like Jeff Ballinger were waiting for. Ballinger, 51, a self-described "Nike shin-kicker," spent 10 years in Indonesia advocating for democracy. He took up the cause of workers striking at Nike-producing factories (in 1997, there were 110,000 Nike contract workers in that country), because he figured he had more leverage with an American sportswear company than he did with the authoritarian regime of General Suharto.

Ballinger realized that Nike's most important product was not its shoes, but its brand. "The way they promote their product is brilliant," says Ballinger. "It's what they do better than anyone else."

What played out was a sort of marketing aikido. To improve conditions in places like Indonesia, labor activists didn't waste their breath arguing with Suharto or the small-fry middlemen in the apparel supply chain. Instead, they turned up the heat on consumer titans like Nike, hoping the companies would defend their brand by hiking wages and shutting down sweatshops, which would in turn put pressure on other manufacturers.

The strategy worked-up to a point. Headlines about working conditions hit Nike hard, and the company was playing catch-up public relations for years. The Worker Rights Consortium, a student-led anti-sweatshop group, went public with reports of Dickensian conditions at a factory in Mexico that was producing Nike clothing for U.S. universities.

"There has been a real shift in the last five to 10 years," says Caitlin Morris, senior manager with Nike's Global Issues Management Department. "I think that one of the shifts for Nike has been a movement away from crisis mode, away from, 'OK, where is the BBC most likely to do an exposé next?' to looking at our supply chain in broader terms and doing the right thing."

One outcome was the Fair Labor Association, which comprises both advocates and industry representatives, which means the group can actually gain access to the factories-in China and Vietnam and Sri Lanka, in Bangladesh and Malaysia and Pakistan-where shoes and clothing are made by contract manufacturers.

But some in the labor-rights movement say the FLA is an example of advocates making too many concessions to industry and thereby losing their ability to agitate for change-a case of the watchdog becoming a lapdog. Tim Connor, of Oxfam Australia, worries that the Fair Labor Association doesn't do enough to ensure that factory managers live up to their commitments. Jeff Ballinger says the FLA's "corporate minders" will never allow the transparent factory monitoring that would really help workers.

Nestled in this debate is a fact that is old news inside the industry but still surprises people outside it: Nike doesn't make sneakers. Nor does Adidas or Reebok or Puma. The companies design, promote and sell sneakers-someone else makes them. "People just don't get that," says one developer who has worked for three prominent shoe companies, including Nike. "It's not just sneakers. It's HP and IBM and Dell. It's all contract manufacturing. We don't own the factories that are building our products."

To have an opinion about Nike is to have an opinion about globalization. Your sneakers and T-shirts have to be made somewhere-probably somewhere with a daily minimum wage pegged safely in the single digits. Right now, for Nike, that means in 900 factories in 50 countries around the world. While those factories may not all be the dark, satanic mills that some labor activists claim, none is as pleasant a work environment as the Nike campus.

The sweatshop issue has receded from public view in the last few years. Possibly, this is due to a tightening U.S. economy that makes consumers more focused on price and less worried about the plight of distant laborers. Possibly, more Americans accept the idea that global market forces will, once the dust settles, improve conditions in the developing world. Or maybe it's just too hard to worry about a supply chain that disappears around the curve of the globe, especially when nifty, $80 sneakers are cradling your feet so snugly.


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