Case Analysis Nike the Sweatshop Debate

CASE ANALYSIS NIKE THE SWEATSHOP DEBATE Summary of the Facts Nike was established in 1972 by former University of Oregon track star Phil Knight. †¦ Nike has $10 billion in annual revenues and sells its products in 140 countries. †¦ Nike has been dogged for more than a decade by repeated accusations that its products are made in sweatshops where workers, many of them children, slave away in hazardous conditions for less than subsistence wages. †¦ Many reporters, TV shows, companies and organizations have repeatedly exposed negative comments towards Nike. For example, a â€Å"48 Hours† news report aired on October 17, 1996 regarding a Nike factory in Vietnam, which was visited by reporter Roberta Baskin. The reporter discovered that Nike hired millions of workers who are literate, disciplined, and desperate for jobs at wages lower than minimum wage. Another example of the criticism against Nike came from a newsletter published by Global Exchange. The newsletter uncovered that the majority of Nike shoes were made in Indonesia and China, countries with governments that prohibit independent unions and set the minimum wage at rock bottom. †¦ In September 1997, Global Exchange published a report on working conditions at four Nike and Reebok subcontractors in southern China. †¦ In November 1997, the organization obtained and then leaked a confidential report by Ernst & Young of an audit that Nike had commissioned of a factory in Vietnam owned by a Nike subcontractor. †¦ Nike formulated a number of strategies and tactics to deal with the problems of working conditions and pay in subcontractors. †¦ In early 1997, Nike also began to commission independent organizations such as Ernst & Young to audit the factories of its subcontractors. Finally, on May 12, 1998 Nike founder Phil Knight spelled out a series of initiatives designed to improve working conditions for the 500,000 people that make products for Nike through subcontractors. †¦ Even though Nike has admitted there have been problems in some overseas factories and has attempted to do things to rectify the problems, the company continues to be a target of protests and a symbol of dissent. Statement of the Problem On the May 12, 2001, Nike’s CEO Phil Knight made six commitments to improving the working conditions in Nike’s international All Nike shoe factories will meet the U.? actories. The six commitments were: The minimum age for Nike factory workers will be raised to 18 for footwear?†¦ Nike will include non-government? factories and 16 for apparel factories. organizations in its factory monitoring, with summaries of that monitoring Nike will expand its worker education program, making? released to the public. free high school equivale ncy courses available to all workers in Nike footwear Nike will expand its micro-enterprise loan program to benefit four? factories. housand families in Vietnam, Indonesia, Pakistan, and Thailand. †¦ Nike has yet to hold up to these commitments they made to its workers and customers. Nike continues to be criticized by human rights organizations and the media because they have ignored demands that labor and human rights groups have requested. †¦ Causes of the Problem Nike has treated sweatshop allegations as an issue of public relations rather than human rights. †¦ Nike has not released documentation to date of their reports from the working conditions in the factories. .