Nike Fights Full-Court Press on Labor Issue
Shareholder meeting yesterday was marred by charges that Asian labor is underpaid.
Nike - the world's largest manufacturer of athletic footwear - has come under fire again for its treatment of workers in Asia.
At the company's annual meeting in Beaverton, Ore., yesterday, shareholders heard new accusations that Nike employees in China are overworked and underpaid.
A report by two Hong Kong-based human rights groups cites "poor conditions" in factories. It charges that workers - mostly young women, some of them children - from rural provinces in China are forced "to put in excessive amounts of overtime" to keep their jobs."
The report levels similar charges at Massachusetts-based Reebok International, the No. 2 athletic shoemaker in the United States.
Nike officials vigorously deny the charges, and they point to a Nike-sponsored investigation by former United Nations Ambassador Andrew Young this summer. It painted a relatively benign picture of Nike labor policies abroad.
But the report follows a string of public-relations hits against the company. They include new questions about Mr. Young's findings, university administrators defending their decisions to outfit college athletes in Nike gear in return for cash, and pointed satire in "Doonesbury" cartoons seen by millions of potential customers.
The good news for Nike shareholders is that the company continues to prosper financially.
On Thursday, it reported record first-quarter profits and revenues. Profits rose $27 million to $253.1 million, or 85 cents a share, a 12 percent jump over the same period last year. Revenues bounced 21 percent to $2.77 billion.
Despite the positive numbers, Nike shareholders face a stumbling stock price. It currently trades about $55 a share, substantially off its high of $76.
And retailers report slower athletic shoe sales in general and a sharp drop in basketball shoes, a traditional slam dunk for Nike. There is also talk of faltering sales in Asia.
Financial issues aside, company officials at the annual meeting scrambled to fend off criticism of labor practices.
"Nike is committed to making the world's best products and ensuring they are made in the very best working environment," insists Dusty Kidd, director of labor practices. "Workers who make our products are paid superior wages and do, in fact, work in good, clean, safe conditions."
The most recent critique is based on interviews with workers at four Chinese factories during 1995 and again in 1997 by investigators from the Asia Monitor Resource Centre and the Hong Kong Christian Industrial Committee.
In some cases, the report states, workers earn less than the Chinese minimum wage because the many extra hours worked are not counted as overtime.
"The human and labor rights violations documented in this report are even more egregious than working conditions found in Nike factories in Vietnam and Indonesia," claims Medea Benjamin, executive director of the San Francisco-based human rights organization Global Exchange, which presented the findings of the Hong Kong groups.
Factories in China, which produce more than one-third of all brand-name sport shoes, typically are operated by subcontractors from Korea or Taiwan. But this does not lessen Nike's responsibility, critics charge.
"If a subcontractor wants to stay in business, he must accept the time line set by the multinational [corporation] and accept the price the multinational is willing to pay per shoe," states the report. "And when the multinationals squeeze the subcontractors, the subcontractors squeeze the workers."
Nike's Mr. Kidd says the report is "largely anecdotal" and "incorrectly states the wages earned by workers."
Stand on child labor
A Nike fact sheet adds that the company's standard on the legal working age in China (16) is "unequivocal."
"If anyone has slipped through this process using forged documents, it is not through lack of a genuine, focused, and continuous program to protect the factory and disallow child labor," it states.
In his June report, Andrew Young said Nike plants he toured in Vietnam, Indonesia, and China were "clean, organized, ventilated and well lit." He said he found "no evidence or pattern of widespread or systematic abuse or mistreatment of workers."
But he also acknowledged that he was not qualified to judge the salary issue, and critics note that Young was accompanied by Nike officials and translators.
Meanwhile, Nike faces other questions.
Michael Hooker, Chancellor of the University of North Carolina-Chapel Hill, recently insisted to faculty members that student athletes had not become "human billboards," wearing Nike shoes and uniforms as part of a five-year, $7.1 million contract signed with the company in July.
Responding to questions about Nike working conditions abroad, Mr. Hooker reportedly said, "The working conditions, relative to what else is available to them, are really very good. So people are clamoring for those jobs."
"On the other hand," he added, "the working conditions would be appalling to you and me."
In response to the recent criticism, Nike is working to improve its image and practices.
Officials say they are is taking steps to enforce its 1992 Code of Conduct for subcontractors - including a recent announcement that laminated cards with the code, which covers working conditions, would be given to more than 100,000 workers and managers in Asia. And Nike is a participant in President Clinton's Apparel Industry Partnership, which is working on industry standards.