Sat, Jul 16, 2011 - Page 9 News List

Nike deflects criticism over worker abuse claims in Indonesia

By Niniek Karmini and Stephen Wright  /  AP, SUKABUMI and JAKARTA, INDONESIA

An internal report Nike released to the AP after it inquired about the abuse show that nearly two-thirds of 168 factories making Converse products worldwide fail to meet Nike’s own standards for contract manufacturers.

Twelve are in the most serious category, indicating problems that could range from illegally long work hours to denying access to Nike inspectors. A Nike spokeswoman said the company was not aware of physical abuse occurring at those factories. Another 97 are in a category defined as making no progress in improving problems ranging from isolated verbal harassment to paying less than minimum wage. Six factories had not been audited by Nike.

Nike blames problems on pre-existing licenses to produce Converse goods that it says prevent the parent company from inspecting factories or introducing its own code of conduct.

It says the situation is further complicated because the license holders themselves usually farm out the production work to a subcontractor. Most of the agreements have come up for renewal in the past five years. However, it is only the past two years that it has made a concerted effort to incorporate Converse factories into the monitoring program that applies to Nike factories.

“We have been working every time we can to renew those agreements or change those agreements or to cease those agreements and to ensure that when we do new agreements we get more ability to influence the licensee and their subcontractors much more directly,” Jones said.

Some corporate experts question whether the company is doing all it can.

“I simply find it impossible that a company of the size and market power of Nike is impotent in persuading a local factory in Indonesia or anywhere else in meeting its code of conduct,” said Prakash Sethi, a corporate strategy professor at Baruch College at the City University of New York.

Critics of outsourcing manufacturing to the lowest-cost countries say it keeps prices down, but allows apparel, electronics and toy companies to reduce their accountability for the conditions in such factories. Even as concern about sweatshop labor has grown, some contractors have simply moved operations to more remote areas, farther from the prying eyes of international and local watchdogs.

Indonesia is Nike’s third-largest manufacturing base, after China and Vietnam, with 140,000 workers at 14 contract factories. Of those, 17,000 produce its Converse line at four factories.

Pou Chen, the largest of the four Converse factories, is located in a hilly city where the minimum wage is well below the national average. Sukabumi can only be reached by car — a five-hour journey across bumpy, winding roads. The plant started making Converse products in 2007.

The Taiwanese contractor said it fired one supervisor after being told workers had spoken to the AP earlier this year.

Others involved in mistreatment, however, have been allowed to keep their jobs, according to Pou Chen.

Nike says the factory is developing programs to teach managers cultural sensitivity and leadership skills.

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