US-based shoe giant Nike and two Indonesian subcontractors have agreed to production contract extensions in the wake of worker protests last month, the factories' parent firm said yesterday.
The Indonesian investment board stepped in to broker this week's deal between Nike and the two companies, PT Hardaya Aneka Shoes Industry (HASI) and PT Naga Sakti Parama Shoes Industry (NASA), a company statement said.
"An agreement was finally reached to extend the shoe production contract by 12 months for HASI and 24 months for NASA," said the statement from CCM, the parent company of HASI and NASA.
The agreement was inked on Tuesday, it said.
Last month, Nike told the two factories it would not renew orders after they failed to improve quality standards, but the move triggered mass protests from the some 14,000 employees due to lose their jobs.
In response, Nike initially offered to extend the contracts for nine months so the factories could develop a worker protection scheme, but the Indonesian firms said that it would not be enough time.
CCM said this week's deal would provide time for the company to develop its own shoe brand "so that the fate of the HASI and NASA workers can be ensured and dismissals be avoided," the statement said.
Earlier Nike said it gave the factories a few months to make a last-ditch effort to boost quality, but saw no improvement.
Nike then planned to shift production to other factories within Indonesia.
More than 115,000 workers are employed by contract factories in Indonesia making Nike products. Last year, more than 50 million pairs of Nike shoes were made in Indonesia.