NIKE: JUST DO IT… In 6.6141 Minutes!

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Profits

Shares of Nike (NYSE:NKE) rose more than 5% after the market closed on Sep. 25 after news broke that the consumer shoes, clothing, and athletic chain saw revenue and earnings that topped expectations. For the quarter, revenue came in at $7.98 billion. In addition to being 15% above the $6.97 billion reported in last year’s quarter, the company’s top line was greater than the $7.83 billion analysts anticipated. While three of its four brand divisions saw sales increases, the single biggest contributor to its top line growth was its Footwear segment, which saw sales climb 18% from $3.98 billion to $4.70 billion.

 

Advertising

Nike spends more money on advertising and promoting the reputation of its products than most other companies in the world, including a massive sun of $1.13 billion of advertising in 1998. Nike has paid Tiger Woods, Michael Jordan, Andre Agassi, John McEnroe, Monica Seles, and Carl Lewis are paid large sums of money for their association with the companies products. In 1998 Nike paid Tiger Woods 28 million dollars and Michael Jordan 45 million dollars. In Indonesia factories Nike has spent a mere $100,000 since 1998 on continuing education programs for Nike workers and $150,000 on small loans to unemployed and disadvantaged people.

 

Santa’s Little Sweatshop

Nike has been accused of having a history of using sweatshops, a working environment considered by many to be dangerous and difficult. Workers can be exposed to hazardous materials, harmful situations, extreme temperatures, and abuse from employers. Sweatshop workers work long days, sometimes 14+ hours and earn pay far below “living wage” (minimum hourly income necessary for a worker to meet their basic needs for an extended period of time or a lifetime. This includes shelter, clothing, nutrition ect. In developed countries people compare wanges and the amount of labor of the workers in Nike factories to developed world standards. Nike is claimed to have unethically taken advantage of these labor markets. In 2001 Director Todd Mckean stated in an interview “Hey, we don’t own the factories. We don’t control what does on in there.”

 

Location

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Most of the factories Nike uses are located in Asia, situated in third world countries including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia. Only 5% of Nike clothing is made in America (not including footwear), while their headquarters are in Washington County, Oregon, United States (near Beavertin , Oregon.)

 

NIKE: JUST DO IT… In 6.6141 Minutes!

The system that Nike uses to pay their workers is not composed of a time frame in hours, they break it down into ten-thousandths of a minute, and the workers have 6.6141 minutes (as per Nike’s internal documents) to make a shirt.  Later the workers would receive 8 cents, which is 3/10 of 1% of the retail price.  The average worker produces 4.3 shirts a day, and only gets the minimum wage of $2.50 a day in Indonesia, while the daily livable wage in Indonesia is between $4 to $4.50.

 

Wages

Nike requires their suppliers to pay workers at least the locally mandated minimum wage and benefits, and any additional benefits are outlined in individual employee contracts or collective bargaining agreements. When a pair of Nike shoes are made, only one of two dollars is set aside to pay for labor expenses per person. Because Nike spends for little on labor, it rakes in huge amounts of profit. Nike gains this profit through the perpetuation of human suffering. The wages Nike pays are less that workers need to live on. No one can survive i the long term on Nike pay. That’s okay by Nike though: after the factory has chewed them up and spit them out, older workers are replaced by younger workers fresh for exploiting. The average pair of Nike shoes costs $55.00. At this rate it would take a Vietnamese or Malaysian worker 40 days to make enough money to buy the shoes they make. Of course, this assumes they don’t have to spend their money anywhere else. They will never be able to purchase the shoes they make.

 

Sweatshop Regulations

There are none. Workers in a sweatshop factory are entitled to almost nothing. A project through the University of North Carolina at Chapel Hill found workers were exposed to toxic isocynates and other chemicals in footwear factories in Thailand. In addition to inhalation, dermal exposure was the biggest problem found (could result in allergic reactions including asthmatic reactions).

 

Issue In Vietnam

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Nike started its venture in Vietnam in 1995 and its share in the country’s GDP reached 5% 1999 but despite Nike’s contribution to the Vietnamese economy the corporate giant failed to prevent the violation of the labor code in the Vietnamese sweatshops during the mid and late 1990’s. Five factories in Vietnam, owned by Korean and Taiwanese subcontractors, employed over 35,000 people, mostly young rural women who wanted to earn better wages. Taw Kwang Vina Factory (VT)  is a Nike sweatshop in an  industrial estate in Dong Nai province. They have employed over 10, 000 people (85%+ women), and soon achieved the reputation of a bad place to work: workers forced to work over the legal overtime limits almost everyday. Along with this they are suffering with  monthly salaries (around $40) which are insufficient for survival, unhygienic working conditions, and verbal and physical abuse by managers. From 1997- 1999 workers were under 18 years of age, which is a violation of the national labor code, as the factory had also avoided complying with the country’s environmental regulations .

 

Trying to Solve a Problem

In 1998 Nike announced a major initiative to eliminate use of toxic solvent-based cleaners and glues, which were harming their workers. By 2001 water based adhesives were used in manufacturing 95% of Nike’s shoes. Nike has set a goal of creating “zero waste” in the production of Nike footwear by the year 2020s. Most of their sweatshop workers were used to hard work and poor living conditions but even these extreme conditions (that Nike had given them) were difficult for them to handle. Toxic solvents and glues used in manufacturing caused dizziness, nausea, and respiratory ailments among workers. Workers were not allowed to go to the bathroom more than once and drink water ore than twice during an eight hour shift. During a survey in 1997 the female workers complained about frequent sexual harassment by foreign supervisors in Vietnam and Thailand. There was no community living near the factory, and the workers had no independent union to raise their issues. The Nike staff was said to have  monitored daily production and quality of final products in sweatshops, yet it took action by third external agencies to assess the actual condition of workers

 

Why does this matter?

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If the United States and other Western nations needed a century to emerge from using sweatshops and child labor, how can we expect third world nations to do the same in less time? Many of the countries that still have sweatshops today didn’t have much industry until about a century after we developed ours. This puts them on a timetable that’s still a few decades from decent labor laws. It’s true that they have our example before them, but we must help them in more effective ways than boycotts and protests.

First of all, countries with corrupt, non-democratic governments are going to have a hard time shaking off their sweatshops. If people working in the sweatshops have no power to lobby the government (by voting for representatives, for example), then their government will want to continue to attract foreign investment in sweatshops without requiring better working conditions. Why should we help them you ask? The garment industry is part of the global economy, which is ruled by a free trade system. In this system, a powerful country such as the U.S., negotiates trade agreements with poorer developing countries (also called the Global South). Free trade agreements promise more market access to all countries involved by lowering or eliminating trade barriers such as taxes or tariffs. In this way, goods and services are sold or traded between the countries. Unfortunately, these trade agreements include very weak social clauses – provisions that set labor, social, and environmental standards – which do not adequately address worker protections or environmental concerns.

Also, most countries in the Global South have relied on loans from the International Monetary Fund (IMF) or the World Bank to fund their economic development. These loans come with conditions that require them to make drastic changes to their economy and social programs that impact their most vulnerable populations. These factors make it very attractive for a transnational corporation (TNC) to distribute their production across the globe, making their clothing in countries with the lowest labor costs and weakest regulations. But most of these workers end up being children, and the factories are crowded and filthy and pose dangerous hazards. Without any way to go against their government policies they have no say in what happens, as they suffer violations of the national labour code. By forcing people to work in this environment they have no chance to do what they want to do, they have no freedom and might be stuck working in the walls of a factory forever.

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