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Niketown - Just don't do it

San Francisco Chronicle - February 20, 1997

[Following is an op-ed column from the February 20, 1997 San Francisco Chronicle. Accompanying it was a photo of Niketown, with a caption reading "The glitzy Niketown store in Union Square gives no hint of the sordid conditions under which Indonesians and others produce its wares." The article is a co-founder of Global Exchange, a San Francisco-based human rights group that recently led a delegation to Indonesia to meet with Nike workers.]

Kevin Danaher – As you travel around the San Francisco Bay Area, it is hard to avoid the many ads promoting the new Nike store that is opening at Union Square. How ironic that Union Square (as in trade "union") should be the home of a store owned by a company that has grown fat off the labor of workers in countries, such as Indonesia, China and Vietnam, where free trade unions are prohibited.

Thanks to billions of dollars in advertising, the Nike symbol and Nike products are known throughout the world. Celebrities such as Michael Jordan, Andre Agassi and Tiger Woods are paid millions every year to lend their names to the promotion of Nike products.

Less well-known, however, is the story behind the symbol. Nike has been a global corporate pioneer in exploiting the low-wage labor of workers in other countries. The mere pennies per hour earned by Nike workers in Asia are the main reason that Nike Chief Executive Officer Philip Knight is one of the richest people in the world, estimated by Fortune magazine to be worth $5.2 billion.

Isn't it just a bit disgusting to accumulate that much money off the backs of people who can't even feed their families – much less buy a pair of Nike shoes on the miserable wages Nike is paying?

During the 1970s, most Nike shoes were made in South Korea and Taiwan. When workers there gained new freedom to organize and wages began to rise, Nike looked for "greener pastures." It found them in Indonesia, where it started producing shoes in 1986.

Indonesia has a repressive regime that outlaws independent unions and sets the minimum wage at rock bottom. Even the Indonesian government admits that the minimum wage there does not provide enough for one person – let alone a family – to survive. In 1996, the entry-level wage was a miserable $2.20 a day. Labor groups estimate that a livable wage in Indonesia is about $4.25 a day.

Compare this with the pay of Nike's celebrity promoters. Michael Jordan gets $20 million a year to promote Nike sneakers. Jordan's compensation alone is more than the annual income of 20,000 workers who make Nike shoes.

Despite Indonesia's repressive government, workers in the shoe industry have been rebelling against low pay, forced overtime, abusive treatment by managers and lack of health and safety standards. When the foreign press publicized these abuses, Nike denied responsibility. It insisted that Nike did not own the factories but simply contracted the work to independent contractors.

Yet with mounting criticism, Nike relented and in 1992 came up with a code of conduct that set standards for its contractors. But abuses continued; workers demanding better conditions were dismissed, and independent organizing was still prohibited.

Jeff Ballinger, who worked with Indonesian workers for five years, writes that Nike suppliers in Indonesia rely on "management by terror," rampant corruption of government officials to keep labor inspectors at bay, forced overtime and illegal "training wages" used as a subterfuge to steal thousands of dollars from workers.

Since it has come under increasing pressure from labor and human rights groups, Nike has mounted a counter-offensive. Through slick promotional materials, Nike tries to defend itself against a growing list of critics. Yet in its own promotional material, Nike admits that its labor costs for producing a pair of shoes that will sell for $80 here the United States are just $2.60.

Nike could take just 1 percent of its advertising budget ($280 million per year) and use the money to raise the income of all the workers in its six Indonesian factories above the poverty line.

Opinion polls show that a broad majority of Americans believe that businesses have a responsibility to treat their workers well, even if it means making less profit. It is up to us, the citizens of the country in which Nike is incorporated, to bring pressure for fundamental change.

Labor, religious and consumer groups have increased their anti-Nike organizing. They are demanding that Nike agree to independent monitoring of their factories by local human rights groups, that the company settle claims by workers who were unfairly dismissed, that independent organizing be allowed in Nike factories, and that wages and working conditions be improved.

Until these conditions are met, the Niketown on Union Square will be a focus of human rights protests.