Jakarta – Reebok International Ltd, the world's No. 2 athletic shoe-maker, said on Tuesday it is committed to production in Indonesia after 1,000 workers staged a protest against it in Jakarta the day before.
"Reebok remains committed to production in Indonesia, as demonstrated by the 19,700 Indonesian workers that we continue to employ at three factories," Hugh Hamill, Reebok's vice-president of footwear manufacturing and development in the Far East, said in a statement.
He also said Indonesia remained Reebok's second-largest global investment in footwear, with more than 25 percent of world output.
The demonstrating workers had said Reebok abruptly cut orders and slashed their salaries. They rallied outside the US embassy and set fire to giant cardboard models of Reebok shoes. A rally co-ordinator said Reebok had cut orders with little warning in April.
Reebok, however, said it first notified the management of PT Primarindo Asia Infrastructure Tbk, owner of the factory in the West Java city of Bandung, last September of a decision to trim orders.
Reebok said it encouraged the Indonesian managers to find another buyer for the factory's output, and after repeating on a weekly basis its intention to cut back gave formal notice in February that it would stop placing orders in June.
Asked to comment, Widjiastuti, assistant vice-president of PT Primarindo Asia Infrastructure, said "management did not receive any notification until February 25 in a meeting...that Reebok wants to reduce orders and terminate the agreement on June 1".
She also said that in January Reebok placed high production orders for the March-May period, even though that was normally the low season.
Reebok's actions had left the plant overstocked with production materials, and Primarindo wants Reebok to delay the termination of the agreement until December and share in labour and overhead costs, Widjiastuti said.
In its statement Reebok said that if the plant's management could not find enough other buyers for its shoes to retain the current workforce, "Reebok continues to pledge its assistance to ensure that the factory (pays) all affected workers appropriate severence wages in accord with Indonesian law." Reebok said the decision to stop orders came after an annual review that also resulted in cuts or shutdowns in two factories in other countries "to improve business efficiencies" and did not reflect a drop in demand. A worker spokesman at Monday's demonstration had said Reebok attributed the decision to falling demand.
Massachusetts-based Reebok announced last Wednesday that second quarter international sales fell two percent to $250.9 million from $256 million a year earlier. US sales rose to $334 million from $315.4 million.