Following in the footsteps of its main rival Reebok, athletics-shoe manufacturer Nike has announced that it will also be reducing production in Indonesia – a move that could spark protests from workers.

Reebok's decision to cease orders from a factory in Bandung, West Java, prompted about 1,000 workers to protest outside the US Embassy in Jakarta on Monday claiming that almost 5,400 people would lose their jobs.

The Associated Press reported that Nike on Wednesday said it will terminate a contract with local manufacturer PT Doson Indonesia in November.

But Nike stressed that it would continue to work to operate in Indonesia, using 47 factories that employ 123,000 workers. "Although Nike's relationship with Doson has changed, its commitment to Indonesian workers and consumers has not," Nike's general manager in Indonesia, Jeff Dumont, was quoted as saying by AP.

He also said the company would try to assist redundant workers by finding them other jobs, or by providing loans, medical care and education costs.

The Kompas daily quoted Dumont as saying the Doson factory was ranked worst of Nike's factories in Indonesia. "If Doson plans to reduce the number of workers, Nike has the commitment to provide an assistance program for affected workers by appealing for Nike's other subcontractors here to recruit them," he was quoted as saying.

Nike commenced production in Indonesia in 1988, and by 1996 one third of its shoes were produced there. Nike claims that its presence in Indonesia has benefited the country, but human rights groups say the company's factories are sweatshops that pay only a pittance.

Trivia buffs used to quip that US basketball star Michael Jordan was paid $20 million to endorse Nike products – about the same amount that Nike pays its Indonesian workforce to produce up to 19 million pairs of shoes annually.

Some multinational manufacturers have left Indonesia over recent years because of social unrest and labor disputes, moving to cheaper locations in China and Vietnam.