Co-Chairman, GoodWorks International, LLC |
Introduction
The Assignment
NIKE's Manufacturing History
The Credibility of This Report
How We Conducted Our Study
Findings and Observations
Recommendations
Closing
Appendix
Footnotes
Illustrations
Co-Chairman, GoodWorks International, LLC |
Six months ago, I was contacted by the leadership of NIKE and asked if I would be willing to make an independent assessment of their Code Of Conduct and evaluate their company's effectiveness in applying that Code to those factories where NIKE apparel and footwear products are manufactured.
Over the past year, I - like most Americans - have seen the highly publicized news accounts of "sweatshops" and "child labor" used by the footwear and apparel industries in their workplaces in this country and around the world. As a lifelong supporter of trade unions, from South Georgia to South Africa, my heart and sympathies were with the workers.
Having just completed a strenuous, six-year assignment as Co-Chair of the Atlanta Committee for the Olympic Games, remarried after the death of my first wife and having recently started a new business, I was not inclined to get involved in the public controversy between this important global company and my many friends in the human rights and labor communities.
However, after an in-depth meeting with the leadership of NIKE, I became convinced that NIKE was sincere in its desire to have me conduct a totally independent assessment of their Code of Conduct and how it was being applied.
I realized that there was public relations value to NIKE in having me perform an "independent evaluation" of their Code Of Conduct, especially if it tended to support their point of view. Therefore, I made it absolutely clear to NIKE at every stage of our discussions that, if I undertook this study, I would reveal the truth publicly, whatever that truth might be.
If NIKE were doing a poor job in its labor practices, I would insist that it should be made known to consumers generally, to NIKE's own employees, to NIKE shareholders and, particularly, to the corporate leadership, because they seemed genuinely convinced that they were doing a good job.
If NIKE were doing a merely adequate or even a good job in the application of its Code, I believed that my report and recommendations - publicly aired - would encourage them to do better and that NIKE's progress on these issues might be emulated by others in the industry.
Concerns & Conditions
Before I agreed to conduct this evaluation of NIKE's Code Of Conduct, I insisted on four conditions:
When I raised these issues with NIKE, CEO Phil Knight pledged total cooperation, promising me that I could, "Go anywhere, see anything and talk with anybody". Knight recommended that the entire written report be made "public" after NIKE's management had an opportunity to review it. (This same report was given to NIKE's management last week in Beaverton, Oregon.)
Finally, Phil Knight sent me a letter stating these commitments in writing. (See Appendix).
Going Forward
Armed with these assurances, I agreed to undertake this assignment with the full and active support of my firm, GoodWorks International LLC.
GoodWorks Co-Chairman Hamilton Jordan and CEO Carl Masters supported my efforts with their own advice and counsel. GoodWorks staff members Maggie Womack, Dianne Wisner and Marva Boea helped in important ways.
Others contributed as well.
Doug Gatlin, a longtime associate and friend, assisted in our work which included traveling with us on our extensive tour of NIKE factories in China, Vietnam and Indonesia and in ongoing discussions with the non-governmental organizations or NGOs. 1
My wife, Carolyn Young, who teaches fifth grade in the Atlanta public schools, accompanied me on our Asian trip and contributed her own thoughts and perspectives which were very helpful. All of the photographs displayed throughout this report were taken by Carolyn, Doug Gatlin or myself with my pocket camera.
Ultimately, however, the views presented here are mine and mine alone. They are expressed with humility, candor and with the hope that it might help NIKE and others in their industry to improve the conditions for factory workers all over the world.
The
Assignment:
NIKE's Code Of Conduct
I was asked to provide NIKE management an independent evaluation of its Code Of Conduct and its application at the factory level and to make specific suggestions going forward as to how their Code Of Conduct could be more effectively applied and possibly enhanced.
Wages & Living Standards
I was not asked by NIKE to address compensation and "cost of living" issues which some in the human rights and NGO community had hoped would be a part of this report. This subject deserves some comment.
Understanding and establishing what is a "fair wage" in a foreign country is a very complicated process. It requires an understanding of national and local labor laws, variances in the costs of food, housing and transportation from region to region, the ability of local governments to enforce local and national laws, factory cooperation and so forth. Such an exercise was well beyond the technical capacity of our small firm.
But even if you had that capacity, I had no desire or intention of addressing wages and standards of living in the countries where NIKE goods are produced. Let me explain why.
Are workers in developing countries paid far less than U.S. workers? Of course they are. Are their standards of living painfully low by U.S. standards? Of course they are. This is a blanket criticism that can be leveled at almost every U.S. company that manufactures abroad.
Many people believe that U.S. firms should not be allowed to "export jobs" to countries with lower wages and standards. While sympathetic to this argument in the abstract, I realize that this is simply not practical in an increasingly global economy.
Others, myself included, believe that minimal global wages and standards are desperately needed.
But it is not reasonable to argue that any one particular U.S. company should be forced to pay U.S. wages abroad while its direct competitors do not. While it is tempting to criticize a few highly visible and successful companies for paying "low wages," meaningful reform can only be achieved through national law or international standards that enforce a "level playing field" for all companies, not just a few.
The bottom line is that a national economy can not be transformed one factory at a time or even one industry at a time. Instead, these economic reforms and improvements will only come when there are international trade agreements and understandings in place which support global standards.
There is important work that has been and is being done by international economists in organizations like the International Labor Organization (ILO) on minimum labor standards. While this is very important and timely work, discussion here of those proposals is beyond the scope of this report and well beyond the technical capacity of our firm.
Consequently, we are focusing our study on the important subject of NIKE's Code Of Conduct and its application.
NIKE has historically produced the bulk of its footwear products in Asia; originally in Japan, Taiwan and South Korea and more recently in China, Indonesia and Vietnam. Today, NIKE and the other major footwear companies manufacture in these same countries.
One may approve or disapprove of the fact that the global footwear and apparel industries are manufacturing in these developing countries of Asia, but any evaluation of labor practices in these countries must be considered in light of that reality - which includes the recognition that these countries do not have a long tradition of workers rights and trade unions.
Some argue that the presence of these factories will, over time, provide economic development that moves these countries toward a market economy and true democracy. Taiwan and South Korea are recent examples of economies that have been the site of "light manufacturing" and which have, over time, been transformed - arguably for the better - by the presence of the footwear and apparel industries.
Others argue that these factories have only been used to prop up, economically, the regimes of thinly-disguised dictatorships which, over time, undermines the development of a strong economy, a true democracy and the principle of workers' rights.
What Is A "Nike Factory"?
From its beginning, NIKE made a decision that its core competencies were the design, marketing and technology of footwear and apparel, not the manufacture of products. Consequently, NIKE does not own or operate the factories where its shoes and apparel are produced and has traditionally contracted with others to produce their products. 2
While considered "NIKE factories", the factories we visited in Vietnam, Indonesia and China are totally owned and operated by Asian companies who have contracts with NIKE (and others). In several sites we visited, for example, there would be a huge factory complex where the owner would produce goods for NIKE in one building, Reebok in the next and for Adidas in another.
While NIKE does not have technical or legal ownership of these factories or even direct control of the management, it has enormous leverage - some would argue "de facto" control - because of the factory's dependence on the huge NIKE contracts.
NIKE does have "quality control" personnel at work in these factories and more recently an expanding labor practices staff in-country, but the active, day-to-day line management of these factories rests entirely in the hands of its various Asian owners and the individual factory management in place at each site.
This is one of the great challenges for NIKE and others in this industry who produce in these same factories - relying on absentee owners and largely expatriate managers 3 to implement and enforce work standards created by corporate leadership half way around the world.
For example, at the factory in Vietnam which was the site of the "running" incident, the owner of that factory is a Taiwanese company, the plant manager is a Taiwanese and most of the line managers are Taiwanese. The lack of indigenous management in these factories contributes to a lack of easy communication between management and workers and is addressed in some detail later in this report.
We have been hired to study a problem and - based on our analysis - to render a subjective opinion.
Some NIKE critics have suggested that we might be "duped" by NIKE.
Have we been shown only the "good" NIKE factories? Systematically misled by carefully selected interpreters in the hundreds of conversations, meetings and dinners that we had in three different countries? Given false factory audit reports by Ernst & Young - when some of the real audits we reviewed were critical of certain factories? Shown sweatshops that have been "disguised" by NIKE?
I took careful and reasonable steps to be sure I saw, heard and discovered the truth. I do not know how - for example - someone can "disguise" a factory that has fifteen thousand employees or "hide" inferior physical working conditions in building that are tens of thousands of square feet in size.
I also have seen insinuations that NIKE is paying me huge sums of money to produce a favorable report which glosses over the truth. In fact, I have devoted at least forty days to this project, trying to understand these issues, and my GoodWorks colleagues have spent over a hundred days in support of our efforts.
The total compensation I have personally received for this report is less than I am usually paid for one speech.
But I have found the effort extremely rewarding. These are global economic and human rights issues which are some of the more complex challenges we face in the coming century. They are not just NIKE issues, or shoe and apparel issues. They are questions which go to the heart of the evolving global economy which is shaping our future.
These are concerns which all of us must begin to understand as participants in the global economy of the 21st Century. Seldom, if ever, does history stand still, and the forces of communications and technology are not likely to be controlled by isolationist reactions.
We realize that over three hundred fifty thousand people who work in factories producing NIKE products are looking to us to hear their voice, to understand their needs and to help them by airing any legitimate grievances that we could identify.
Conversely, we understand what is at stake for NIKE, whose global brand and reputation for integrity has been directly challenged by some.
We accepted this challenge, resolved to seek the truth and report the facts, without regard for the consequences. Toward that goal, we took advantage of every possible resource, which included:
1. Briefing By NIKE
We spent the day at NIKE headquarters being briefed on every aspect of the manufacturing process with particular emphasis on the Code Of Conduct. We asked for and received a variety of documents, audits and internal reports from NIKE.
2. Review Of Third Party Reports
We asked for and received confidential audit reports conducted by Ernst & Young, LLP., which has been working since 1994 for NIKE to provide them a way to monitor labor practices in the factories manufacturing their products. Price Waterhouse has recently begun to conduct audits for NIKE in Chinese factories.
These "spot audits" were conducted by trained professionals (who spoke the local language) at the manufacturing site and without prior notification of the plant management. In addition to using a long "check-list" of items which could be tracked over time, these audits also featured the random selection of employees who were interviewed without plant management present - about conditions in the plant, the attitude of management, satisfaction with their job, living conditions, etc. The individual responses of the workers interviewed were treated confidentially and reported anonymously.
We also reviewed the "follow-up" reports which measured the manufacturer's "compliance" and implementation of the audit recommendations. Generally speaking, we found these audits were rigorous in their analysis and follow-up.
3. Factory Visits
We visited four factories in China, four factories in Vietnam and four factories in Indonesia. These factories represented the "work sites" of forty per cent (40%) of the total NIKE contract employees in Vietnam, twenty-five per cent (25%) in Indonesia and forty-five per cent (45%) in China.
I went to the factories considered their "best" and their "worst" based on the audit reports which we had reviewed.
I also insisted on going to places where there had been highly publicized "incidents" reported in the press. 4
4. Time "On The Ground"
We spent - on average - up to three to four hours at each factory and talked individually with employees at each factory - randomly selected by me - and usually without NIKE management around. We often had lunch or took a break with the "labor representative" in the factory, the workers or with the factory management.
5. Meetings With Interested Third Parties 5
A. National & In-Country
NGO's
In each country, I had conversations with NGOs, usually without NIKE personnel present. These meetings were very useful and constructive as it was important to me to hear first hand the problems they saw in local factories. Occasionally, someone would make a charge or allegation which seemed to be ideological and emotional, but my overwhelming reaction was that most of these critics were serious and sincere, although the facts were supplied only by the aggrieved party.
I also took advantage of opportunities along the way to meet and talk with other interested parties whose perspective on this problem could inform and guide our work.
B. International &
USA NGO's 6
Early in the process, I wrote and called a number of the important international and U.S. NGO's - both to inform them of our assignment and to solicit their input and advice. Following our Asian trip, we met in Washington with representatives of the key groups and talked by phone with others who could not attend.
Like the meetings in Asia, these discussions were tremendously helpful. Several representatives in the Washington meeting had been part of the leadership group that produced the Apparel Industry Partnership and had important and relevant insights on the successful collaboration and interaction that had taken place between the NGOs and the apparel industry which had led to the agreement.
Disclaimer
While my colleagues and I have immersed ourselves in this evaluation for the past six months, there are limits to what any lay person can understand in a relatively short period of time. Obviously, we do not claim to be labor practices "experts".
While I do not exaggerate what one person can see and absorb in a short period, neither do I diminish it. For all of my political life, I have enjoyed the strong support of organized labor and understand the dynamics and realities of factory work. I believe that the observations and recommendations presented here are balanced and fair.
In this section, we present our own points of view in two forms. As used here,
A "finding" is a strongly held belief based on what I/we have seen, heard, read or learned. We believe our findings to be statements of fact based on what we know.
An "observation" is important information that we have developed or learned that should be known by NIKE and appropriately belongs in this report. As used here, an "observation" does not have the weight of a "finding."
1. Factory Conditions
Finding: The factories that we visited which produce NIKE goods were clean, organized, adequately ventilated and well lit.
The twelve NIKE "factories" that I visited in Vietnam, Indonesia and China were physically as clean and modern as any manufacturing sites I have seen in the USA and certainly did not appear to be what most Americans would call "sweatshops." 7
2. Abuse Of Workers & Violations Of Human Rights
Finding: I found no evidence or pattern of widespread or systematic abuse or mistreatment of workers in these twelve factories.
With more than three hundred fifty thousand workers in their contract factories in Asia, it is not surprising that there have been instances of worker abuse and violations of human rights. While not a single abuse is acceptable - and there have been such abuses - there was no evidence of widespread and systematic abuse of workers at these factories.
There have been specific instances of abuse documented in the confidential Ernst & Young's audits which I reviewed (See "Third Party Reporting & Monitoring"), in some highly publicized incidents reported by the news media and by NGOs, and in firsthand reports I have received from workers and NIKE managers I met on my Asian trip.
I did not find in the audit reports or in my own conversations with workers at these factories or in our other research a pattern of these factories violating national laws, local laws or the Code Of Conduct as relates to age or working conditions.8
Indeed, I found considerable evidence that NIKE and its labor practices staff led by Mr. Dusty Kidd are deeply committed to the Code Of Conduct and are working hard to address these problems.
3. Plant Management - Worker Relationships
Finding: Generally speaking, these twelve factories are controlled by absentee owners, managed by expatriates, who, in Vietnam in particular, do not speak the local language fluently and are overseen by a relatively small number of NIKE technical supervisors focused largely on quality control.
While one can make some judgments about physical conditions at NIKE plants and dorms after spending sixty to seventy hours wandering the factory floors and talking randomly with workers, I realize that what happens day-to-day on the production line is not easily understood by an outside observer on an occasional visit. The quality of the individual worker's life depends on the relationship between the worker and the management and the commitment of that management to a set of principles which will govern the operation of the factory.
I was disappointed at how few of the plant managers actually spoke the local language. This obviously works against easy communication and a strong relationship between the workers and the management.
Nevertheless, I saw tens of thousands working very hard in the factory lines. The workers I met and observed appeared relaxed, pausing from time to time to smile or talk with one another. While the factories were highly organized and the workers very focused, there was not an oppressive atmosphere in any of the factories that we visited.
4. Workers' Rights
Observation: The concept of "workers' rights" is not a well-developed or well-understood principle in the three Asian countries where NIKE and its major competitors produce shoes and apparel.
Because of my own background, I understand what happens on the factory floor. Even with the most enlightened management with the very best of intentions, when the pressure is on to meet production quotas, managers sometimes do cut corners to squeeze maximum production out of their line or shift.
When this happens, there has to be a system and safeguards in place that discourages and penalizes managers from cutting corners, protects workers from abuse and provides an adequate system so that workers can report grievances with a reasonable assurance that their complaint will be heard and acted upon without fear of retribution.
In these Asian countries that do not have a mature trade union movement or a long tradition of "workers' rights", the responsibility for protecting the workers must fall increasingly on the large companies - like NIKE - that have production contracts with these factories. This means that NIKE - and its competitors - must pro-actively take steps that contribute to the creation of systems and processes that protect its workers in these "contract factories".
This challenge is dealt with in the "Recommendations" part of our report which follows this section.
5. Third Party Reporting & Monitoring
Observation: Some system of third party monitoring is necessary because of the ownership structure of these Asian factories.
With absentee ownership and expatriate plant management, it is important that there be a regular and sustained way to monitor conditions in these factories.
It is an indication of the distrust that exists that the professional audit work of an international accounting firm like Ernst & Young would be discounted so completely as it has been by some of NIKE's critics. I found the Ernst & Young audit reports which we reviewed to be professionally sound, aggressive and precise in documenting shortcomings at these work sites. In every instance, they cited specific problems and suggested very specific remedies which NIKE requires to be completed by a target date.
These citations ranged from reports that a certain bathroom lacked adequate toilet paper to complaints about certain unpopular meals to more serious allegations, which included:
That a factory shift was made to work overtime against their will;
That reduced "training" and "probationary" pay rates were paid to workers beyond the time of actual training;
That a particular worker was consistently paid less than the minimum wage over an extended period of time; and,
That religious holidays and "days off" were regularly denied to certain workers.
These audits paint a picture of certain factories that excel in their efforts to create the best possible work environment for their employees, other factories which do better than average and a very small number of factories which seem to have, disproportionately, many of the more serious allegations and problems.
These reports demonstrated to me that the NIKE contractors were running far less than perfect factories, that NIKE was well aware of these problems because of these very same "audits" and that NIKE was insisting that the factory management address these problems on a systematic basis.
There still needs to be an additional level of "monitoring" and a better way for an individual worker to file a complaint or grievance within the factory. This is the subject of a specific "recommendation".
6. Living Conditions At Factories
Observation: In some factories, workers are offered housing as an additional benefit, 9 but it is entirely voluntary. The housing is usually organized like "dorms" with bunk beds and common toilets and shower areas. By Western standards, the dorm rooms are small and the furnishing sparse. The workers I talked with said that it was "better than their home".
Several of the twelve factories we visited had living quarters for their workers. These were usually organized in a dorm setting with six bunk beds which slept twelve people who shared a common bathroom area. Many rooms in the Indonesian factory we visited had televisions paid for by the pooled savings of the workers. These dorm rooms were like a summer-camp environment in the United States with clothes hung out to dry, pictures on the wall and radios blaring. But I had to remind myself that these small rooms were "home" for these workers year round.
Most of the employees at these factories are female, and several told me that they came to work and live at the factory for a year or two to save up a "dowry", then return home to marry. While a few complained that factory housing was "crowded", most said the "dorm" room in the factory was better and cheaper housing than they could afford in the area near the factory.
Some of these factories have sports fields and common areas for use by their employees. One factory owner in China (at the Pegasus factory) is building a theater for his workers. He told us that it was in his interest for his workers to be happy and satisfied so that they would work at his factory for a long time, and he could reduce "turnover".
7. Processes & Systems
Finding: There should be a better system or process in place in these factories that would allow an individual worker to file a complaint or grievance and know that it will be seriously considered and/or investigated and that will not leave the worker vulnerable to retribution by factory management.
8. Education & Training
Finding: The NIKE Code Of Conduct should be the basis of the relationship between NIKE, the plant ownership and management and the workers. The Code is not visible on the factory floors and not well understood by the workers.
This is - in my opinion - an acute need and goes to the heart of NIKE's challenges at these factories where its goods are produced.
Current and new plant managers and workers should undergo special training sessions focused on the Code Of Conduct. On a regular basis, there should be required training sessions that focus on different elements of the Code, with particular focus on workers' rights and the process for a worker to make a complaint or to file a grievance.
NIKE should work with its manufacturers to recruit, train and promote more indigenous factory management. Many of the problems we discovered in the audits and on our visit were largely a result of expatriate management who did not speak the language of the workers, creating communications barriers between the workers and the managers that are the usual sources of problems on the factory floor. If a line manager is unable to explain a need or effectively encourage or discipline a worker in their own language, this frustration can sometimes lead to inappropriate actions.
Special human relations and cultural sensitivity programs should be designed and organized. Participation should be mandatory for all expatriate management.
Arising from our work and the "Findings" and "Observations" previously stated, we submit here for NIKE's consideration a number of recommendations. In some instances, these suggestions are "directional" and indicate general areas or topics for additional work or focus. In others - where we are comfortable doing so - we offer specific ways in which these recommendations might be effectively implemented.
1. Recommendation: NIKE should continue its efforts to support and implement the provisions of the Apparel Industry Partnership which resulted in the first major agreement - across industry lines - to set voluntary, global standards and goals for international labor practices.
While it was probably considered an imperfect result, particularly by the parties who participated in it, the Apparel Industry Partnership represents a significant collaboration among the apparel industry and the NGOs on a critical global issue. It is our strong recommendation that NIKE continue to play a leadership role in this important effort.
2. Recommendation: NIKE should take more aggressive steps to explain and enforce the Code Of Conduct.
I am aware of some of the efforts already underway to increase both awareness and enforcement of the Code Of Conduct, but NIKE can do more.
During my trip to Asia, I had the opportunity to meet and talk with the NIKE Labor Practices staff who worked in the countries visited.10 I found that Director of Labor Practices Dusty Kidd already had some ambitious plans to enhance training and education and was very open to our specific suggestions as to what might be done to improve the overall relationship between the management and workers. I made a number of suggestions to him related to the Code Of Conduct and repeat them here:
A. NIKE should do a better job of explaining to new and current employees the importance of the NIKE "Code" which is a covenant between NIKE, the factory operators and employees.
B. The NIKE "Code Of Conduct" should be displayed more prominently in the factories where NIKE goods are produced.
C. Each worker should be given a card suitable for a billfold or pocketbook which contains the "Code Of Conduct" written in the local language and signed by the plant manager.
D. Hold regular sessions with expatriate managers, new and current employees, explaining the Code Of Conduct and the workers' rights under that Code.
3. Recommendation: NIKE should take pro-active steps to promote the development of "worker representatives" in the factories who can effectively represent the workers' individual and cumulative interests.
A common problem in some factories is that the "worker representatives" are full-time employees and do not have time to understand problems and communicate grievances to the factory management. NIKE should take specific steps to insure that in each factory which produces its goods there are qualified people who have the time and ability to forge relationships with the workers and can be the workers' voice and advocate with factory management.
It makes little sense to have an elaborate procedure for a worker to air a grievance if the worker is not aware of the procedure and/or does not know how to utilize it. Effective worker representation is needed.
4. Recommendation: NIKE should insist that the factories which manufacture its products create and enforce a better grievance system within the factory that allows a worker to report a complaint or abuse without the fear of retribution or reprisal.
A worker in any factory should have a way to register a complaint that can be seriously considered by factory management. That same worker - if he or she fails to get satisfaction from factory management and/or fears personal reprisal - should have some practical and confidential way to communicate with NIKE. (A specific suggestion is offered in #6 which follows.)
5. Recommendation: NIKE should expand its dialogue and relationship with the human rights community and the labor groups within the countries where they produce goods and with their international counterparts.
I come from the larger NGO and human rights community and understand their purpose. These groups - created on high principles and universal values - demand perfection of all us and are not easily satisfied. They play a special and important role in our world today.
I believe that NIKE will accomplish more for themselves and for those in the factories by working directly with the NGOs and the human rights community on these problems, whenever possible. The direct dialogue with the human rights and NGO community which grew out of the Apparel Industry Partnership should be continued and is in the best interests of the workers.
I have seen harsh criticisms of NIKE by some of these groups that have no basis in fact. This type of exaggerated rhetoric only makes NIKE less inclined to work with these very groups who have the ability to help them to understand and deal with many of these problems. It is asking a lot of NIKE to trust groups who have made irresponsible statements about them.
6. Recommendation: NIKE should consider some type of "external monitoring" on an ongoing basis as a way to demonstrate its commitment to the Code Of Conduct and to insure its effective application.
First, it is very important that the ongoing "spot audits"- conducted by Ernst and Young and by Price Waterhouse - be continued. While these audits may not have much credibility with the NGOs, I know from having examined them they are professionally done, rigorous in their examination of these issues and very useful for NIKE's in-country management.
But NIKE should do more, and I have several suggestions.
Many have called for NIKE to submit to "independent monitoring" which has different meanings to different people.
To some, this means turning over monitoring factory compliance with NIKE's Code Of Conduct to NIKE's critics, and giving these organizations free access to the plants which produce NIKE goods so that they can monitor and publicize worker conditions and problems.
This is - in my opinion - neither a practical nor fair solution. I am not aware of a single Western institution, public or private, profit or non-profit - whether it be a business, a law or accounting firm, a newspaper, a hospital, a church or a labor union - which permits its critics to be the final arbiter in evaluating its performance.
The Southern Christian Leadership Conference was a major force in the passage of the Voting Rights Bill, but we were never asked to be official "election monitors" in areas of the South where this new and controversial law was enforced. The AFL-CIO would never invite the Chamber of Commerce to "audit" their work. The American Bar Association would never allow the American Medical Association to "monitor" its professional standards.
As a practical matter people, and groups on the opposite sides of a hotly debated issue are not considered objective, independent monitors of that same issue.
However, I do have two suggestions for accomplishing the same objectives.
First, I believe a more relevant and useful model is the "ombudsman" model used by some large news organizations. I would recommend that NIKE consider establishing an "ombudsman" inside each major country that manufactures its products and have a practical way - by mail, by phone or by after hours office - for workers to report abuses, violations of the Code Of Conduct or national law after the worker has exhausted his or her remedies within the plant. It would undermine the responsibility that the individual factory has, to comply with the Code of Conduct and national laws, if a mechanism is established that encourages all complaints and grievances to be presented externally.
Secondly, I believe that a small panel of distinguished international citizens could be assembled to monitor these factories on a regular basis. As I have personally discovered, the "learning curve" on these issues is steep. If the same group of people developed a familiarity with these issues and monitored these factories over a two or three year period, it would provide the public and NIKE a broader perspective and continuity not possible in my six-month assignment.
Implementation Of Recommendations
NIKE's commitment was to seriously consider the suggestions that we put forward in this report. To the extent NIKE accepts any, most or even all of our recommendations, I would urge them to put forward a public timetable for implementing those suggestions.
The goal of NIKE and the various NGO's who are concerned about these issues should not be to find a middle ground that merely "splits" their economic and moral differences. The goal should be to find a common ground, through dialogue, that respects the right of the worker to fair pay and humane treatment in a decent work environment, while not imposing conditions on the manufacturer that have economic consequences that make the production of its goods economically infeasible.
With this in mind, let me make these final comments:
It is my sincere belief that NIKE is doing a good job in the application of its Code Of Conduct.
But NIKE can and should do better.
It is an awesome accomplishment to build a global business and brand as NIKE has done, but it is an equally tremendous responsibility to employ (albeit indirectly) almost half a million people and to know that these people and their families are ultimately dependent on NIKE for fair treatment, fair compensation and some measure of dignity and self-respect in the workplace.
Just as NIKE expects much of the designers who create its products and much of the athletes who use its products and promote its brand, NIKE must continue to hold itself to a high standard in the way it treats the factory workers who make its shoes and apparel. The fact that so many footwear and apparel manufacturing jobs today are in countries that lack a tradition of "worker rights" is an additional challenge for NIKE and others in this industry, but it can never be an excuse, nor justification, for sub-standard working conditions or abuses of any kind.
I take seriously NIKE's stated commitment - as the largest producer of athletic footwear and apparel in the world - to be an industry leader and an example in providing the best possible working conditions for its employees around the world.
We should and will hold NIKE to that promise. My friends and colleagues in the human rights and labor communities should give NIKE a fair opportunity to demonstrate the sincerity of that commitment.
I hope and believe that NIKE will build on the progress of the Apparel Industry Partnership, accept and act upon the recommendations in this report and continue to strive to improve the working conditions for its people all over the world.
As I have read on a sign at NIKE's headquarters in Beaverton, Oregon:
There is no finish line.
Nike, Inc. was founded on a handshake.
Implicit in that act was the determination that we would build our business with all of our partners based on trust, teamwork, honesty and mutual respect. We expect all of our business partners to operate on the same principles.
At the core of the NIKE corporate ethic is the belief that we are a company comprised of many different kinds of people, appreciating individual diversity, and dedicated to equal opportunity for each individual.
NIKE designs, manufactures and markets products for sports and fitness consumers. At every step in that process, we are driven to do not only what is required, but what is expected of a leader. We expect our business partners to do the same. Specifically, NIKE seeks partners that share our commitment to the promotion of best practices and continuous improvement in:
1. Occupational health and safety, compensation, hours of work and benefits.
2. Minimizing our impact on the environment.
3. Management practices that recognize the dignity of the individual, the rights of free association and collective bargaining, and the right to a workplace free of harassment, abuse or corporal punishment.
4. The principal that decisions on hiring, salary, benefits, advancement, termination or retirement are based solely on the ability of an individual to do the job.
Wherever NIKE operates around the globe, we are guided by this Code of Conduct. We bind our business partners to these principles. While these principles establish the spirit of our partnerships, we also bind these partners to specific standards of conduct. These are set forth below:
1. Forced Labor. (Contractor) certifies that it does not use any forced labor - prison, indentured, bonded or otherwise.
2. Child Labor. (Contractor) certifies it does not employ any person under the age of 15 (or 14 where the law of the country of manufacturing allows), or the age at which compulsory schooling has ended, whichever is greater.
3. Compensation. (Contractor) certifies that it pays at least the minimum wage, or the prevailing industry wage, whichever is higher.
4. Benefits. (Contractor) certifies that it complies with all provisions for legally mandated benefits, including but not limited to housing; meals; transportation and other allowances; health care; child care; sick leave; emergency leave; pregnancy and menstrual leave; vacation, religious, bereavement and holiday leave; and contributions for social security, life, health, worker's compensation and other insurance.
5. Hours of Work/Overtime. (Contractor) certifies that it complies with legally mandated work hours; uses overtime only when employees are fully compensated according to local law; informs the employee at the time of hiring if mandatory overtime is a condition of employment; and, on a regularly scheduled basis, provides one day off in seven, and requires no more than 60 hours of work per week, or complies with local limits if they are lower.
6. Health and Safety. (Contractor) certifies that it has written health and safety guidelines, including those applying to employee residential facilities, where applicable; and that it has agreed in writing to comply with NIKE's factory/vendor health and safety standards.
7. Environment. (Contractor) certifies that it complies with applicable country environmental regulations; and that it has agreed in writing to comply with NIKE's specific vendor/factory environmental policies and procedures, which are based on the concept of continuous improvement in processes and programs to reduce the impact on the environment.
8. Documentation and Inspection. (Contractor) agrees to maintain on file such documentation as may be needed to demonstrate compliance with this Code of Conduct, and further agrees to make these documents available for NIKE or its designated auditor's inspection upon request.
 |
| Abigail Abrash | R.F.K. Memorial Center for Human Rights | |
| Jeff Ballinger | Press for Change | |
| Medea Benjamin Director |
Global Exchange | |
| Jacques Bertrand | Development and Peace | |
| Ambassador Vu Khac Bong Deputy Foreign Minister |
Government of Vietnam | |
| Anita Chan | Australia National University | |
| Cicih Sukaesih Worker dismissed after strike |
NIKE critic | |
| William Conklin | Asian American Free Labor Institute | |
| Bob Dunn President |
Business for Social Responsibility | |
| Linda Golodner | National Consumers League | |
| Pharis Harvey Executive Director |
International Labor Rights Fund | |
| Selma Widhi Hayati | Indonesian Legal Aid Foundation | |
| R. Kyle Horst Vietnam Specialist |
The Specialist Group | |
| Michael Jendrzejczyk Asia Director |
Human Rights Watch Asia | |
| Dr. Le Xuan Khoa President |
S.E. Asia Regional Action Center | |
| Apo Leong Executive Director |
Asia Monitor Resource Center | |
| Conrad MacKerron Director, Social Research |
Progressive Asset Management Inc. | |
| Lou Mitchell | PACT | |
| Indera Nababan President |
Indonesian Sport Shoe Monitoring Network | |
| Maniza Naqvi | World Bank | |
| Thuyen Nguyen | Vietnam Labor Watch | |
| Maria Pakpahan Assistant Secretary |
International NGO Forum on Indonesian Development | |
| Dwight Perkins Professor-Political Economy |
Harvard Institute for International Development | |
| Jennifer Porges Newsletter Editor |
Asia Monitor Resource Center | |
| Brian Quinn Country Coordinator |
Harvard Institute for International Development | |
| Soumodip Sarkar Fulbright Economics Teaching Program |
Harvard Institute for International Development | |
| David Schilling | Interfaith Center on Corporate Responsibility | |
| Ping Kwan Shek | Hong Kong Christian Industrial Committee | |
| Jim Silk | R.F.K. Memorial Center for Human Rights | |
| Dr. Payaman Simanjuntak Assistant Minister of Manpower |
Government of Indonesia | |
| Valentin Suazo Local Representative |
AFL-CIO | |
| Joseph Tham Fulbright Economics Teaching Program |
Harvard Institute for International Development | |
| Hien Dai Tran Coordinator for the South |
Southeast Asia Resource Action Center | |
| Sesto Vecchi Business & Corporate Law |
Russin & Vecchi Ernst & Young | |
1. NGOs
are usually non-profit organizations with public concerns and goals. Those
who tend to follow labor practices issues closely include human rights groups,
religious organizations, labor organizations, etc.
2. NIKE
has had two U.S. plants in the past and currently has a plant in Beaverton
that produces the "air soles" for their footwear. Generally, NIKE
has relied on contract factories inside and outside of the U.S. for production
of its footwear and apparel. More than half of NIKE's U.S. apparel sales
come from goods manufactured in the USA.
3. Personnel
from toher countries - often the home country of the owner - who live in-country
and manage the plant.
4. I
visited the factory in Vietnam where a supervisor had forced sixty-one women
to run two laps around the plant as a way to discipline them for failing
to meet production quotas and for wearing improper footwear. I talked with
11 of the women and with the supervisor who had been suspended, pending
disposition of the case by the Vietnamese court.
5. The
Appendix lists the individuals and groups we met
with on our trip.
6. There
is a listing in the Appendix of these people and
organizations as well.
7. In
Vietnam, our group walked, unannounced, into a government-operated factory
which was making shoes for another company. It was strikingly less modern
and less clean than the factories where NIKE produces its goods. It came
much closer to the public's image of a "sweatshop"
8. Asian
women generally and Vietnamese women in particular appear very young by
American standards. In one factory in Vietnam, I asked a number of young
girls their age. All pulled out their IDs, and I was surprised to find that
most were over twenty years old. Some factories did report problems with
underage job applicants submitting false identification but they indicated
that this was a small and manageable problem.
9. Of
factories producing NIKE products, none in Vietnam presently offer housing
to workers, one of thirteen in Indonesia and about forty percent (40%) of
the footwear factories in China offer housing to workers.
10. On my Asian trip, Labor Practices
chief, Dusty Kidd and I discussed some of my ideas for improving the awareness
of the Code. It is my understanding that some of those suggestions have
been or are being acted upon. It deserves attention and focus as less than
half of the workers making NIKE product (according to the audit reports
and to my own personal "survey") knew what the Code was, could
explain it or was able to understand how it might help them with their particular
problem or grievance.
