Nike: Hitting the Wall

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This article "Hitting the Wall" describes the ways in which international labor policies hurt Nike, a company that was once prospering and a model of efficiency. The article begins by describing Phil Knight's, the CEO of Nike, strategy to outsource all manufacturing. He then wanted to use this money saved through outsourcing and use it towards marketing and endorsements with athletes. Nike began by using manufacturers in Japan, switching to South Korea and Taiwan when costs rose to high. Now a large percentage of their manufacturing is done in China and Indonesia. Indonesia had very low labor costs and as such they were a prime target for Nike to use as manufacturers. But as soon as Nike moved into Indonesia a wave of labor protests swept through the nation, these protests were not caused by Nike but they opened the way for Jeff Ballinger, a labor organizer.

Ballinger had been investigating labor conditions in Indonesia and found that Nike factories were some of the worst offenders, with the bribing of officials who monitored factory conditions. With the labor protests the Indonesian government and the United States started paying attention to his reports. Through these reports Indonesia was forced to increase the minimum wage, but this attempt did almost nothing for the workers in the factories. Nike maintained the stance that they could not be responsible for labor conditions in factories that they outsourced to but they did create a code of conduct for companies they outsourced to. During the Olympics and after with the opening of new stores Nike faced protests against the conditions in which their products were made. Washington created the Apparel Industry Partnership to help further the conversation between critics and the manufacturing industry. Nike also hired Ernst and Young to audit their factories, but this created a conflict of interest as Nike was paying them.

As Nike stock continued to drop and the public outcry against them grew stronger they...
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