Sweatshop Debate: Nike Case Study

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The Nike Controversy
By Matt Wilsey, Scott Lichtig
Introduction:
Poor working conditions have been present for centuries. Often times little or nothing is done unless a tragedy occurs to persuade the public to rally for worker rights. This was definitely the case in the United States during the Industrial Revolution and even late in the 20th Century. These conditions have for most purposes disappeared in the United States, with the exception of some in the agricultural sector. However, internationally, mainly in poor third world countries, that is far from the truth. Large corporations from the United States have moved a large portion of their factories overseas to circumvent the strict working regulations within the United States. The third world countries such as Vietnam, China, South Korea, and Taiwan provide access to readily abundant cheap labor. These corporations could now reap the benefit of the United States consumer market, while keeping their costs extremely low in offshore production. The media has awakened the public to this fact and several prominent corporations have come under fire lately for the malpractices. No corporation has come under as much criticism as the culture icon of Nike. It was illustrated that conditions were sub-par in several critical areas of Nike’s factories overseas and minimal standards needed to be reached for all employees. This report will investigate the Nike example and how it has exploited workers in Asia for financial gain. For several years little was known about Nike’s factories simply because there was little concern. But once news broke, the company was attacked ceaselessly and strict recommendations were made to improve conditions. This paper will look at why Nike moved its factories to begin with, what were the first recommendations, how Nike responded to these needs, and what could be expected for future improvement. Moving Factories:

Before we look at the problems at the overseas sites, we must first understand why Nike moved the majority of its production so far away from its headquarters in Beaverton, Oregon. The untapped markets across the globe presented several benefits. Of course there was the labor aspect in which cheap labor could produce shoes and other clothing at the fraction of the price it would cost domestically in the United States. As well, an aspect that is less often recognized, expanding into China, the world’s most populous country, opened up a tremendous opportunity as a stepping stone into all of Asia. While Adidas was looking to grow in Eastern Europe and the Soviet Union, Nike wanted to get a leg up in clothing the nearly 2 billion people in China alone. (Swoosh, pg. 405) This was in 1975 and today that population is even higher and expanding at a blistering pace. All seemed well in the corporation as stockholders and managers were receiving huge dividends and the public was receiving great products. However, starting in 1991, Nike’s offshore practices have been consistently criticized in the press. Labor conditions in Chinese and Indonesian factories were questioned in some of the reports, pay scales of Asian line workers and famous athletes were compared, and Nike was even blamed for abandoning the American shoe manufacturing industry of which it was never a significant part. (Just Do It, pg. 166) On May 12, 1998, Nike Chairman and Chief Executive Officer Phil Knight gave a talk on such allegations and the company’s new labor initiatives to combat them. In that discussion he touched upon Nike’s reasons for moving factories out of the United States and into mainly third world countries in Asia. The following are excerpts from that lecture. It's been said that Nike has single-handedly lowered the human rights standards for the sole purpose of maximizing profits. And Nike products have become synonymous with slave wages, forced overtime, and arbitrary abuse. One columnist said, "Nike represents not only everything that's wrong with sports but...
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