Nike faced allegations in the 1990s of worker abuse in their overseas factories, including physical and verbal abuse, toxic working conditions, low pay, and excessive overtime. In response, Nike initially denied responsibility for three years but later implemented a Code of Conduct and hired ethics managers to improve conditions. However, critics argued the Code did little and a leaked audit revealed ongoing issues. Nike then took proactive steps like reducing overtime and increasing protections, but debates continued around balancing profits with worker welfare.

1. Nike, Inc.
Presented by Caroline Graham

2. “Nike is a company of people
rooted in our responsibility to
be good corporate citizens. We
have improved labor practice
throughout Southeast Asia by
paying decent wages, adhering to
a Code of Conduct, and having it
monitored by independent parties”

4. Scandal
• 1990s: Allegations of worker abuse in
China and Indonesian factories
• Humiliation and intimidation
• Physical abuse
• Toxic fumes in the workplace, forced
overtime
• Worker Exploitation
• Low pay
• Brought the attention of high profile
watchdog and labor regulations groups

5. Define “abuse”
• As punishment for not wearing regulation
(Nike) shoes to work, workers were forced
to run laps in the 100 degree heat,
sometimes causing fainting
• Reports that 125 assembly-line workers
were lined up and slapped with the sole of
a Nike sneaker
• Workers were allegedly forced to lick the
factory floor for misdemeanors

6. Nike’s Response
• For a 3 year period (1989-1992) Nike’s strategy was to disregard the
issue
• Nike Vice President: “we don’t pay anybody at the factories, and we
don’t set policy in the factories. It’s their business to run.”

7. Reasons for Targeting Nike
1. Nike has great influence over the entire
industry
2. If they raise their human rights
standards, it would set a precedent for
the entire apparel and garment
industries
3. “We didn’t call them a leader – they
did. And they’re not doing what a
leader would do.”

8. Maria Eitel + Dusty Kidd
• Maria Eitel: “Ethics Manager”
• Improve Nike’s image as a good corporate citizen
• Dusty Kidd: “Director of Labor Practices”
• Manage and train contract labor managers

9. The Code
1. Prohibits forced labor
2. Prohibits child labor
3. Establish minimum wage
4. Provides mandated benefits
(transportation, child care,
health care, sick leave,
religious leave, etc.)
5. Sets hours of work/overtime
6. Manages environmental
safety
”Nike has a zero tolerance for underage labor.”

10. The Code Backlash
• Critics contended the code
actually meant little
• How do they inforce the
code?
• Controversy over if the
code was making any real
impact on the work
environment
• Perceived shortcomings of
the code increased the
anti-Nike sentiment among
watchdog groups and
consumers

11. An Economic Issue?
• Critic: “A mere 10 percent of Nike’s US$65 million marketing
campaign would double the wages of 100,000 young women in
Indonesia”
• Nike: “The fact that Nike’s contractors can find people willing to work
for the wages they offer now is proof that the pay is in line with the
‘going rate’ of the local market.”
Food for thought: If Nike were to double its wages,
factory workers would make the equivalent of
surgeons, engineers and teachers. Doesn’t
Vietnam need surgeons, engineers and teachers?

12. Merry Christmas: Press Leak
• Front page of the New York Times: Nike Audit Report
• Reported factory conditions:
• More than half of the employees do not wear chemical protective equipment in
hazardous places
• Thousands of women (most under 25) work 10/11 hours a day, 6 days a week, in
excessive heat and polluted air for slightly over $10 a week
• Nike had no choice but to call a press conference

13. Pro Active Moves
• Reduce overtime hours, increase worker protection equipment,
tripled the capacity of the medical facility
• Purchased full page ads in major U.S. newspapers
• Conducted press conferences highlighting the Nike Code of Conduct
and its impact on the factories
• Posted progress on company website of labor conditions
• Diligently responded to watchdog group inquiries
• Established an exclusive website specifically addressing labor issues

14. The 9.2 Billion Dollar Question
How should the Nike Public Relations team
address their public profile and design an
effective public relations strategy?

15. Sources
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