Nike's Labor Practices
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Case Details:
Case Code : BECG018
Case Length : 12 Pages
Period : 1996 - 2001
Pub. Date : 2002
Teaching Note : Available
Organization : Nike, CBS News, Vietnam Labour Watch
Industry : Apparel and Footwear Industry
Countries : USA, Vietnam
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BECG018) click on the button below, and select the case from the list of available cases:
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"Nike is being hypocritical in its support of children's programs in public schools while exploiting child labor in its shoe factories."
- The Canadian Catholic Organization for Development and Peace.
"I think that's always been true, that basically we have not had a problem with child labor. It has been somewhat of a problem in the apparel industry, but it hasn't been a problem at Nike factories."
- Philip Knight, CEO, Nike.
Breach of Code of Conduct
On 17 October 1996, CBS News1 ran a 48 hour program covering the inhumane treatment of workers by their supervisors, the payment of wages below the legal minimum wage, and the sexual abuse of several women workers at Nike's shoe manufacturing plants in Vietnam. Workers had been physically assaulted on the job. Temporary workers were paid, on an average, 20 cents per hour while team leaders were paid $42 per month2; regular workers were paid even less.
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The CBS news program aired interviews with team leaders and even showed a copy of a labor contract to substantiate its claims. On March 14, 1997, Reuters reported that 56 women were forced to run around one Nike factory. Twelve of them went into shock, fainted and were taken to hospital. As a result of these reports, a group of Vietnamese Americans contacted labor groups and journalists in Vietnam. A group called Vietnam Labor Watch (VLW) was organized to study the working conditions of workers at factories in Vietnam and monitor Nike's labor practices on an ongoing basis. VLW visited Nike's factories in Vietnam and met workers, shoe manufacturing executives, labor union representatives and legal experts.
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By late 1997, VLW came out with a report that accused Nike of violating numerous labor laws. According to the report, Nike did not pay the minimum wages, did not provide proper working conditions, did not take adequate health and safety measures. In addition, Nike turned blind eye to child labor and sexual harassment in its factories.
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The report also observed that there was a difference between the practices in Nike's factories in Vietnam and what Nike told American consumers about its labor practices. Analysts said that in spite of its good image in the US, Nike was a very different company in Vietnam and other Asian countries.3 The sweatshop4 conditions in Nike's Asian factories was confirmed by several leading newspapers and journals including The New York Times, USA Today, The Wall Street Journal, AP, and Reuters. However, Nike had repeatedly claimed that it did not tolerate worker maltreatment in its Asian factories. The company had developed and published both a "Code of Conduct" and an agreement with its Asian subcontractors, setting out the company's position on wages and working conditions. |
Nike's Labor Practices
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