March 8, 2000

Nike's response to No Logo (by Naomi Klein)

Naomi Klein's first book, No Logo: Taking Aim at the Brand Bullies, is a self-proclaimed cultural analysis and journalistic exposé on the influence and impact of multinationals in today's world, and their effect on society at large. Throughout the book, the author cites 'real world' examples to support her analysis by singling out marketing-communications and advertising campaigns belonging to some of the world's largest corporations. Although the book includes numerous references to Disney Corp., McDonald's and Microsoft, the author spends the most time analyzing Nike's marketing strategies, corporate goodwill activities and manufacturing practices. In particular, the author dedicates a large portion of the book to an often misinformed, unbalanced evaluation of Nike's labor practices.

While Nike respects the rights of interested parties to make their opinions known to the general public, it is also important to recognize the complexities of global manufacturing issues and the strides Nike has made in this area. In numerous instances, No Logo diminishes the progress Nike has made by dredging up past events, repeating misinformation and often failing to tell the whole story. The book constantly references incidents that occurred in the early 1990s and liberally quotes many of Nike's detractors, yet fails to reference any of Nike's more recent, "industry-first" labor initiatives. Additionally, Ms. Klein never met with any current Nike labor practices representatives during the writing of this book.

Listed below are a few points with which we take issue:

  • Several times throughout the book, Klein references Nike's manufacturing operations in the Philippines. At one point, she alludes to the consolidation of manufacturing that Nike undertook in early 1999. As a result of the Asian crisis, the production of Nike apparel and footwear, like that of many other consumer goods, slowed down. This affected our production base in the Philippines, as well as in other countries, and resulted in a streamlining of manufacturing operations until the economy recovered from the crisis.

  • Klein inaccurately states that Nike cut ties with higher-waged workers in the Philippines and moved into China. She claims that Nike made this decision because workers' rights are not as protected, monitoring is difficult and wages are lower in China. For years critics have tried to contend that Nike flees "high-cost, unionized" countries for "low-cost, repressive" countries like China and Indonesia. Over those years, Nike has repeatedly pointed out that we remain in Korea and Taiwan as a buyer, despite higher wages and labor rights. In fact, Nike is the only branded athletic-footwear company still making shoes in Taiwan and South Korea. In addition to our presence there, we are still very active in the Philippines, with 20 factories. We have one footwear factory, four equipment factories and 15 apparel factories in the Philippines. In recent years, we have expanded our footwear sourcing country list to include countries like Vietnam, which boasts a recent record of promoting workers' rights through government labor bureaus; and Italy, which has a vibrant democracy and the highest wage base of any Nike footwear sourcing country.

  • The author makes reference to the Asia crisis, claiming that "with currency devaluation and soaring inflation, real wages in Nike factories fell by 45 percent in 1998." She fails to mention that at the same time Nike workers in Indonesia realized three wage increases during an 18 month period, totaling 66 percent, to help offset this economic crisis. During this time, food subsidies were also increased. These increases affected over 30 percent of Nike's total workforce.

  • Klein alleges that Nike has developed its own Code of Conduct to avoid government intervention and enforceable labor and environmental codes. In fact, most governments in developing countries have a body of law that dictates how foreign multinationals must operate while doing business in those countries. Nike has always ensured that it abides by the labor laws and regulations enforced by governing bodies. Very often however, we will go beyond the prevailing industry requirements outlined by government. For example, in Indonesia, where government only recently raised minimum age requirements from 14 to 16, Nike set minimum age in footwear factories to 18 and to 16 in light-apparel manufacturing factories. In Vietnam, foreign-owned companies are required to pay a higher wage to their employees than Vietnamese companies pay their workers. Finally, in several developing countries, labor laws allow companies to pay workers a minimum wage with a combination of cash and non-cash benefits. Nike however, requires a full cash minimum wage.

  • Klein makes reference to a 1996 Life Magazine photo spread that includes photos of Pakistani children stitching Nike soccer balls. Nike made a large mistake when we began to order soccer balls for the first time from a supplier in Pakistan. Our production-sourcing group discovered that some portion of that work was performed through contractors in villages and private homes where children were in some cases employed. We immediately joined our manufacturing partner, SAGA Sports, and developed a process of moving all such production to stitching centers. Today, SAGA Sports owns and operates several stitching centers, five of which stitch Nike balls. These facilities include a controlled, monitored and child-labor free work environment for thousands of people. Pakistani hand-stitched soccer balls made in these stitching centers cost Nike 10% more than a comparable ball made by competitors in the homes and villages of home-work stitchers. We think however, that's a financial burden worth bearing.

  • Klein refers to unfortunate incidents involving Nike factory workers that occurred during the mid-1990s. We concede that there have been inappropriate happenings in factories. When these occurrences were brought to light however, the managers involved were disciplined and/or dismissed from the factory. Since then, Nike has worked with factories to implement cultural sensitivity training for managers responsible for factory workers from other cultures. Code of Conduct training is also an integral part of the orientation sessions provided to all new workers. The Nike Code of Conduct by which all contractors must abide is clear: management practices must recognize the dignity of the individual and the right to a workplace free of harassment, abuse or corporal punishment. In addition to ensuring internal and external monitoring, Nike will sever ties with contractors found to be in violation of the Code. In fact, in the past couple of years, Nike has severed ties with ten contractors in eight different countries found to be in violation of the Code.

  • In her book, Klein refers to allegations that Cicih Sukaesih, an Indonesian factory worker, was dismissed for trying to organize a union in a Nike contract-factory. The factory disruption and related events that led to the dismissal of Ms. Sukaeish and other workers occurred in 1993. These allegations are old news – seven years old to be exact. Although Nike doesn't currently produce footwear in the factory in question anymore, it did change ownership since these events occurred and presumably benefited from some of the improvements we left behind. Furthermore, the factory environment in which Ms. Sukaeish worked in 1993 is vastly improved for the footwear workers who make Nike products around the world today.

    We value in input from workers and organizations on how to improve working conditions for footwear workers around the world. Many of these improvements are reflected in our Code of Conduct, which changes as we find more appropriate standards. The Code is properly enforced through a series of independent, external and internal monitoring systems.

  • Several times throughout the book, Klein alludes to the discrepancy between the low wages earned by overseas factory workers, and then compares these wages to the cost of Nike shoes at retail. Klein never stops to consider that the wages, though seemingly low by North American standards, are in line with the income levels, productivity, investment levels and labor compensation of a developing country. People around the world working in Nike factories are paid a fair wage, which often combines cash with allowances for meals, housing, transportation, health care and even cash bonuses. Nike sets the cash wage for entry level workers using the standards set by local governments or trade unions in each country.

Furthermore, labor is just one of the many inputs that impact the cost of a product as it moves toward the consumer. Typically, labor is about 15 percent of the factory's price to Nike and about 4 percent of the retail price. The cost of materials is far greater – usually about four times greater than labor. Between the laborer and the consumer there are a dozen more inputs to price: materials, factory overhead, factory depreciation, factory profit, Nike's shipping and handling costs, insurance, storage and distribution costs, research and development, investment, marketing and sales costs, administration and taxes.

Throughout the book, Ms. Klein continuously disparages Nike's commitment to "enhance people's lives through sports and fitness." At Nike, we see this as a positive attribute. There is no mistaking that Nike is passionate about sports and fitness. And when it comes to global manufacturing and trade, we want to be just as clear about what we stand for and what we do. We've taken significant actions to improve the lives, opportunities and working conditions of the people who make our product around the world, and regularly invest in the communities where we do business. And we do this so that consumers can buy Nike products with the knowledge that these products have been manufactured under safe and fair working conditions. As such, we welcome debate and criticism that can help make Nike a better company – only however, when it is based on correct information, and provides a balanced, well-informed evaluation of the facts.