How Nike Solved Its Sweatshop Problem

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Nike protests Reuters


Reuters


Not too long ago, Nike was publicly shamed for its labor practices to the point of seriously tarnishing the company’s image and hurting sales.

A recent factory collapse in Bangladesh reminded us that while Nike has managed to turn around its image, much of the industry still hasn’t changed much.

Nike was an early target for the very reason of its success. Its business model was based on the outsourcing of its manufactureusing the money saved on aggressive marketing campaigns.

Nike managed to straighten out its image. Nike failed to completely align the factories, but there’s no denying that the company has executed one of the biggest image reversals of decades.

Here’s the timeline of how Nike became a global symbol of abusive labor practices and then managed to turn the tide:

  • After rising prices and organizing labor in Korea and Taiwan, Nike begins to encourage contractors to move to Indonesia, China and Vietnam.
  • 1991: The problems begin in 1991 when activist Jeff Ballinger publishes a report documenting low wages and poor working conditions in Indonesia.
  • Nike first formally responds to complaints to a factory code of Conduct.
  • 1992: Ballinger publishes an expose of Nike. Harpist Sound Section highlights an Indonesian worker who worked for a Nike contractor for 14 cents an hour, less than the Indonesian minimum wage, and documented other abuses.
  • 1992-1993: Protests At the 1992 Barcelona Olympics, CBS’ 1993 interview with Nike factory workers and Ballinger’s “Press For Change” NGO garnered a wave of mainstream media attention.
  • 1996: Kathy Lee Gifford’s clothing line is shown to be made by children in poor working conditions. His tearful apology and activism make it a national issue.
  • 1996: Nike creates a department to improve the lives of factory workers.
  • 1997: Promotional efforts become occasions for public outrage. The company is expanding its “Niketown” retail stores, only to see growing protests. The sports media is beginning to challenge spokespersons like Michael Jordan.
  • The abuses continue to emerge, such as a report alleging a Vietnamese contractor took women out until they collapsed for not wearing regulation shoes.
  • Nike tasks diplomat and activist Andrew Young with examining its working practices abroad. His report East criticized for being lenient with Nike. Critics object that he failed to address low wages, used Nike interpreters to translate, and was accompanied by Nike officials on factory tours. Young’s report being largely favorable, Nike is quick to publicize it, which increases the game.
  • 1997: College students across the country have begun protesting the company.
  • 1998: Nike faces weak demand and relentless criticism. He has to lay off workers and begins to realize that he has to change.
  • The real change begins with a May 1998 speech by then-CEO Phil Knight. “The Nike product has become synonymous with slave wages, forced overtime and arbitrary abuse,” Knight said. “I truly believe that the American consumer does not want to buy products made under abusive conditions.”
  • During this speech, he announces that Nike will increase the minimum age for workers; dramatically increase surveillance; and adapt US OSHA air quality standards in all factories.
  • 1999: Nike begins to form the Fair Labor Association, a non-profit group that brings together businesses and human and labor rights representatives to establish independent oversight and a code of conduct, including a minimum age and a week’s 60-hour work, and pushes other brands to join.
  • 2002-2004: The company performs some 600 factory audits between 2002 and 2004, including repeated visits to problematic factories.
  • 2004 : Human rights activists recognize that increased monitoring efforts address at least some of the worst issues, like locked factory doors and hazardous chemicals, but problems remain.
  • 2005: Nike becomes the first in its industry to publish a complete list of factories with which it has contracts.
  • 2005: Nike releases a detailed 108-page report revealing conditions and wages at its factories and acknowledging widespread problems, particularly at its factories in South Asia.
  • 2005–present: The company continues to publish its commitments, standards and audit data as part of its corporate social responsibility reports.

Nike wasn’t the only or the worst company to use sweatshops. But he was the one everyone knew.

Transparency does not change ongoing reports of abuse, persistently low wages or tragedies like the one in Bangladesh.

But by becoming a leader instead of denying all the allegations, Nike has mostly managed to put the toughest chapter in its history behind it and other outsourcing companies could learn a few things from Nike’s turnaround.

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