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INTERNATIONAL OUTSOURCING AND NIKE

Emily Christensen

Decreasing labor costs

All companies want to make a profit, and one fantastic way to do so is to decrease the labor costs of a product by employing low -wage workers. Since the standard of living in America is comparatively high, many U.S. firms are "contracting out" and taking advantage of the masses of poor workers in developing countries. Huge corporations such as Nike design their products in the U.S. and then sub-contract manufacturers in countries like South Korea, India, China and Indonesia to do the 'dirty work.' Bringing jobs and money into developing countries can (and should be) a positive move. However, it seems more the rule than the exception to exploit and neglect the overseas worker (see sweat shops/migrant workers in the U.S).

Sidestepping ethicality
The fact remains that many successful American firms tend to be driven by market forces to continuously boost their profits, while guarding against declining margins. Towards these ends, there is an inclination to use whatever means necessary. Oftimes an excellent method of maximizing profits involves compromising the most basic human rights of the company's employees. Nike shoes, like those of most of their competitors in the athletic shoewear industry, are currently manufactured (see illustration: how a shoe is manufactured) by poor young women in Indonesia who flock from their village homes to the Nike production factories to be paid 20% less than the "minimum physical need" for a single adult (about $2.25 a day). This means that Nike's factory workers are hardly making enough money to eat. Also, these Nike employees sometimes work over 10 hours a day in poorly-ventilated areas. Overall, the working conditions for these factory workers are lousy and Nike continues to ignore the crisis. The Press For Change conservatively estimates that $800,000 in wages were stolen by Nike's contractors from these young women laborers during the same period that Nike's net profit was $1.4 billion. Obviously the rich are getting richer as the poor continue to suffer.

Indonesian workers have organized independent strikes in order to rally for better wages and more humane working conditions, but the government often intimidates the working class with police and military force because they do not want to lose the jobs that Nike supplies to the country. According to Apong Herlima, an Indonesian lawyer, in the event of a labor strike "Employers always call the police and they come and interrogate the workers. Then the workers are fired" (New York Times, 3/16/96).

The Indonesian Government sponsors just one union but most activists insist that it does nothing constructive for the workers' benefit. What seems difficult to believe is that Nike actually supports the government crackdowns on independent unions and ignores the unprecedented abuse of workers in the factories. Nike's Indonesian operations manager Tony Nova insists that Nike cannot be aware of any deviation from local labor laws on the part of the contractors. However, Nike created the "Nike Production Primer" in 1994 to address the very issue of subcontracting in Indonesia. Quoth the Primer: "...a country bound to the international community by trade is more likely to uphold human rights than a country that remains isolated." Were that true it would not be necessary for Nike to defend their overseas manufacturing procedures in a manual distributed solely to journalists and ethical investment firms. Moreover, perhaps Nike would be more apt to discuss human rights issues with Amnesty International (a group they currently refuse to speak with) if they did not have so much to hide.

Image, brand names, and contradiction

Nike financially contributed to the films Malcolm X and Hoop Dreams. Though the films are certainly provocative and worthwhile, does Nike truly support people who struggle against discrimination and inequality or is the company only trying to "win votes" with consumers who identify with such problems, like African-Americans and women? An actual Nike advertisement reads "We let our fears stand in the way of our hopes. We sit quietly when we want to scream. Why?" Is this ad also trying to recruit the population of people who are routinely mistreated within society to stand up and fight back? If so, then why does Nike discredit its own advertisement by supporting abusive labor practices that operate using fear and intimidation? And how can Nike justify giving Michael Jordan $20 million dollars in endorsement fees while their own employees are living below the poverty line?


U.S. consumer power
As American consumers it is imperative that we pressure our companies into using fair and humane business practices. Certainly we do not realize the potential of our buying power and how we as individuals can affect change. Not all U.S. companies with foreign investments ignore the concerns of their customers as Nike does. For example, Levi- Strauss severed ties with a garment contractor after they learned that women were being strip-searched to check if they were menstruating (In many cultures women are considered "ritually unclean" or dirty during menstruation. Some women are not allowed to enter the kitchen or go to temple during this time). The Gap recently allowed its Central American plants to be monitored after hearing reports of sexual harassment of women workers, low wages and the inability of workers to organize unions to support their demands for reform. Many other companies -- Patagonia, Liz Claiborne, and the Limited-- are following suit and investigating the labor processes behind their products. So far Nike has yet to jump on the bandwagon. With all these serious issues of neglect, child labor, harassment and intimidation, it is amazing that we Americans continue to buy into the ridiculousness of fancy shoes and brand names. As Sallie Tisdale eloquently says in "Shoe and Tell," "How much does it matter, I wondered, squeaking around the volleyball court in my frayed Reeboks? How easily do principles give way to the pressing need for ankle support? For brand loyalty? For fashion?" I question whether we as a country are willing to give these things up.