Nike Opens a Window on Overseas Factories

By Staff Report

Apr. 22, 2005

It’s a simple list of names and addresses, but it’s something the public has never seen: exactly who makes the running shoes, basketball jerseys and other pieces of sports gear that bear the famous Nike swoosh.

In a 2004 corporate responsibility report released last month, Nike disclosed the particulars of 705 contract factories in more than 50 countries–such as China, Vietnam, Bangladesh and Mexico–that make its products. In visits to some of those factories during the past two fiscal years, representatives of the Beaverton, Oregon, company found instances of forced over- time, unsafe working conditions, sexual harassment and other violations of Nike’s vendor code of conduct, according to the report. The lapses have since been corrected, Nike says.

Nike’s disclosure marks the first time a major U.S. apparel company or retailer has revealed such detailed information about its contract manufacturers to the public, a step industry watchdogs hope competitors will follow.

Since 1999, Nike and competitors such as Adidas-Salomon, Reebok, Puma and Patagonia have shared the names of their outsourcers with the Fair Labor Association, an independent monitoring organization in Washington that audits contractors used by member companies. By disclosing the same information to the public, Nike officials hope to persuade companies that share the same factories to pool their resources to improve workplace monitoring and compliance.

“We’re a $12 billion player in an $800 billion industry, and to really effect systemic change we have to have greater collaboration on great endemic issues,” says Lee Weinstein, Nike’s corporate communications director.

Whether Nike’s action will nudge competitors to do likewise remains to be seen. An Adidas-Salomon spokeswoman says the German sportswear company is barred by confidentiality agreements from disclosing names of its contract manufacturers but is talking with unions and shareholders about options. Gap spokeswoman Kimberly Terry says the retailer considers the names of its 3,000 contract factories proprietary.

The real challenge will be getting low-cost retailers to follow suit, says Michael Posner, executive director of Human Rights First, a New York-based legal rights watchdog. “Companies like Wal-Mart have said customers are interested in one thing, and that’s low prices,” he says.

Companies like Nike say factories that concern themselves with better working conditions may come out better financially. Historically, Nike used three criteria in deciding whether to give new work to a contractor: price, speed and product quality. In 2003, the company added a fourth measure: how closely they follow Nike’s vendor code of conduct. “The companies that do well against all four we want to reward through increased orders,” Weinstein says. The companies that aren’t doing well can expect less business, he says.

—Michelle V. Rafter

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