In the video above, Nike chairman and cofounder Phil Knight narrates the philosophy behind the company's Better World corporate citizenship platform. He articulates its goals for sustainable packaging and product design, giving back to the community, and looking beyond the bottom line to improve lives (hence the "better world" tagline). He also admits that Nike could do more to improve the lives of the factory workers around the world who make its shoes and branded goods.
So Knight can't be too pleased by the latest news about its longstanding battle with human rights and labor activists regarding its global contractors. The Associated Press today released an expose documenting how dozens of factory workers making Nike's Converse sneakers in Indonesia are routinely abused on the job.
Nike's Indonesia contractors are accused of horrific labor practices that range from vicious name-calling to physical injury, running sweatshops that would be illegal back in the bucolic burg of Beaverton, Oregon, where Nike has its corporate HQ.
Nike, when confronted by AP, admits the abuse from contractors, which includes slapping workers in the face and calling them pigs and dogs, but says (astoundingly) there’s little they can do to stop it.
The abuse claims are shocking. One worker at the Pou Chen Group factory in Sukabumi, 60 miles from Jakarta, alleges she was kicked by a supervisor for a mistake in cutting rubber for soles.
"We're powerless," said the woman who spoke on condition of anonymity, fearing reprisal. "Our only choice is to stay and suffer, or speak out and be fired."
According to the AP report, the 10,000 workers in the Taiwanese-managed plant are mostly women who earn 50 cents an hour. "They throw shoes and other things at us. They growl and slap us when they get angry. It's part of our daily bread," said a 23 year-old worker from the embroidery division.
Mira Agustina, 30, was fired in 2009 for taking sick leave despite a doctor's note. "It was a horrible job. Our bosses pointed their feet at us, calling us names like dog, pig or monkey," all pointedly insulting to Indonesia’s Muslim population.
At a second Tawainese-managed factory, PT Amara Footwear outside Jakarta, also manufacturing Converse shoes, a supervisor made six female workers stand in the blazing sun when they failed to produce their allotted 60 dozen pairs of shoes on time.
Nike VP of sustainable business and innovation Hannah Jones (one of Fast Company's "most creative" people of 2010) is responsible for the company's improvement of working conditions. Jones acknowledged the "serious and egregious" physical and verbal abuse to AP, adding, "We do see other issues of that similar nature coming up across the supply chain but not on a frequent level. We see issues of working conditions on a less egregious nature across the board."
The comeback, of course: why not punish (and fire) offending factories, and step up its monitoring and enforcement of factory conditions and its contractor compliance clauses to improve the lives of its workers before it becomes a human rights horror story?
It’s not only disappointing but déjà vu time for Nike, which came under public and harsh criticism ten years ago for child labor and foreign sweatshops in its 1,000 overseas factories. Indonesia is home to Nike's third-largest production operation, after China and Vietnam, with 140,000 workers at 14 contract factories.
The AP reports that Nike — #25 on Interbrand's Best Global Brands ranking — admits that nearly two-thirds of 168 world-wide factories producing Converse products do not meet Nike's standards for contract manufacturers. You read that correctly: two thirds.
Nike blames the lack of compliance on pre-existing licenses which prevent it from inspecting factories or imposing its own code of conduct. "We have been working every time we can to renew those agreements or change those agreements or to cease those agreements and to ensure that when we do new agreements we get more ability to influence the licensee and their subcontractors much more directly," Jones said.
That's not enough, however, to appease Nike's critics, who can't believe that a company of its size and might doesn't have the power to lay down the law with its suppliers.
"I simply find it impossible that a company of the size and market power of Nike is impotent in persuading a local factory in Indonesia or anywhere else in meeting its code of conduct," said Prakash Sethi, corporate strategy professor at Baruch College, to AP.
How hip is the Converse sneaker, let alone the Nike "swoosh" logo, when built at the hands of egregious human rights violations?
No further comment on Nike's corporate site about what (if anything) it plans to do to address this situation, although the site does tout a new concept called Salvation: "a new 4,000 square foot location unveils a new concept for NIKE, Inc. with the launch of a fresh attitude, innovative consumer experiences, market tailored product offerings, community resources and the introduction of customization services."
Now, how about salvation for the workers making those "product offerings"? Perhaps the Fair Labor Association, which has worked with Nike to address local grievances (such as this complaint against a Shanghai manufacturer), can help the brand put a "fresh attitude" (and more muscle) into tougher contract compliance to help meet those Better World goals.