Nike Lists Abuses at Asian Factories Management Case Study Assignment Answers


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Nike Lists Abuses at Asian Factories


Nike, long the subject of sweatshop allegations, yesterday produced the most comprehensive picture yet of the 700 factories that produce its footwear and clothing, detailing admissions of abuses, including forced overtime and restricted access to water. The company has published a 108-page report, available on its website, the first since it paid $1.5m to settle allegations that it had made false claims about how well its workers were treated. For years activists have been pressing Nike and other companies to reveal where their factories are in order to allow independent monitoring. Nike lists 124 plants in China contracted to make its products, 73 in Thailand, 35 in South Korea, 34 in Vietnam and others in Asia. It also produces goods in South America, Australia, Canada, Italy, Mexico, Turkey and the US. It employs 650,000 contract workers worldwide. The report admits to widespread problems, particularly in Nike’s Asian factories. The company said it audited hundreds of factories in 2003 and 2004 and found cases of “abusive treatment”, physical and verbal, in more than a quarter of its South Asian plants. Between 25% and 50% of the factories in the region restrict access to toilets and drinking water during the workday. The same percentages deny workers at least one day off in seven. In more than half of Nike’s factories, the report said, employees worked more than 60 hours a week. In up to 25%, workers refusing to do overtime were punished. Wages were also below the legal minimum at up to 25% of factories. Michael Posner, the executive director of the organisation Human Rights First, described the report as “an important step forward” and praised Nike for its transparency. But he added: “The facts on the ground suggest there are still enormous problems with these supply chains and factories – what is Nike doing to change the picture and give workers more rights?” Nike has joined the Fair Labour Association, a group that includes other footwear and clothing makers, as well as NGOs and Universities, which conducts independent audits designed to improve standards across the industry. The company said it needed further cooperation with other members of the industry. “We do not believe Nike has the power to single-handedly solve the issues at stake,” the company said in the report. Mr. Posner said retailers such as Wal-Mart bore huge responsibility for keeping prices low and consequently compounding poor working conditions in factories overseas. He said that the likes of Nike and Adidas needed to work together to gain some kind of counterweight. Debora Spar, the author of a case study on Nike, said the report “shows the company has turned a corner, although I am not sure that I would describe it as a very sharp corner.” Workers turning out trendy Converse trainers in Indonesia said they have been kicked, slapped in the face, had shoes thrown at them and been called ‘dogs’, ‘pigs’ and ‘monkeys’.  In one incident, a group of female workers were forced to stand in the blazing sun for two hours as punishment for failing to make hundreds of pairs of shoes quickly enough.  One worker, 23, said: ‘They throw shoes and other things at us. They growl and slap us when they get angry. It’s part of our daily bread.’  Greg Muttitt, campaigns and policy director at anti-poverty charity War on Want, said: ‘Sportswear brands such as Nike have a clear responsibility to ensure ethical standards from their suppliers. Yet, time and again, companies have failed to achieve it.’  Nike, which is promoted by sports stars such as Rafael Nadal, Tiger Woods and Wayne Rooney, sells the trainers for up to £50 a pair. Yet, a report by the company revealed that workers at the two factories were subjected to ‘serious and egregious’ physical and verbal abuse. It also found that almost two-thirds of its 168 factories making Converse products across the world failed to meet company standards.  At the Pou Chen Group factory in Sukabumi, 100km (60miles) from the capital Jakarta and where pay is well below the national average, 10,000 mostly female workers earn just enough to pay for food and rent in basic lodgings. They claimed they were hit by supervisors and one man was scratched on the arm until he bled.At the PT Amara Footwear factory, near Jakarta, a supervisor made six staff stand in the sun when they failed to make 60 pairs of trainers in time. One worker said: ‘We’re powerless. Our only choice is to stay and suffer, or speak out and be fired.’ A Nike spokesman said: ‘Once notified about these issues within factories producing Converse products, immediate action was taken.’ The Fair Labor Association was asked to monitor the factories, he added.




  1. List all the employee abuse issues that the staff at Nike were subjected to as highlighted in the above case study? ‘We’re powerless. Our only choice is to stay and suffer, or speak out and be fired.’ Critically discuss this statement. (5 Marks)


  1. What necessary actions should the Management take to ensure that the sweatshop allegations are swiftly solved? Why should such allegations be a major cause of alarm for a company like Nike? (10 Marks)


  1. What would be the biggest Industrial Relations challenge the Management would have to face in tackling the issue of employee exploitation at Nike? Explain in detail using example. (10 Marks)