Tuesday, July 26, 2011

Say it ain't so, Mo! - Nike in Indonesia

Guest blog by Jeff Ballinger

Jeff Ballinger, global worker rights researcher/activist
Twitter: @press4change

My apologies for references to baseball, the U.S.A.'s "national pastime", but the exasperation expressed by the quote, "Can't anyone here play this game?" perfectly captures my reaction to the news last week that a Bangladesh factory run by Grameen (Nobel-laureate, Muhammad Yunus) was closed after attacks by rioting garment workers. [Given the toxic political atmosphere in Bangladesh and current bad relations between the  government & Grameen, there could be some behind-the-scenes (political or freelance-extortion) provocateurism.]

The foregoing is noted with more sadness than surprise, as it comes on the heels of a searing
Associated Press report ten days ago, about how Converse/Nike shoes are made in Sukabumi, West Java. ("Nike says nearly two-thirds of the factories that make Converse products fail to meet standards for contract manufacturers...")

Converse shoes are displayed at a store in Jakarta, Indonesia. Irwin Fedriansyah | The Associated Press

I have been
warning (whining?) -- and here -- about Nike's deployment of "codes of conduct", Corporate Social Responsibility (CSR) and business self-regulation schemes for more than a decade; here's the evidence that this noxious media manipulation has, for the most part, succeeded:  Almost all the comments about this AP story were either expressing surprise ("We thought that Nike had fixed that.") or, that this type of "gotcha" story was inevitable when a big brand sources from nearly a thousand factories. In other words, the Sukabumi story is a one-off (and what a great challenge it is to police the supply chain).  In fact, this story could have been written 15 -- or five -- years ago, and it could have described almost any Nike-producing factory in China, Vietnam, Malaysia, Thailand, etc.  The default position of virtually all garment production is something akin to what Frederick Douglass wrote in the 1850s: "Find out just what any people will quietly submit to and you have found out the exact measure of injustice and wrong which will be imposed upon them."

You may be thinking, "Oh, it is the 'race to the bottom,' then?"  Not so fast. Folks who remember the years-long strike wave in Indonesia during the early- to mid-90s will recall that the minimum wage rocketed from 86 cents to $2.46 per day.  Instead of running off to Sri Lanka or Bangladesh, Nike-supplier factories increased investment and the Nike contract-workforce went from 22,000 to 110,000.  It was still a very good deal in Indonesia at triple the price for labor!  [The 'Underground Economist' of the Financial Times cites a brilliant study by Berkeley economist on these latter two points...]

In this AP photo taken May 26, 2011, workers leave a factory that make Converse shoes, in Gunung Putri, West Java, Indonesia. Workers making Converse sneakers in Indonesia said supervisors throw shoes at them, slap them in the face and call them dogs and pigs.
The Douglass principle still held up, however; these brutal contractors would not pay a penny over what was required and - as Nike continued to assemble a team of phony "responsibility" operatives - the Korean and Taiwanese bosses devised new ways to cheat workers.  Tens of thousands were denied severance pay ($32 million in Indonesia alone, I calculate) in the early- to mid-2000s and work became more "precarious" with short-term contracts and outsourcing. Nike's feckless "responsibility" team (now numbering over 210!) could do little more than lament the fact (see transcript beginning @10:54) that Nike HQ is powerless.  By the way, the video clip that I have is devastating: Nike's CSR vice-president giving a condescending lecture on poverty-level wage to young CNBC reporter. [Any help I can get in uploading this to Youtube would be most appreciated!] Reminds me of the lesson I received on Wage Elasticity from a World Bank staffer in the parking lot of the American Club in Jakarta (1990). I could not tell him what I thought of this slavery/servitude justification because he was the only poker player in our group more inept than myself...

But, hold on a minute - don't tell the U.S. anti-sweatshop students' movement or some determined group of Vietnamese expats that you cannot force Nike to directly deal with contractors' depredations! The Vietnamese forced Nike to broker a million-dollar settlement... students' story - pls see below. 

[Fragment from what I wrote for the War Resisters League's WIN magazine some months ago]: 

How did university students achieve a string of victories for Latin American workers? United Students Against Sweatshops (USAS) has assisted more than 4,000 college-logo garment workers in Honduras and the Dominican Republic by deploying grassroots pressure tactics and carefully crafted appeals to university administrators. Even in the midst of a global economic downturn, diligent research combined with determined activism on the part of the wronged workers forced Russell Athletic to reopen a factory that was closed to thwart unionization. It produced an agreement between Nike and the CGT union of Honduras to pay restitution to 2,100 workers illegally denied severance benefits when two suppliers for the shoe giant closed abruptly last year. In addition, the students' persistence in seeking ethical alternatives has led the largest brand selling to bookstores, Knights Apparel, to pay more than triple the Dominican Republic's minimum wage to hundreds of workers. Merchandise from the Alta Gracia factory is already on 140 campuses. 
The research to monitor compliance with "codes of conduct" for factories was carried out by the Worker Rights Consortium (WRC; launched by the USAS in 1999) and funded by 123 universities, based on a percentage of university-licensed apparel sales. While the codes include language about "freedom of association" and collective bargaining -- specific trade union protections -- the Russell case was the first in nearly a decade of activism that delivered meaningful redress when the Jerzees de Honduras plant was shuttered as collective bargaining talks were under way. For 14 months starting in early 2008, USAS teams in North America and Great Britain convinced administrators at 110 schools to stop purchasing from Russell Athletic. College bookstores are the company's largest revenue source. In late 2009, the Jerzees de Honduras factory was reopened and Russell has pledged not to oppose unionization at seven other factories it owns and operates nearby.
In essence, these two inspiring stories are like the early days of the East Timor Action Network, when no one would believe that an activist group with almost no budget could win against the Pentagon, lobbyists of arms-makers, and diffident politicians. Our current struggle for justice in West Papua is facing the usual challenges, complicated by "conventional wisdom."  What do I mean by this?  See what PBS/Newshour reporter, Ray Suarez said about Indonesia just last week: "Indonesia hasn’t managed to do is root out the legendary levels of corruption that discourages foreign investment." Now, how could he say this immediately after saying, "...solid years of back to back to back high levels of economic growth"?  How can you say, on the one hand, that corruption inhibits growth, while the evidence of double-digit growth has been the reality for Asia's most corrupt countries for two decades?  Any ideas on how to fight this pervasive misperception?

We've heard this song before -- starting, like, 20 years ago!  -jdb]

Nike (NKE), Converse Address Unfair Labor Practice Issues, Take Decisive  Action

July 13, 2011 


Nike (NYSE: NKE) has issued the following statement:

As an affiliate of Nike, Converse takes matters of unfair labor practices very seriously and vigorously supports the protection of rights for the worker. Once notified about these issues within factories producing Converse product, immediate action was taken. Nike and Converse remain highly engaged with its factory partners so that the corrective actions are systemic and lasting. Nike has made significant progress in its Nike brand supply chain and we will continue to accelerate the optimization of our affiliate supply chain. This includes -- where possible -- integration between factories producing affiliate branded product and those producing Nike-branded product, while aligning factories that exclusively supply affiliate brands to the standards outlined in the Nike Code of Conduct.

Once we were notified of these issues, Nike and Converse took decisive action...


excerpts from AP report:  An internal report Nike released to the AP after it inquired about the abuse show that nearly two-thirds of 168 factories making Converse products worldwide fail to meet Nike's own standards for contract manufacturers.

"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, a corporate strategy professor at Baruch College at the City University of New York.

[Sethi is no ivory-tower prof -- he was primary CSR guy for Mattel for years.  That said, he's one of the most honest: He says that the major global players - the World Bank, OECD countries and the International Labor Organization - have failed to apply pressure on low-cost producing countries that do not protect workers' human rights or health and safety. He has also called on corporations to pay restitution to developing-world workers for "years of expropriation" enabled by corrupt, repressive regimes. (Particularly poignant is his brusque assertion that "bigotry" was at the root of most companies' refusal to even try to grapple with some of these issues.  -- jdb]

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