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Nike

Nike The athletic apparel industry in which Nike is involved is a major money maker in the United States, but the fact that none of the factories are located in North America has brought some heat to the company. Nike controls more than 40 percent of the U.S. Market for sports related goods, but doesnt have a single sneaker factory in this country (Miller 1). Nike continues to make millions of dollars yet exploits workers overseas by paying them very little, while requiring long hours without overtime pay in factories that are not up to American standard. Nike subcontractors employ nearly 500,000 workers in plants in Indonesia, China and Vietnam (Saporito 1).

The exploitation of workers in Third World counties, where the majority of Nikes labor is done sparks a controversial issue. People question why is it that Nike continues these practices. According to Just do it, Nike, Nike seems especially fond of doing business in undemocratic countries like China and Indonesia, where the military can be relied upon to crack heads if workers get out of line (Miller 2). The military monitoring has been a large controversy due to the fact that these are often Chinese working against other Chinese workers, or Vietnamese against their own people also. For Nike there are two benefits: it its a cheap way to monitor in an overseas factory and it creates a sheaper labor workforce.

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In turn making the labor cheaper for Nike. This makes it possible for Nike workers from the states to work on other things and only tour the factories when nessecary. While still assuming a stable workforce without good pay. The critics of Nikes labor practices have taken tours and witnessed the mistreatment firsthand. Time magazine reported saying, The plants were found to be modern and clean, well lighted and ventilated and paying a decent wage by local standardsalthough by no means are they trouble free. Make no mistake: these are factories not amusement parks, and even in developing Asia, where jobs are scarce and getting scarcer, this is not the job of choice.

(Saporito 1) The wages that the workers overseas are paid is nothing when compared to how much we pay for a pair of shoes or the profit that CEO Phil Knight is making off his sportswear giant he once operated out of the back of his car as a college student. A big issue that surrounds sweatshops is wage. The minimum wage often does not reflect the cost of living. (Hepner Online) Is the wage fair? There are many people who feel the wage is fair and the cost of living is taken into account when the wage is looked at, but studies show otherwise in many factories. Just recently, CNN reported a raise to entry level workers in Indonesia, Nike officials said the increase will raise the minimum monthly compensation packagewhich includes bonuses, housing, healthcare, transportation and meal allowances to approximately $37.14 a month.(Nike Establishes Labor Online) To many people living in the U.S., that package may sound good however the compensation package doesnt do away with the long hours, the poor conditions or the low rate of pay. Many of these workers are young children working to help support their families.

The benefits do not make up for the low pay rates that keep them in the work force. The pay is only enough to get by where these children want to be saving in order to leave the factories and return home. In Taking a Look inside Nikes Factories, part of Bill Saporitos, Can Nike Get Unstuck? this is what was found. Americans pay $100 for a pair of shoes that a worker gets less than $3 a day to make. They pay Michael Jordan $40 million to endorse them.

Cant they find more money to pay the workers? The short answer is no, because corporations pay the going rate for labor whereever they are. (Saporito 1) If this statement is true Nike pays the wage for the country the factory is in, then what is the controversy about? Much of it stems from the overtime that these workers are forced to work without over time compensation. Here in the United States there are regulations placed on businesses that require then to compensate their workers with a higher wage for over time hours. So since Nike is an U.S. based company should Nike have to pay overtime? The answer is no.

Nike doesnt have to pay overtime like here in the U.S. so they dont. In Vietnam Workers so want a reduction in overtime, the length of annual leave for the Indonesian workers making Nike shoes is more than 30 days though dozens of workers interviewed in November, said the actual amount is 10 days. (Ballinger 2) There has been evidence of Nike breaking at least nine labor laws in China according to AMRC; a Hong Kong based human rights group that has been monitoring the abuse of human rights in China for the last 20 years. Children as young as 13, were found employed in Nike factories, working from 144-192 overtime hours per month to make ends meet. (Designer 1) Ernest and Young, an accounting firm, hired by Nike, to do research and the issue reported conditions in Vietnam where young women toil sixty-five hour weeks for $10, in air so bad that 78 percent of the employees have respiratory problems. (Miller1) Factory workers endure abuse on the job lacking a voice or ablility to do anything about it.

Since Nike contracts out for their factory managers, it has been hard for Nike to regulate what goes on when they are not on their tour or walk through. A Korean supervisor in a Vietnam factory was found guilty of beating 15 Vietnamese about the head with a shoe upper, and another Korean supervisor was charged with sexual molestation. (Saporito 3) In this instance it was not an U.S. supervisor, nor was it a military officer but someone of a different nationality. The hard part is that there are no independent unions and meaningful corporate codes of conduct to discipline management.

So workers must turn to the courts for help which is a long fought battle that no one wants to attempt. In one case that made it to, a Vietnamese court recently found a Korean supervisor guilty of beating workers and extradition may be sought for the accused sexual molester who fled. In Indonesia 24 discharged Nike workers are challenging the legality of their dismissal before the countrys Supreme Court (Saporito 3). These are major breakthroughs in the court systems to have someone tried and convicted in these distant countries whose courts are often corrupted. Factory conditions are consistently getting press here in the U.S., as many are angry with Nike for not providing for their overseas employees. The following account is of the conditions in a Chiniese factory: Twelve hour shifts several days a week; wages as low as 16 cents and hour; 16 workers to a dorm room; pregnant women fired. Workers are not allowed to talk.

There is constant pressure to produceworkers are yelled at. If you dont meet your high production quota you must stay until you do-without pay. The factory is noisy, filled with dust and fumes. Workers have fainted, overcome by the long hours and the glue fumes. One worker died; another lost an arm; other has had their fingers broken by the equipment.

Most workers have never heard of the Nike code of conduct. There is no union and workers are afraid that if they complain, they will be fired. When a group of workers stopped working in March to protest had not been paid, they were fired. The supervisor warns workers in advance of any inspection, the factory is cleaned and if workers are interviewed it is in the presence of factory management. (The Neediest and the Greediest 4) This is only one description of the factory conditions and the requirements that are put on the workers of these factories, on contract with Nike.

In order to deal with the criticism Nike gets about working conditions and pay, Nike Inc recently established a new department with a mandate to continue to evolve its monitoring of subcontracted manufacturing facilities and to continue to upgrade conditions for workers in subcontracted facilities around the world. (Nike establishes 1) This department will monitor, compensation issues, benefits, the work environments, recruiting and hiring policies, overtime policies, worker management, environmental issues and supervision of independent monitoring systems. All these are large steps by Nike to improve its factories and to repair the relations with people here in the U.S. who are appalled by the reports of poor work environment workers are forced to endure. The company has been tarred by an image as a sweatshop operator that exploits Asian workers who make shoes and apparel for Nike subcontractors.

Nikes efforts to be a good corporate citizen, and they have been considerable, have yet to sway the public forum. Basically, our culture, and our style, is to be a rebel, and we sort of enjoy doing that, says Knight, who created a jock empire based on hero worship backed up with good product and great advertising. Now that we reached a certain size theres a fine line between being rebel and being a bully, and yeah, we have to walk that line. (Saporito 6) According to Knight he will continue to make the sport-wear giant successful any way he can. The estimated net worth of co founder and current CEO Phil Knight is $5.4 billion, one of the wealthiest people in America. (Miller 1) The issue remains whether the sports wear giant, Nike, will continue to do work in other countries, where labor is cheap and regulations are few, and not monitored on a normal basis.

Nike will continue to exploit workers in these countries as long as America continues to buy the products. Nike, who recently spent $978 million in one year on advertising worldwide, depends upon Americans and their children to purchase its sneakers. Yet it locates 150 factories and some 350,000 jobs in Asia. Knight recently made the absurd and arrogant statement that, Americans dont want to make shoes. (Sanders 2) Is CEO Phil Knight right? Are American workers not willing to make the shoes that are so popular in stores and classrooms across the nation.

If so, the exploitation will continue and Nike workers will remain underpaid and over worked in poor working conditions. Bibliography Ballinger, Jeff. Nike does it to Vietnam. Multinational Monitor. Mar. 1997. Vol.

18 Issue 3 p 21. EbscoHost. Nov. 1999 Baum,Bob. Study says Nike workers make ends meet plus some. Online.

Internet.18 Nov.1999. Available FTP:Http://www.jrnl.com Cobb, Chris. Courting Controversy. Public Relations Tactics. Jun. 1998.Vol.5 Issue 6 p 13 Ebsco Host. Nov. 1999 Hepner,Mischa.

UCs Take Advantage of Cheap Labor. Online. Internet. 20 Nov. 1999 Available FTP:Http://www.Labor.com Miller, Anne and Mark Star. Just do it, Nike.

Newsweek. 2 Oct.1995.Vol.126.Issue 14. pg 64 Ebsco Host. Nov. 1999 Nike Establishes Labor Practices Department. Online. Internet.

18 Nov.1999. Available FTP:Http://www.siagon.com/nike/nike-labor.htm Nike Needs to End Exploitation. Online. Internet. 18 Nov.

1999 Available FTP:Http://www.illinimedia.com/di/archives/1997/Fe bruary/27/ p10-edit1.txt.html Press, Eyal. A Nike Sneak. Nation. 5 April 99.Vol. 268 Issue 13 p.

6 Ebsco Host. Nov. 1999 Saporito,Bill. Can Nike Get Unstuck?. Time 30 Mar.

1998, Ebsco Online. 18 Nov. 1999 The Neediest and the Greediest. Online. Internet. 18 Nov. 1999 Available FTP:Http://www.laborworkers.com.

Nike

In 1958 the beginning of NIKE
Inc. came about when Coach Bill Bowermen and business student Phil Knight, both
from the University of Oregon, felt the need for a better athletic shoe. Through
Bowermens athletic experience and Knights business background they
designed and tried to sell their model of the perfect running shoe. None of the
major companies trusted the engineering or demand for the new sneaker and
therefore would not manufacture the item. In 1964 Bowerman and Knight used their
own money to start Blue Ribbon Sports company. They convinced Onitsoda Tiger to
manufacture their sneakers, which they sold from their cars at track meets. Four
years later Blue Ribbon Sports was changed to, the now famous, NIKE, which was
named for the Greek Goddess of victory. In that same year, the NIKE
“swoosh” logo was designed by Carolyn Davidson, for which she was then
paid only $35. The time came when the owners decided that NIKE could survive on
its own. NIKE separated itself from Onitsoka Tiger in 1972. It was in this year
that NIKE convinced Olympic marathon runners to wear NIKE sneakers for their
Olympic event. Later, NIKE was able to brag that their sneakers won four of the
top seven places in this event. The following year, NIKE designed the waffle
sole sneaker which was worn by elite runners around the world. The 1980s led
to a new era of NIKE sneakers. The popularity of running was declining rapidly
and, therefore, NIKE expanded into a new domain. With endorsements by Michael
Jordan and other professional athletes, new lines of sneakers, such as Air
Jordans and the Cross Trainer, became available in the market. One of the
most influential advertising schemes for NIKE Inc. was the “Just Do
It” campaign which took effect in 1988. In the turn of the next decade,
NIKE began to expand to more than just sneakers. In 1992, the first two NIKE
concept shops were created, including Niketown. In the mid 90s, NIKE
gained permission to print their logos on NFL uniforms, in addition to soccer
and golf becoming another money market. NIKE is now international with seven
Niketowns in the US, plus one in the UK, Germany, and Japan. Products/Services
NIKE Inc. produces a wide variety of sporting footwear and apparel. The company
places a large emphasis on the quality and innovative design of their products.


As of 1993, the top-selling products were shoes manufactured for Basketball,
Fitness, running, and children. However, the company also markets products for
tennis, golf, soccer, baseball, football, cycling, volleyball, wrestling,
cheerleading, aquatic activities and outdoor athletic and recreational use. In
addition Company often markets footwear, apparel and accessories in
“collections” of similar design or for specific purpose. Athletic
shoes are not NIKEs sale investment. NIKE Inc. also sells several products
under different names. They sell a line of casual footwear and apparel under the
names of “i.e.” and Cole Haan. In 1993, the company acquired Sports
Specialties, Inc. which markets head wear. Nike also sells plastic products to
other manufactures through its wholly-owned subsidiary, Tetra Plastics, Inc.

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Message to Stock Holders NIKE believes that each sport requires different
athletic equipment, especially shoes. Although NIKE expects to come out on top
of the market, the Company expects a few hard tasks necessary to overcome in the
upcoming year. The economic atmosphere in Western Europe is the worst in
NIKEs 13 years. They are establishing their first real “futures”
program like the one currently in the US. It is designed to improve the long
term profitability of the company and of cooperating retailers. The Company is
very excited about reaching their $1 billion point abroad. Domestically, total
revenues grew over $4 billion over the past six years. The Company has two main
goals for next year. First, they want to get the whole international division
positioned so it can resume faster growth once the underlying economies improve.


Second, they need to keep growth, albeit single-digit growth, increasing for the
NIKE brand in the US. They believe that there is a lot of upside potential in
both the US and abroad and the management understands that it is their
responsibility to reach this potential. They are committed to making
improvements in both their products and policies, and maximizing growth.


Financial Condition For the sixth consecutive year, NIKE Inc. set new records in
revenues and net income in fiscal 1993. “Consolidated revenues rose $526
million to $3.9 billion, an increase of 15% over the industry record $3.4
billion also set by NIKE in 1992 and an increase of 31% over the 1991
record.” During the six year period, revenues have increased 348%.


International revenues now represent 36% of consolidated revenues, growing 24%
over 1992 and 63% over 1991. The revenues have increased 495% during this six
year period. Consolidated net income increased 11% over 1992 and 27% over 1991
in this period. The Company surpassed the $2 billion level in total assets for
the first time during the fiscal year 1993. The $1 billion mark was achieved in
1990 and during the six year period referred to above, total assets have
increased 917%. Stock as an Investment In my opinion, NIKE would be a good
investment. NIKE Inc., is internationally known and is a stable company always
on the up rise. As with all companies, objectives cannot be obtained smoothly.


There will be some ups and downs, but the upside growth potential in the common
stock is very probable.

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