Factory Inaction on Significant Labor Concerns Forces Decision After
Exhaustive Efforts; Nike Engages Stakeholders to Support Affected Workers and
Explore Fresh Approaches to Local Manufacturing and Social Enterprise Models
BEAVERTON, Ore., Nov. 21 /Xinhua-PRNewswire/ -- NIKE, Inc. (NYSE: NKE)
today announced that the company is ceasing orders with its hand-stitched
soccer ball supplier, Saga Sports, based in Sialkot, Pakistan, due to the
contract factory's failure to correct significant labor compliance
violations. As a result, Nike is limiting its supply of hand-stitched soccer
balls for the foreseeable future. Nike is engaging with a diverse group of
governmental, non-governmental and industry stakeholders to secure support
for affected workers and jointly explore sustainable, fresh approaches to
local manufacturing and social enterprise models in Sialkot.
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"This contract factory has persistently broken its commitments and
irrevocably breached its trust with us; most importantly, the factory has
failed its employees," said Nike CEO and president Mark Parker. "Rather than
continue with Saga, we have decided to limit our supply of hand-stitched
soccer balls as we are developing new sources with factories committed to
upholding our standards and treating workers fairly."
While Nike continues to source apparel in Pakistan, the company currently
does not have other soccer ball vendors in Sialkot able to absorb production
under conditions acceptable to the company. Soccer teams and leagues
sponsored by Nike will not be affected by the decision. For its retail
partners, Nike is working to mitigate any shortfalls between supply and
demand. Nike will continue to work with several existing contract factories
in China and Thailand to supply premium hand-stitched and machine-stitched
soccer balls. Those contract factories already supply a significant portion
of Nike's total soccer business.
Nike made the decision to end its relationship with Saga following a six-
month investigation into conditions and a concerted effort to remediate.
Efforts included repeated meetings between Nike and Saga executives, detailed
remediation plans and timeframes, and adjustments of Nike orders to provide
Saga the opportunity to devote more management time and resources to
implement the agreed-upon plans. Despite those efforts by Nike, Saga did not
make needed changes.
Through both company-led and independent investigative efforts, Nike
discovered widespread unauthorized outsourcing of its products from Saga
facilities, resulting in the production of Nike soccer balls inside homes in
the Sialkot area. Nike has a long-standing policy against such practices
because of the potential for using under-aged workers and the inability to
ensure safe working conditions in home-based settings. The company also found
numerous labor, environmental and health and safety compliance violations
within Saga's facilities, including serious allegations by trade union
representatives and other Saga employees of worker harassment, wrongful
termination and inaccurate payment of wages. The Fair Labor Association, in a
recent unannounced audit of Saga unrelated to Nike's investigation, found
similar violations.
Hannah Jones, Nike's vice president of corporate responsibility, said
that in support of workers the company strives to work with its contract
factories to remediate compliance violations and create continuous
improvement in contract factory conditions. However, in this case, the
company exhausted all options and was left with no alternative but to cease
orders, despite the potential impact to workers and the near-term affect on
Nike's soccer ball business.
"In this case, remediation didn't work," Jones said. "In fact, we saw a
further significant deterioration of working conditions due to a lack of
commitment by management to address the problems. We also are deeply
concerned about the broader conditions and practices we saw in home-based
settings."
"Our energies are now focused in two areas: first, helping to protect the
rights of Saga workers potentially affected, and second, exploring with
stakeholders ways in which this moment can become a catalyst for transforming
local manufacturing models and creating sustainable development," Jones
said. "We see the potential that fresh approaches like social enterprise
initiatives can create for economic diversification and the long-term health
of the community."
About Nike, Inc.
NIKE Inc., based near Beaverton, Oregon, is the world's leading designer,
marketer and distributor of authentic athletic footwear, apparel, equipment
and accessories for a wide variety of sports and fitness activities. Wholly
owned Nike subsidiaries include Converse Inc., which designs, markets and
distributes athletic footwear, apparel and accessories; NIKE Bauer Hockey
Inc., a leading designer and distributor of hockey equipment; Cole Haan, a
leading designer and marketer of luxury shoes, handbags, accessories and
coats; Hurley International LLC, which designs, markets and distributes
action sports and youth lifestyle footwear, apparel and accessories, and
Exeter Brands Group LLC, which designs and markets athletic footwear and
apparel for the value retail channel.
