The latest news release and subsequent Internet posting regarding Nike factories in Indonesia by Jeff Ballinger is a good example why you cannot believe everything you read on this democratic medium.

Dissecting their news release from September 2, we examine the claims of the delegation and separate what is real from what is not.

What is not real.
What is real.

Contract Talks Deadlocked
(Not True - Talks are ongoing)

at World's Largest Nike Contractor IndonesianTroops in Factory; MoreDeployed Near Factory Gate Visiting U.S. Team Alleges Nike Betrayal of Pledge to Clinton Panel

(Not True - Given the recent civil unrest in the country and elections, the stationing of military security at large industrial facilities is not uncommon. This maybe uncommon to Westerners but not to Indonesians - many of whom also want protection and safety from unpredictable elements in a time of political
and economic reform in the country. Most of the security team are positioned outside the factory building and some are near the factory gate.)

Jakarta, Indonesia: The union for workers at the sprawling Pou Chen complex reported that their labor agreement expired yesterday.

(Partially True - Factory officials confirmed that the labor agreement expired on Sept. 2nd, but they have applied for and been granted a 3 month extension from the local labor department. Factory management assures Nike they will proceed as quickly as possible on the contract renewal process.)

The factory - known locally as PT Nikomas Gemilang - employs 23,000 young Indonesians who make 10 million pairs of Nike shoes annually for export.

(True - Give credit where credit is due - at least this was approximately correct. In factories where the average worker age is 21, they are still considered young.)

Pou Chen labor practices director Barry Chin refused to provide any details of the stalemate during a one-hour meeting with local union leaders, American university students and NGO (non-governmental organization) activists Wednesday evening. Union leaders and workers report that seniority pay (wage increases linked to length of service) was not being addressed seriously.

(Partially True - This proposal submitted by the workers to increase a bonus based on the length of service was considered, but not readily accepted by management. Placing this in context, Nike's Indonesian factories have Raised wages on three occasions by a total of 66% beginning first in April, 1998; again in October 1998 and again in April, 1999. These increases must be examined through a business analysis before any new increases are granted by Pou Chen management.)

During the meeting, factory management confirmed the use of Indonesian (Marinir) soldiers in the factory; workers reported the deployment of several dozen more troops nearby the factory gate.

(Not True - As stated above, these military security are not troops - they are positioned around the factory in the event of unpredictable violence/riots.)

"Nike's failure to insist that contractors deal fairly with trade unions exposes the weakness of the White House-backed Fair Labor Association (FLA)," according to representatives of United Students Against Sweatshops (USAS) after two meetings with Nikomas workers this week The FLA was organized by President Clinton to quell criticism of U.S. firms producing shoes and apparel in countries where trade unions are repressed. "It is easy to make a pledge to respect freedom of association - as in the FLA declaration. Pushing your contractors to bargain collectively in good faith is the true test," the USAS team said.

(Our View - This has nothing to do with the growing support among colleges of the FLA - Nike's code of conduct endorses freedom of association and we encourage our factories to work with recognized trade union reps - both those represented inside the factory and outside. We have no knowledge of Nikomas workers meeting with USAS.)

Jeff Ballinger, a longtime Nike critic, said the company continued to claim that contractors deal with workers in a dignified manner. However: "Nike and its Pou Chen partner have saved $16 million in labor costs since the crash of the Rupiah two years ago. Nike increased advertising outlays 46% this year and Nikomas workers' real wages have been eroded by 30% since the Asian financial crisis hit." Inflation was near 80% last year and is currently near 15%.

(Not True - If Mr Ballinger is this good at calculating Nike's finances, perhaps he should apply for our vacant Chief Financial Officer's position. Yes, Pou Chen realized some immediate labor savings, material cost savings and reduced general operating savings due to the de-valuation of the Rupiah as they sell their
product to Nike in US dollars. These savings, however, were short-lived as the majority was used to help pay for worker wage increases and other related benefits (food staples, education classes, transportation, etc.). The balance of the short-term savings were then used to cover the added costs of raw materials, product transportation and other related operating costs.)