NIKE, REEBOK COMPETE TO SET LABOR RIGHTS PACE
News and analysis by Trim Bissell,
national coordinator, Campaign for Labor Rights
posted March 25, 1999

********************************
We should avoid overstating the initiatives announced recently by Nike and
Reebok. The great majority of these companies' employees still toil under
sweatshop conditions. The Nike campaign is not declaring a victory.
Nonetheless, we have crossed a continental divide when the two leading sport
shoe companies are trying to outbid each other in the area of improving
labor rights.
********************************

SUMMARY: Sustained pressure finally has begun to pay off in the form of
substantial changes in Nike's and Reebok's labor practices - at least in
their shoe factories. The important changes which Nike and Reebok are
implementing testify to the strength of the anti-sweatshop movement. We
appear to have arrived at the point we have long predicted, when
implementing fair labor practices would become a competitive advantage in
the market place - because of heightened consumer awareness about sweatshop
issues. The two leading sport shoe companies are leap-frogging each other in
posting press releases with news of labor rights initiatives.

Now that our work is beginning to bring about results with these two
companies, we should not squander the momentum. Campaign for Labor Rights
advocates that we:
* acknowledge the important changes and promises made by Nike and Reebok;
* keep up the pressure so that both companies carry through on their promises;
* continue to press for necessary changes to which Nike and Reebok have
yet to commit themselves; and
* begin to press other shoe companies to come up to the new marks being
set by Nike and Reebok.

DISCLAIMER: There is vigorous strategic debate between allies in the Nike
campaign. Campaign for Labor Rights does not claim to speak for the entire
international effort.

WHY IS NIKE BEGINNING TO CHANGE NOW? At varying levels of intensity, the
international Nike campaign has been hammering at the company's image for 8
years. Nike gradually shifted from outright denial of problems, to
disclaiming that it had any responsibility for the behavior of its
contractors and then to a series of public relations maneuvers designed to
improve the company's image without significantly addressing its sweatshop
abuses. We have long held that, eventually, Nike would decide that the only
viable PR maneuver would be to reform its labor practices. That eventuality
seems now to have come to pass.

Nike was seriously wounded financially. Its golden stocks turned to tin as
sales plummeted and profits moved from black to red. Much of the decline,
surely, was due to the loss of a sizable portion of Nike's Asian market
following the crash there; and surely the vagaries of fashion - the turn
from sneakers to brown shoes - also contributed to the company's troubles.
Equally certain is that Nike's resistance to a real clean-up of its
sweatshops did not go unnoticed by those more-aware consumers who constitute
an important and growing minority of shoe and clothing buyers.

Last year, Nike hired Maria Eitel to be its new ethics czar and pledged to
allot her independence and a say in company policy. Those who have
negotiated with Eitel give her high marks for sincerity. If that is an
accurate assessment of her, we should assume that hiring Eitel was a
calculated business decision made out of necessity. Something had to give.

WHY IS REEBOK BEGINNING TO CHANGE NOW? We have consistently maintained that
Nike's practices are typical of the entire sport shoe industry. Indeed, in
many cases, rival shoe companies produce side by side in the same Asian
factories.

Reebok may have surmised (accurately) that it was about to become the next
object of the labor rights movement's attention. Indeed, had Reebok's latest
press release been posted only hours later, Campaign for Labor Rights would
already have sent out an earlier version of this alert, in which we called
for much of the pressure to shift to Reebok.

Reebok is a logical next focus. It follows Nike as number two in market
share of the industry. Reebok has gotten a free ride, positioning itself as
the responsible company without substantially reforming its labor practices.
Reebok's annual "Human Rights Award" (scheduled for yesterday, March 24) is
a major exercise in hypocrisy. It was time to call Reebok's bluff.

With its announcement of new labor rights initiatives, Reebok has stolen
some of Nike's thunder. We should avoid overstating the initiatives
announced recently by Nike and Reebok. The great majority of these
companies' employees still toil under sweatshop conditions. The Nike
campaign is not declaring a victory. Nonetheless, we have crossed a
continental divide when the two leading sport shoe companies are trying to
outbid each other in the area of improving labor rights.

NIKE HEALTH AND SAFETY GAINS: Nike has allowed an independent health and
safety expert into its Tae Kwang Vina shoe factory in Vietnam. That
workplace safety specialist (Dara O'Rourke) and another who helped analyze
the results of the inspection (Garrett Brown) verified dramatic reductions
in worker exposure to dangerous solvents. Nike has agreed to cooperate with
independent monitors in continuing to clean up Tae Kwang Vina and the rest
of its 37 shoe factories in several countries.

RESERVATIONS ABOUT NIKE HEALTH AND SAFETY GAINS: Mainstream media accounts
of the inspection report on Tae Kwang Vina are more glowing than the report
itself. While the improvements certainly are dramatic, serious chemical
exposures and other safety issues remain unresolved. And this is, after all,
only one factory. There is no truly independent structure in place yet for
conducting more than spot checks in a limited number of factories. How to
staff and fund truly independent health and safety monitoring of Nike's
entire 37-factory shoe manufacturing network is a problem yet to be solved.

NIKE INDEPENDENT MONITORING GAINS: From the outset, the campaign has
insisted that Nike work with truly independent monitors. Skeptics said that
the company would never consent to such a demand. In fact, one of the health
and safety monitors it is now cooperating with in cleaning up Tae Kwang Vina
(see above) made front page news in 1997 when he released a devastating
report on conditions in that very factory!

RESERVATIONS ABOUT NIKE INDEPENDENT MONITORING GAINS: As important as health
and safety concerns are, other areas of concern remain unmonitored by
independent sources - wages most glaringly. Also, while Nike certainly is to
be credited for admitting a critic back into the same factory he had blown
the whistle on, the company still refuses to allow in-country
non-governmental organizations (NGOs) the same access. NGO access is a core
empowerment issue.

REEBOK INDEPENDENT MONITORING GAINS: In conversation, Reebok company
spokespeople indicate that the company has begun to implement a program of
independent monitoring in Indonesia and China using local NGOs. If true,
this puts Reebok a step ahead of Nike on the issue of independent monitoring.

RESERVATIONS ABOUT REEBOK INDEPENDENT MONITORING GAINS: Details are too
sketchy at this point to assess Reebok's statements about independent
monitoring, which has not yet been formally announced by the company.
"Independence," like so much else in life, is in the eye of the beholder.
Both Reebok and Nike are members of the Apparel Industry Partnership, which
proposed has a monitoring system that many say will not be truly independent.

NIKE WAGE GAINS: Nike has publicly committed itself to a substantial raise
for its lowest-paid Indonesian shoe workers. It is even using a survey
conducted for Global Exchange last year in setting a new base wage.

RESERVATIONS ABOUT NIKE WAGE GAINS: While it is positive that Nike is paying
more than it is legally obligated to pay (in a marked departure from the
past), the Global Exchange wage study that Nike refers to specifies the wage
needed to cover the basic needs of only one person. A living wage is not
calculated on the assumption that all workers are single. By definition, a
living wage must contribute to the needs of a family. Global Exchange
asserts that Nike should be paying twice its present wage in Indonesia to
help cover family expenses. Also, company promises about wages in other
countries are vague. Moreover, the company is making no promises about its
hundreds of thousands of clothing workers.

REEBOK WAGE GAINS: Reebok now promises to increase the base pay for its
Indonesian shoe workers to 24.3% above the new government-mandated minimum
wage. According to a company press release, a combination of actual base
pay, attendance bonuses and in-kind compensation (meals and transportation
allowances) will now increase the total compensation package for a 40-hour
week to nearly 43% above the new minimum wage. Workers also receive Sembako
packets containing rice, sugar and other staples.

RESERVATIONS ABOUT REEBOK WAGE GAINS: Although Reebok claims to have
bettered Nike in wages for its Indonesian shoe workers, actual comparisons
are difficult between compensation packages including in-kind provisions and
bonuses. As with Nike, verification is necessary before we accept company
claims. Also, Indonesia is but one of the countries where Reebok produces
shoes, and shoes are but one of the company's products.

NIKE DISCLOSURE: Nike promises to disclose the names and locations of all
factories producing goods for universities with which it has licensing
contracts.

RESERVATIONS ABOUT NIKE DISCLOSURE: Nike has conditioned its promise of
disclosure on:
1) a promise from participating universities that they join the Apparel
Industry Partnership (AIP); and
2) a promise of disclosure by all other companies that have licensing
contracts with those schools.

NIKE AND THE APPAREL INDUSTRY PARTNERSHIP: Nike and Reebok are charter
members of the Apparel Industry Partnership (AIP, the White House task force
on sweatshops). Last fall, the labor and religious organization members quit
the AIP after a sub-group of the task force adopted an agreement widely
considered inadequate for eliminating sweatshop abuses. General opinion in
the labor rights movement considers the AIP a cover for sweatshop business
as usual. Nike has repeatedly held up its membership in the AIP as evidence
that it is committed to fair labor practices - eventually prompting a rebuke
from the remaining NGO members of the task force that making such claims
prior to undergoing the certification process violates an understanding of
AIP membership.

In recent weeks, 17 major universities suddenly have joined the AIP. Their
membership follows a groundswell of student activism demanding that schools
adopt strict codes for companies with which they have licensing agreements.
Although there is nothing to prevent any AIP member from adopting higher
standards than those of the task force, students activists consider the rush
for AIP membership a ploy to pre-empt such standards. Student anti-sweatshop
activists at the University of Michigan successfully resisted their school's
joining the AIP.

It is of no small significance that Nike has been pushing hard for
university membership in the AIP. The more charitable reading would have it
that Nike wants a level playing field with its competitors. Cleaning up
sweatshop abuses costs money. Many who have followed Nike behavior closely
for years offer a more jaundiced explanation of the company's AIP
boosterism: Nike hopes to co-opt our movement. In this view, what we are
seeing is no less than a struggle over who will control the agenda for
eradicating sweatshop abuses. Nike's implicit message is: "Leave it to us.
We have voluntary codes of conduct. We have a task force. We'll take care of
it from here. Go home and forget about sweatshops."

NIKE AND AUTHORITARIAN GOVERNMENTS: In January, a letter from Joseph Ha (a
Nike Vice President and a Special Assistant to Nike CEO Philip Knight) was
printed in the official newspaper of the state-run Vietnam General
Confederation of Labor. Ha's letter singled out "a few U.S. human rights
groups, as well as a Vietnamese refugee who is engaged in human rights
activities," claiming that they "are not friends of Vietnam." The letter
equated labor rights activism with attempts to impose a particular form of
government on Vietnam.

Ha's letter referred to Thuyen Nguyen and Vietnam Labor Watch (VLW). The
effect of his letter was intimidation of VLW's sources of information in
Vietnam, making it virtually impossible now for VLW to monitor what is
happening in Nike shoe factories there.

Ha, noted for his caution, must have been shocked to find his own words
suddenly so public. The uproar following the letter's publication was an
embarrassment for both Ha and Nike. However, the letter is consistent with
how many believe Nike operates privately in its dealings with authoritarian
governments. Thuyen Nguyen of VLW wrote that Ha's letter "makes us wonder
how many similar letters have been sent from Nike to other government
officials of China and Indonesia."

The International Labor Rights Fund (ILRF) reports that Nike is taking the
steps asked of it by the ILRF, to try to reverse the damage done by the
publication of Ha's letter.

REEBOK AND AUTHORITARIAN GOVERNMENTS: Like Nike, Reebok profits (literally)
from siting much of its shoe production in countries with authoritarian
governments. However, Reebok has now taken the first step toward acting more
responsibly in such countries. In a March 23 press release, Reebok announced
that it was making public "a letter from Reebok CEO Paul Fireman to
Indonesian President B.J. Habibie urging the the release of imprisoned
Indonesian labor rights activist, Dita Sari ... Fireman sent the letter
January 6, 1999, and has not yet received a response."

Fireman said: "I am hoping that by making this letter public at this time,
President Habibie will hear the cries for her release. Workers have the
rights to freedom of speech and assembly. Dita Sari has been particularly
effective at raising issues on behalf of factory workers, and her voice
deserves to be heard."

Nike would do well to match Reebok in calling publicly for the release of
Dita Sari.

CLOTHING FACTORIES: Most of the changes coming from Nike and Reebok
headquarters apply to shoe factories. In November 1998 the National Labor
Committee brought public attention to the case of Julia Esmeralda Pleites,
who had worked in a sweatshop in El Salvador producing clothing for Nike and
other companies. Although Nike is quick to assert that much of its clothing
is manufactured in the United States, critics point out that domestic
garment production, too, often happens in sweatshops. Now that there is
momentum at Nike and Reebok for changing labor practices in their shoe
factories, we should pressure the companies to extend those changes to every
sector of its production. Disclosure - providing the names and addresses of
all its factories - would be one step which Nike and Reebok could take in
demonstrating that the company truly intends to reform its labor practices.

CHILD LABOR AND SOCCER BALLS: Following a widely publicized exposure of
Nike's use of child labor in the production of soccer balls in Pakistan, the
company promised to set up controlled stitching centers in order to
eliminate the use of child labor. However, the stitching centers producing
soccer balls for Nike and some other companies have refused non-governmental
activists access to their facilities to assess their follow-through on
promises to end child labor.

The International Labor Rights Fund recently had the following to say about
child labor and soccer balls: "In 1996, we first called attention to the
bonded child laborers producing soccer balls for the world market in
Sialkot, Pakistan. These children, often working in debt servitude, were
producing balls carrying major labels like Challenge, Baden, Nike, Adidas
and Reebok. In response to the exposes, soccer ball manufacturers agreed to
participate in a monitoring program sponsored by the ILO [International
Labor Organization]. The program had the stated goal of eliminating child
labor from the soccer ball industry in Pakistan within 18 months. The
program intended to provide former child workers with educational
opportunities, so that they were not simply forced to work in another industry.

"Now, a year into the program, independent researchers have discovered that
child labor persists in the Sialkot soccer ball industry. Moreover, even
according to the ILO's own assessment of the program, it is beset with a
number of problems. These include:

"Many manufacturers who signed onto the program have not paid dues or
provided any details about their stitching centers.

"Even participating employers are still using children in their stitching
centers, and in home-based employment; the ILO is not empowered to apply any
sanctions to these employers.

"Soccer ball production may be shifting from Sialkot to nearby, unregulated
regions of Pakistan, and some children may be moving from production of
soccer balls to production of surgical instruments.

"In short, we are deeply concerned that soccer ball manufacturers and
retailers are using their participation in the program to claim their balls
are "child labor free," without actually taking sufficient steps to remove
children from the production process."

NIKE AND FREEDOM OF ASSOCIATION: Although the AIP code supports the right of
workers to form unions and to bargain collectively, Nike preferentially
sites its production in countries with authoritarian governments which
forbid and repress independent trade union organizing: China, Indonesia and
Vietnam. Elsewhere (the Philippines), evidence suggests that Nike actively
pressures governments to weaken their labor codes. The burden of proof is on
Nike to demonstrate that it means to make good on respecting freedom of
association and that it does not collude with authoritarian governments in
repressing that right. The evidence so far does not support a benign
interpretation of Nike policy on this issue. The company never has
intervened on behalf of workers fired after they organized for their rights.
Earlier this year, Cicih Sukaesih and 23 co-workers fired for leading a
strike in 1992 settled with a Nike contractor, having to accept only partial
payment, in spite of an Indonesian court ruling that they be reinstated with
full back wages. Had Nike even once supported their case, these workers
might have received the full payment owed them and might not have had to
wait 6 years for what they did receive.

REEBOK AND FREEDOM OF ASSOCIATION: Some reports indicate that Reebok has
been cooperating in a program of union training for the workforce in its
Indonesian shoe factories. Information is far too incomplete at this time to
give an assessment of that program.