(More on this case) ( !! Note that Kukdong changed it's name sept 2001 to Mex Mode )

• Fair Labor Association statement
• Press release from Nike
• Report to Universities Affiliated with the FairLabor Association Regarding the Kukdong International Conflictin Axtlico, Peubla, Mexico

Fair Labor Association statement Source: U.S./LEAP
Statement from Sam Brown January 25, 2001

We continue to follow the situation at the Kukdong factory. Thereis little, credible, objective information available. As reportedlast week it Mexican attorney, Arturo Alcalde, working with theInternational Labor Rights Fund has been to the factory. He hasmade recommendations to insure that Mexican, international, andFLA standards on freedom of association are observed. He is particularlyconcerned about continuing allegations that severance pay is beingused to silence workers. The FLA Code of Conduct is clear on thisissue, and one of the Benchmarks for interpreting performance underthe Code says that, "Employers shall not offer or use severancepay (or "indemnicization" in Latin Ameica) as a meansof restricting union formation or union operations."

Although, NIKE currently has no production in this factory theyhave been responsive to suggestions for ways insure that the FLACode is upheld. Mr. Alcalde has encouraged NIKE to send an officialto the factory with instructions to strongly reiterate to factorymanagement Nike's support for worker freedom of association andstrict compliance with the workplace Code of' Conduct. Nike hashad a responsible official on the ground at the factory who hasmade this point to factory management. Mr. Alcalde and the NIKErepresentative have been in contact and have discussed next steps.

Reebok has also had production in this factory and has been engagedin an effort to assemble the facts in a thoughtful way, to respondto the situation as the facts become known, surd to make clear tofactory management Reebok's commitment to freedom of associationand to the FLA Code provisions on this and other subjects.

In light of the continuing allegations, an urgent and comprehensiveindependent review of these allegations ?? and others -? by an accreditedindependent monitor familiar with Mexican law and skilled ire factorymonitoring is highly desirable. Fortunately on Tuesday, ire theculmination of a process that has been underway for marry months,the FLA accredited Verite, a Massachusetts not for profit firm,as its first monitor for work in Mexico. It is my understandingthat Nike and Reebok are proceeding to make arrangements with Veriteto undertake the required independent monitoring.

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Press release from Nike

NIKE REITERATES ITS SUPPORT FOR AN INDEPENDENT, ACCREDITED MONITORFOR KUKDONG MEXICO FACTORY

January 25, 2001

Nike has been actively engaged in bringing a resolution to theongoing labor dispute occurring at the Kukdong factory ire Puebla,Mexico. Mike shams the concern of all interested parties that thissituation be resolved fairly arid expeditiously and that all Kukdongtears be treated with dignity and respect For that reason, uponhearing them was a dispute At the factory, Mike acted immediatelyto effectively address this situation. Nike has been working witha number of individuals and organizations inducting an Independent?14156fexpert, our compliance officer on the ground In Pueblo, Kukdongfactory management, third pony labor rights advocates currentlyin Puebla, students and other interested parties. Politicizing thisissue is not in the toot interest of any of the parties.

Last Friday, Nike initiated a call to the Fair Labor Association(FLA) and its university affiliate board member, the Kukdong factorymanagement, Reebok and the Workers' Rights Consortium (WRC) to jointlyagree upon an independent, trained external monitor so that thefacts of this situation may fully be assessed and remediation carsbegin as soon as possible. While the WRC has shown interest in thisissue, Nike does not consider their group to be an objective ortrained monitoring organization, as evidenced by their recent preliminaryfindings,

Nike is committed to working with tie FLA and its university affiliateboard member, the Kukdong management, Reebok, and the WRC to agreeupon and commission an independent monitor to conduct a full investigationof the alleged labor compliance violations at the facility. Nike,the FLA, and its university affiliate board member. Reebok and thefactory have all agreed to use the FLA certified independent monitoringorganization Verite, a non?profit group based in Amherst, Massachusetts,to achieve this goal. In addition, Nike is committed to workingwith the Kukdong factory management to ensure they are compliantwith Nike's internal Code of conduct.

Nike supports they rights of alt Kukdong workers to return to thefactory without reprisal. Nike has maintained from the beginningthat workers have the right to organize and collectively seek fairand independent resolutions to disputes such as these. It is Nike'sunderstanding that the factory management is working to facilitatethe return of workers, who choose to come back to the factory regardlessof which union they support. In addition, the factory has made arrangementsfor workers who, for various reasons, have chosen not to returnto work yet, to return when the situation at the factory normalizesor collect severance in accordance with Mexican labor law.

Nike will work with all parties committed to this process by couplingmonitoring with remediation to further strengthen our commitmentto long?term improvements for workers. Nike and FLA members areworking toward one of conduct that everyone can follow. Our mutualchallenge is to work toward the continuous improvement of factoryconditions through active and collaborative involvement by all stakeholders.By recognizing each other's responsibilities, we can rapidly advanceour mutual goals of human rights and workplace dignity.

Nike once again calls upon all parties to use care and restraintin making any charges or drawing any conclusions about these complexissues until full and independent monitoring assessment can be completed.We also encourage interested parties to visit our Web site www.nikebiz.comfor mare details and the most current information about company'scorporate responsibility programs.

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Following is a recent report issued by the International LaborRights Rund (ILRF) investigation of the Kukdong factory

INTERNATIONAL LABOR RIGHTS FUND 733 15th Street, NW, #920 Washington,DC 20005

Report to Universities Affiliated with the Fair Labor AssociationRegarding the Kukdong International Conflict in Axtlico, Peubla,Mexico

January 25, 2001

On January 12, the International Labor Rights Fund contacted Nikecompliance officials regarding a conflict at a plant in Mexico whichhad been producing Nike sweatshirts for the collegiate market. Asa consequence of that conversation, we accepted a request from Niketo find a knowledgeable labor attorney in Mexico who could conductan independent investigation on our behalf about a situation inwhich the company was receiving multiple and contradictory reports.

The same day, ILRF contacted Mr. Arturo Alcalde Justiniani, akey independent labor lawyer who has been president of the NationalDemocratic Lawyers Association of Mexico, and who serves as theattorney for a number of independent non-officialista unions inMexico. Mr. Alcalde has also been a member of the ILRF board ofdirectors for a number of years.

On Monday January 15, Mr. Alcalde visited the factory in Axtlicoand interviewed company officials, local labor department officials,company lawyers, workers both in the factory and on strike outside,and representatives of the CROC and UNT, two competitive union federations.He reported his findings to us, which in summary form, concludedthat the major issue was the failure of the company to reinstateworkers who had been on strike over a variety of issues and thenegative impact this would have on any subsequent union representationelection. An agreement had been reached by management with locallabor authorities to reinstate all the striking or fired workers,but when workers attempted to regain their jobs they were beingrejected unless they signed statements in support of the CROC union,which Arturo reported had been given a sweetheart contract by managementwithout the knowledge of the workers. Company lawyers were reportedto be giving severance payments to any workers rejected by CROC,thus effectively removing from the factory any workers who had beenbrave enough to complain about workplace conditions. We also consultedwith the AFL-CIO representative in Mexico, Jeff Hermanson, whoseinterpretation of the situation matched that of Arturo Alcalde's.Alcalde strongly recommended that Nike send someone to the factorywith the authority to insist that all workers be reinstated, notjust those loyal to the CROC union.

Nike has acted on these recommendations in good faith, insofaras we are currently able to determine. The Nike compliance officesupervisor for Latin America, Gabriel Llaguno, has visited the factoryagain, and today has confirmed that the CROC representative was,as Alcalde had reported, refusing to allow workers who had soughta new union to regain their jobs. A meeting at the factory is scheduledfor later today to correct this, at which the ILRF will be representedby Arturo Alcalde.

Reebok officials, we understand, have also met with Kukdong'sparent company, urging a firm statement of support for a free andfair union representation election and reinstatement of all workerswho were on strike.

We understand that the Worker Rights Consortium also sent an investigationteam from the United States early this week to examine the situation.Their preliminary report, issued today, confirms in most particularsthe findings of Arturo Alcalde from his visits beginning last week.

We believe that the crisis at the Kukdong factory can be resolved,if action is taken swiftly to re-employ all the workers who wereon strike and to allow a free and fair election to take place inthe factory. When it comes to union representation, justice delayedis justice denied. Following such reinstatements, the allegationsof labor rights violations that caused the January 9 - 12 walkoutcan be fairly investigated and, where confirmed, corrected.

We understand that the Fair Labor Association has accredited anindependent monitor, Verite, who has been contracted to carry outa full investigation and independent audit of the factory. ILRFwill continue to monitor these developments and cooperate with allwho are seeking a fair resolution for the workers of Kukdong.