Company Overview:
“What started with a handshake between two running geeks in sleepy Eugene, Oregon, is now the world's most competitive sports and fitness company.” – Nike.com
In 1962, Bill Bowerman, track coach at the University of Oregon and student, Phil Knight founded Blue Ribbon Sports. Later the company was renamed Nike after the Greek goddess of victory. Company sales have grown from $8,000 during the first year to $ 4,819,000,000 in 2001, a 602,375 % increase. Currently Nike has 22,000 employees world wide, half of which work in the United States. Nike facilities includes 17 Niketown stores, over 70 Nike factory stores, 2 Nike Goddess boutiques, and over 100 sales and administrative offices. In addition to Nike producing the swoosh adorning products we are familiar with, the company also owns Cole Hann, known for casual men’s and women’s footwear and accessories, Bauer Nike Hockey, leading producer of hockey equipment, and Hurely International, focusing on “teen lifestyle” clothing and accessories. Nike headquarters is located in Portland, Oregon and consists of 16 buildings, 175 acres of land, and numerous sports facilities for the employees. “If you have a body, you are an athlete” are words spoken by Bill Bowerman and words that the Nike corporation lives and grows by.
Phil Knight believed that high quality, low-priced shoes could be imported from Japan decreasing the German domination of the market in the United States. Knight visited the Japanese company, Tiger Shoes, and introduced them to his belief that opportunity awaited them in the United States. A shipment of 200 shoes soon arrived in under the control of Blue Ribbon Sports. Knight sold the shoes from his basement as well as out of his car at local and regional track meets. At these track meets he also received input from runners about designs Bowerman had been developing. Blue Ribbon Sports was the sole distributor of the Japanese footwear that used a wedge-shaped foam cushioned heel designed by Bowerman. Bowerman continued to experiment with shoe innovation eventually developing a sole that would change the way running shoes were designed in the future. The name Nike literally came to Jeff Johnson, Nike’s first employee, in a dream.
Shoe Production:
Nike’s manufacturing practices have not changed dramatically since 1964. They invest the majority of their resources in the design, marketing, development and sales. They contract with more than 800 other companies throughout the world to manufacture their products. Many of the countries where Nike factories are located have lower minimum wages therefore making it more economical for companies such as themselves to manufacture goods in these locations. Nike is able to produce high quality products at a low cost for the company and thence the consumer. In the mid 1990’s Nike fell under a great deal of scrutiny concerning the conditions of many of the factories where products were produced. Nike was accused of the workers being employed under sweatshop conditions with underage workers, low wages, long hours, physical abuse, and exposure to toxic chemicals.
Human rights activists, Jim Keady and Leslie Kretzu, spent August of 2000 living with the workers and on their pay. Before Keady was an activist he was a soccer coach at St. John’s University and a Theology graduate student. Keady began to research the practices of the Nike Company while doing research for a class paper. He found that the University was in a $ 3.5 million contract with Nike and that all members of team as well as the coaches had to use and wear Nike products. Keady refused and therefore had to resign. Keady and Kretzu found that the workers were being paid $1.25 a day for 8 to 15 hours of work, six to seven days a week. It was possible to live on the wages but Keady and Kretzu state that it was not possible to live with dignity. Since a doctor’s visit costs nine days wages the workers often had to choose between medication and food. According to Keady and Kretzu, while they were in Indonesia a worker tried to form a union and was tortured and killed by hired agents.
Nike argues that a month is not enough time to get an accurate impression of the conditions in Nike factories. Keady and Kretzu claimed they offered to work for Nike in Indonesia over a 6-month period, but Nike refused to allow it. They believe that Keady and Kretzu were biased in their observations against Nike. In March of 2000 Nike invited college students from around the United States to visit factories in North America, Latin America, and Asia and form their own opinions of the conditions. The students noted that there were some questionable things about the factories, but overall they had a positive impression. The students noted that there were often communication issues between the workers and the management, some of which were due to cultural differences. They also noted the low pay, mentioning instances of workers not being compensated for overtime and a lack of raises for workers that had been with Nike for a long period of time. There were also health and safety concerns in factories across the globe. However the students also noted that there were no underage workers, religious or racial discrimination, and there seemed to be a commitment to the workers by management.
Since then production in these countries has decreased from 40% to 30%. Also the location of the sweatshops has shifted from Indonesia to Mainland China, Vietnam and Thailand, where minimum wage is double but the unions are not as strong. Now that Nike has been pulling out of Indonesia thousands of jobs are being lost causing further protesting. The workers don’t want Nike to leave the country, instead they want to opportunity to unionize and earn larger wages.
A man in San Francisco, California is suing Nike claiming that statements made by the company were violating human right’s laws were a form of false advertisement. Nike is not being sued directly for it’s labor practices, but rather for not speaking truthfully about them. The court calls this type of speech commercial speech, therefore it is not protected under the freedom of speech amendment. Much of Nike’s advertising relies on image and not just the image of their product but of the company as a whole. If Nike did not defend itself against critics it would have hurt the image that they depend on.
Since the controversy revolving around Nike and the sweatshops the company has been trying to improve their image through factory improvements. Nike requires their company Code of Conduct to be displayed in common rooms in the factories. They also require the factory to educate the workers on the Code, labor laws, and their rights. The Code of Conduct is a fairly strict set of rules on cleanliness and employee-employer relations.
One way Nike has attempted to improve conditions for factory workers is by offering educational opportunities. Eighty-five percent of factories, world wide, now have educational programs such as government-accredited middle or high school programs, and informal vocational and business training.
Community affairs:
Much of Nike’s success is based on image. Not only the image of their products and advertisements but also the image society has of the company. After Nike’s image was put at risk due to bad press surrounding manufacturing practices Nike had a lot of work to do in order to regain respect. One way Nike has worked on improving their image is by giving back to the community.
Programs such as NikeGo, Wings of America, and KidSport are focused toward increasing physical activity among youth. Not only do programs such as these encourage healthy lifestyles but that also produce possible future Nike product consumers. Nike also donates products to the Police Activities League of Portland, Jerome Bettis The Bus Stops Here Foundation, and Major League Baseball Foundations. These three organizations are just a glimpse of the numerous groups that receive donations from Nike. Product donation brings the Nike Company down from atop their peak as major manufacturer to the local level.
Another way Nike has tried to improve their image is by getting involved in environmental programs. Nike concentrates on continual innovation of their products. Many consumers aspire to keep up with these latest design trends and therefore replace their shoes fairly frequently. Nike instituted a program, Reuse-A-Shoe, that uses these old shoes to produce athletic fields.
Nike also has programs that teach students about conservation and other environmental concerns. It is probably no coincidence that the majority of Nike community involvement is focused toward its main group of consumers. The more involved they get directly with this group the closer the connection between the company and the consumer.
Sources:
http://www.nikewages.org/index.html
http://www.nike.com/nikebiz
http://www.caa.org.au/campaigns/nike/index.html