Nike Moves Factories Overseaso Nike moves factories overseas to China, Vietnam, Korea, and Taiwan
o Cheap labor produces shoes and clothing for a fraction of what it would cost in the United States
o Moving factories creates a stepping stone into Asian markets that Nike has not yet reached
News of Nike Sweatshops Appear in the Newso Articles appear in Indonesian and Taiwanese newspapers regarding investigative reports and wage protests
o Most shoe factories illegally paid workers "training wage," which was less than the standard eighty-six cents a day
Nike's Scandal Reaches Worldwide Newso UK’s Thames TV, The Economist, and Knight Ridder all report poor working conditions of Nike factories in Indonesia
o Exhaustive quota system, low wages, dangerous working environment, abusive supervision, child labor, and unclean air
Nike Fights Back with New Regulationso Nike formulates an official code of conduct for its contractors that is supposed to apply in all factories producing Nike products
o The code, first formulated in 1992 and amended in 1997 and 1998 is still in use today
o The code is called SHAPE: Safety, Health, Attitude, People, and Environment, and results in spending $10 million a year to follow the code, adhering to regulations for fire safety, air quality, minimum wage, and overtime limit
Nike Responds to Continuous Bad Publicityo Further bad press in 1994 included investigative reports in The Rolling Stone, The Boston Globe, The Los Angeles Times, The Chicago Tribune and a book by Donald Katz called Just Do It
o Nike hires accounting firm, Ernst and Young to do "social audits" at Indonesia-based contract factories to earn back consumer trust
Nike Works to Build Public Trusto Nike hires former UN ambassador Andrew Young to visit its contractors' factories in Asia and report on working conditions hoping that he would provide an independent endorsement.
o Human rights groups criticise tour as a public relations stunt
o Strikes outside of Nike stores and student protests begin in the United States
o Anti-Nike rallies are held in 50 US cities and 11 other countries
Stakeholder Reactionso Share prices have dropped significantly and profits are weak
o CEO Phil Knight admits “The Nike product has become synonymous with slave wages, forced overtime and arbitrary abuse
o Nike pours its marketing expertise into its own corporate reputation and seeks to portray a caring company that is concerned about working conditions in its contractors' factories
o Nike becomes a member of the Fair Labor Association (FLA) that states that member companies will pay the minimum wage of the country
Nike Partnerships Under Stresso Nike has 'partnerships' with over 200 US colleges and universities,42 of which involve cause-related marketing deals providing them with a financial reason for supporting the company
o Under pressure from student activists, universities have been joining up with the Worker's Right Consortium (WRC) rather than the FLA
o 50 universities have joined up so far further undermining the credibility of the FLA
Nike Makes Strides to Change Public Opiniono Nike is using the internet to provide information that defines themselves as a trustworthy compnay and to profess a social conscience
o Nike has a whole section of its website devoted to responsibility, with sub-sections on labour, global community, environment and diversity
o In April 2000, Nike CEO Phil Knight announced the company would be publishing the results of monitoring of its contract factories by PricewaterhouseCoopers (PwC) on its website
A Not So Happy Ending for Nikeo Nike has employed reputation management rather than instigated real reforms that addressed the underlying issues of their overseas factories
o Nike seems to be moving slow with regards to its major issues: paying a minimum wage, allowing workers to afford basic human necessitites, and granting workers the right to form independent labor unions
o Many people believe that once the public relations nightmare is over for Nike the company will revert back to its exploitative ways
Leading Up to the ScandalMany companies, including Nike, move their production factories overseas to cut costs.
Unfolding of the Nike Sweatshop ScandalInhumane labor environents and low wages come to light in Nike factories overseas.
Corporate and Consumer ReactionsConsumers and the corporate world react to constant criticism of Nike's sweatshops.