Victory at Nike’s PT Nikomas factory: A lesson in persistance

October 20th, 2011

Team Sweat:

Below is a detailed reporting of the recent victory we won at Nike’s PT Nikomas factory in Serang, Indonesia on the issue of “jam molor” (unpaid, forced overtime).  This was an eight month long fight and there is still work to be done, but we can and should celebrate what we have accomplished thus far.

Please check out the report and share it.  I think this is a particularly good piece for college students to share with their business professors.

Peace, Jim Keady

Jim Keady meeting with union leaders from PT Nikomas

REPORT: NIKE’S PT NIKOMAS FACTORY AND “JAM MOLOR”

On February 22, 2011 I sent an open letter to Nike CEO, Mark Parker detailing allegations of forced overtime and wage cheating at Nike’s PT Nikomas factory in Serang, Indonesia.  I told Mr. Parker that the union leaders at this Nike factory had shared with me that workers were being forced to work overtime off the clock, a practice known as the “jam molor” (hour of delay).

I noted I my report that there were thousands of workers being impacted by this practice, a practice that was a violation of Indonesian law and Nike’s Code of Conduct.  I also noted that this practice had gone on for years unreported and that a quick calculation of the wages owed to workers could be worth tens of millions of dollars.

On February 23, 2001 I received an email from Caitlin Morris, Nike’s former Director of Sustainability and Innovation.  She wrote:

“Thank you for bringing these serious allegations to our attention.  Nike’s Sustainable Manufacturing and Sourcing team are following up in Indonesia with key stakeholders to better understand the situation.  A member of the SMS team will provide you with an update once we’ve had a chance to complete our own investigation.”

On February 28, 2011 I received a phone call from Edward Chang, Director of Sustainable Manufacturing at Pou Chen Nike Division (The Pou Chen group runs PT Nikomas).  Mr. Chang seemed genuinely interested in exploring this issue and we had a lengthy conversation and follow up email exchange.

However, any potential progress I thought might have been made with Mr. Chang was thwarted by what occurred next.

On March 1, 2011 I received an email from Mr. Mike Chen, the Senior Manager at Nikomas.   Mr. Chen’s letter was a bullet point refutation of the information I had shared with Nike USA.  Mr. Chen claimed that:

  • There are 23,500 Nike factory workers at PT Nikomas and they produce 1.5 million pairs of Nike shoes per month.  (I was told there were only 18,000 Nike workers.  I was surprised to learn there were more.)
  • The daily shifts for workers are 6:30am-2:30pm, 7am-3:00pm, and 7:30am-3:00pm (I think he meant 3:30pm on the end time of that last shift.  This was challenging my statement that the workers’ daily shift was from 7:00am-3:00pm)
  • Nikomas’ time clock system shows that their annual overtime hours average 1.5 to 2 hours per day in the peak season and that they do not have workers work over the legal limits for overtime.
  • Nikomas has a procedure in place that would prevent the forced overtime that I claimed to document.
  • Nikomas has 6,633 sewing workers (I was told there were 13,000.  Again, I was thankful for the correction) and that none of these workers are forced to work overtime, stating, “This does not occur at PT Nikomas.”
  • He challenged my wage calculation for the fourth hour of overtime, the “jam molor,” stating, “there is no fourth hour (of) overtime.”
  • He challenged my claim that workers are being forced to work the “jam molor” six days a week stating, “We would like to advise you that this does not occur at PT Nikomas.”
  • He challenged my claim that workers could be owed up to $5.4 million dollars in overtime wages for last year alone, stating, “These allegations are incorrect. We have not received these allegations from our union or workers.”
  • He challenged my claim that I was told this information by the leadership from the factory trade union and that this practice of “jam molor” had been happening for 18 years, stating, “This is an incorrect statement. We abide by government labor law, PT. Nikomas’ CBA (Collective Bargaining Agreements) and Nike CLS (Code Leadership Standards). Any issues that arise are investigated and resolved as soon as possible.”

On March 7, 2011 I received a letter from the district Chairman of the Serikat Perkerja Nasional, (SPN) the union representing workers at the factory.  His letter basically stated that all the information I had in my report was incorrect and that the union leadership could not confirm any of the data that I had shared with Nike.  This was despite the fact that he and his colleagues shared all this information with me in a videotaped meeting.  This was disappointing, but understandable, given the dynamics of pressure and fear that permeate these factories.  As I later learned, not surprisingly, the union leaders had been met with significant pressure and intimidation from the factory management for telling me about this.  The management felt that it could have been taken care of “in house” and that there was no need to go to Nike USA with the case.

Over the course of the next few months I received messages weekly, sometimes daily, from rank and file workers that this issue of forced, unpaid overtime, the “jam molor” was indeed happening at PT Nikomas.  I also learned from my contacts that my reporting the issue to Nike USA and the actions of the Nikomas management and the local union leadership were causing quite a stir.

Because of this, I made great efforts to speak with the local union leadership, but to no avail.  They were scared and they were dealing with some serious pressure from the factory management.  And, as far as I could determine, they were getting no help from Nike to alleviate this pressure.  In fact, I never heard anything from Nike on this matter beyond the initial email from Caitlin Morris on February 23, 2011.

In June 2011 I returned to Indonesia and was able to meet with some of the district level leaders from SPN.  During our discussion on June 18, 2011 I was told that in response to my February report, the district level leadership had conducted their own research.  They concluded that the allegations I had reported to Nike in February were true and that the matter was now going to be addressed by the national leadership of SPN.

On June 30, 2011 I sent an email to Catlin Morris at Nike USA about a number of issues I had unearthed during my visit to Indonesia, most importantly the situation at PT Nikomas.  I wrote:

I am writing to follow up on your email of February 23, 2011 (below).  Has Nike’s SMS team researched the “jam molor” (forced overtime) issue at PT Nikomas?  If so, what were the findings of your team?  In my recent visit to Indonesia I have been brought to believe that the allegations I presented Nike with on this issue back in February were accurate.  I have also been notified by Pak Bambang, the Chairman of SPN’s national committee (the union representing the majority of Nike’s Nikomas workers) that they have just commenced their own investigation into this matter.

On June 30, 2011 I received a reply from Caitlin Morris.  Nowhere in the email did she discuss the situation at Nikomas or answer any of the questions I had raised about the situation at Nikomas.  She did share with me information on two other cases and she let me know that she was moving to a new position at Nike and that further inquires on these issues should be sent to Sonya Durkin-Jones, Director of Issues Management.

On July 12, 2011 I wrote to Ms. Durkin-Jones.

I assume you are aware of the forced overtime (“jam molor”) issue at PT Nikomas.  On February 23, 2011, Caitlin wrote me saying… “Thank you for bringing these serious allegations to our attention.  Nike’s Sustainable Manufacturing and Sourcing team are following up in Indonesia with key stakeholders to better understand the situation.  A member of the SMS team will provide you with an update once we’ve had a chance to complete our own investigation.”

On June 30, 2011 I wrote Caitlin and said, “Has Nike’s SMS team researched the “jam molor” (forced overtime) issue at PT Nikomas?  If so, what were the findings of your team?  In my recent visit to Indonesia I have been brought to believe that the allegations I presented Nike with on this issue back in February were accurate.  I have also been notified by Pak Bambang, the Chairman of SPN’s national committee (the union representing the majority of Nike’s Nikomas workers) that they have just commenced their own investigation into this matter.”

An answer by Caitlin to this June 30th follow up about the situation at PT Nikomas was noticeably absent from her email of July 8th.  Can you please answer these questions for me with regard to PT Nikomas and the forced overtime allegations?

Later that day, Ms. Durkin-Jones wrote me back.

I will regroup with the Nike field teams on your outstanding questions… and get back to you this week.

On July 17, 2011 I received the following from Ms. Durkin-Jones.

Finally, I would like to provide you with an update on PT Nikomas and allegations of forced overtime there.  Since our last update, we have communicated with the local union who had no recent complaints of such activity. However, our subsequent follow-up with district level union members has revealed information we feel needs further attention. We will be working with PT Nikomas management, the Trade Union and our local teams to address any findings.

On August 10, 2011 I sent Ms. Durkin-Jones the following.

With regard to the situation at PT Nikomas, what is the information that the district level union members shared with you?  I have been reading posts on worker forums as recent as Sunday about the continuation of forced overtime.  I did see one post that mentioned Nike’s new “home on time” policy.  Can you please verify if this is an actual policy and if it is, can you please share the details?  Also, if the allegations of forced overtime at Nikomas are accurate, what measures will Nike take to ensure that your workers are justly compensated for the hours they worked off the clock?

On August 11, 2011 I received the following from Ms. Durkin-Jones.

We do not have a “home on time” policy, but it is absolutely Nike policy that all workers in our contracted supply chain are paid for all time worked and choose whether or not to do overtime. Following the allegations of unpaid overtime at PT Nikomas, we are currently in the final stages of dialogue with the Pou Chen Group about the findings from the joint Trade Union-Nike investigation and I hope to come back to you in the near future with our findings.

I returned to Indonesia in September and on September 6, 2011, I met with Bambang Wirayhoso, the national chairman of SPN, as well as a number of the top national officers of the union.

During our meeting I was told that on July 25-26, 2011, Nike, in collaboration with the SPN national union, sent two teams to PT Nikomas.  One team was sent in officially and a second team was sent in undercover.  It was reported to me that both of these teams found that the forced overtime was in fact happening.  They also found that workers were being forced to pay bribes to gain employment and that supervisors were verbally abusive to workers.

Now it was an established fact that Nike workers were cheated out of millions of dollars in overtime pay (potentially tens of millions).

On September 8, 2011, the national leadership of SPN met with the local management at Nikomas to discuss how to resolve the case and get these Nike workers the justice they deserve.

On September 13, 2011 I received a letter from Mr. Bruce Shih, the Director of PT Nikomas.  The letter stated in part:

As you are aware, we recently were informed of numerous complaints from employees at our PT Nikomas Gemilang IY plant regarding unfair labor practices, which include charges such as abusive language and behavior, as well as grievances associated with overtime pay.  We take such allegations seriously and launched an investigation into these reports.  To ensure objectivity, we also employed a third party to conduct an independent audit of labor practices at the manufacturing plant.

We deeply regret that the company’s preliminary investigation found merit to the allegations and we take responsibility for the actions made by some of our supervisors/managers.  Our first priority is to protect the rights of our employees and take decisive action to rectify their grievances.

Finally!

Mr. Shih then went on to list the points of the remediation plan, which included:

  • Corrective Action: Implement code of conduct with zero tolerance for non-adherence to policies;
  • Overtime: Commissioned a third party to evaluate overtime situation. Based on third party’s finding, the plant is committed to working with the Union to resolve the overtime discrepancy issue in accordance with Indonesian Labor Law;
  • Training: Implement training programs for the local management team that include cultural sensitivity, respectful supervisory skills, team leadership and human resource management;
  • Task Force: Develop a task force to rectify grievances, create a more robust grievance procedure, and update other human resource practices where appropriate;
  • Third Party Review: Engage a third party accredited by the Fair Labor Association (FLA) to review plans, conduct employee satisfaction surveys, and report on results;
  • Communication: Communicate these plans to employees and customers.

On September 14, 2011 I received an email from Sonya Durkin-Jones stating:

At Nike, we feel that the decisive actions taken by Pou Chen at their PT Nikomas Gemilang IY plant clearly demonstrate how seriously they are taking the recent allegations of worker abuse.  Nike commends the plant on their action plan and efforts to correct inadequacies in current policies designed to protect the rights of workers in their factories…  We will continue to monitor and support their efforts to remediate the situation.

On September 30, 2011 I sent an email to Mr. Shih (Nikomas), and I copied Ms. Durkin-Jones and Pak Bambang (SPN).

Mr. Shih,

I am writing to thank you for your letter of September 13th and I am happy that things are now moving in the right direction with regard to addressing the violations of workers’ rights at PT Nikomas.  I do have one question and one concern with regard to the items you listed in your plan of action.

You stated that you “Commissioned a third party to evaluate overtime situation.  Based on third party’s finding, the plant is committed to working with the Union to resolve the overtime discrepancy issue in accordance with Indonesian Labor Law.”

Can you please tell me who the third party is that was chose to evaluate the overtime situation?

You also stated that you have committed to engaging “a third party, accredited by the Fair Labor Assocation (FLA) to review plans, conduct employee satisfaction surveys, and report on results.”

I must state emphatically that I hope that the leadership at SPN will reconsider agreeing to this point and that you will allow a TRULY independent organization to provide a third party for oversight.  The Fair Labor Association is NOT an independent body.  The FLA was an offshoot of the Apparel Industry Partnership and both groups have been dominated and controlled by the major brands, including Nike.  If the FLA were truly functioning in way that they (and Nike) claim, it would not have taken me to unearth the jam molor issue at PT Nikomas.  I could go on at length on this matter, and I will if you need more information, but simply stated, I do not trust the Fair Labor Association in this or any capacity and I will strongly encourage SPN to renegotiate this point.

In closing, I want to reiterate that I am very happy that we are making progress on this matter and I look forward to hearing back from you soon.

Peace, JWK

To date, I have not received a reply.

CONCLUSIONS

  1. It is clear from this case that we cannot trust Nike, the factories or the Fair Labor Association to monitor these kinds of issues.  If they were effective in their monitoring, they would have unearthed this issue well before I did.  Nike has a Corporate Responsibility division of 120 employees with a budget of $30,000,000.00 and complete open access to every Nike factory.  I am a one-man operation with a $100,000 a year budget and limited access to Nike’s factories and management teams.
  2. It is clear that we cannot trust Nike or the factories to provide us with honest information at the outset.  It was only after pushing this issue and working with the district level and national level union that real traction was gained to get Nike and the factory to admit to the truth about the allegations.
  3. While the admission by the factory and Nike that they “found merit to the allegations” and that they will “take decisive action to rectify their grievances” is a victory in itself, this case will not be truly won until a check is written and these Nike workers receive the money they have been cheated out of for years.

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