June 23rd, 2009
The ASSOCIATED PRESS
June 22, 2009
PORTLAND, Ore. — Nike Inc. is scheduled to report earnings for its fiscal fourth quarter on Wednesday after the market closes. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Nike Inc. ( NKE - news - people ) is expected to deliver reasonably strong fourth-quarter results due to recent cost-control measures by the world’s largest footwear and apparel company.
During the quarter, Nike reduced several layers of management and cut more than 1,750 jobs worldwide, or 5 percent of its global work force. About 500 of the jobs lost were at Nike’s world headquarters in Beaverton, Ore.
The cuts come on top of other measures that the company has taken - including a hiring freeze and tight inventory controls - to improve its bottom line as the economic meltdown took a toll on its sales.
While the company has seen its profit slip in previous quarters, Nike has consistently beaten Wall Street expectations.
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June 23rd, 2009
JAKARTA, Jun 22, 2009 (AsiaPulse via COMTEX) - Nike Inc has placed orders for an additional supply of footwear worth US$45 million from Indonesia this year, an official said.
Earlier Nike announced plan to cut 10 per cent of its shoe order for delivery in March to July but the cut would not include shipments from Indonesia.
Nike already planned to import 55 million pairs of shoes worth US$1.3 billion from Indonesia this year, Budi Irmawan, the director general of multifarious industries said
Irmawan said Nike placed the orders with a number of local shoe makers for a total of 3 million pairs of shoes this year, adding the additional orders came after it closed its factories in China, Vietnam and Thailand.
This year Nike wants an additional supply of 250,000 pairs a month or 3 million pairs a year, to be supplied by PT Nikomas Gemilang, PT Cing Luh Indonesia, PT Panarub Industry and PT Hardaya Aneka Shoes Industry, he added.
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Original Story posted at www.tradingmarkets.com/.site/news/Stock%20News/2381920/.
June 23rd, 2009
Team Sweat:
Check out this story published last week by “News of the World” (UK) about Indonesian sweatshop workers making the English National Team kits. Umbro is owned by Nike, Inc. I am hoping to visit with workers from PT Tuntex (mentioned in the article) during my visit to Indonesia in July.
Peace, Jim Keady
By Simon Parry in Indonesia & Dominic Herbert, 14/06/2009
THE World Cup shirts worn by England’s multi-million pound soccer stars and tens of thousands of fans are made by slumdog workers paid just £2 A DAY in a secret sweat-shop in Indonesia.
A News of the World investigation has traced the Football Association’s newly-designed official Three Lions tops back to a slave labour factory that makers Umbro-owned by Nike- don’t want YOU to know about.
Behind barbed wire fences patrolled by guards, more than 2,000 dirt-poor teenage girls and young mums toil for a sickening 16p AN HOUR, 12 hours a day, making the trendy shirts the FA is selling for £49 A TIME.
One told us: “We all work maximum overtime because the basic salary isn’t enough to live on and keep our families. The work is very hard and the pay is not good but jobs are hard to get.”
The machinists are watched constantly by patrolling supervisors ordered to fire anyone caught chatting or taking mobile phone pictures of their appalling conditions.
FOR THE FULL STORY CLICK HERE
June 12th, 2009
Team Sweat:
The article below edifies the position that I have been taking on factory monitoring for the past few years. When corporate monitoring initiatives were first discussed in the late 90s, I held out hope that they might be an effective means for improving the lives of workers. Time has shown that they are not and the article below very succinctly explains why.
To truly improve the lives of NIke’s factory workers, we must continue to push the debate away from “monitoring” and bring it back to a discussion on collective bargaining agreements, living wages, factory ownership models, and long term commitments to countries where Nike produces their products. Only when these objectives are achieved will we have reached our goal of ensuring that Nike’s factory workers are being treated with the dignity and respect that they deserve.
Peace, Jim Keady
U.N. Expert Raises Doubts on Factory Monitoring
by John Zarocostas
Posted THURSDAY JUNE 04, 2009
From Women’s Wear Daily (www.wwd.com)
ISSUE 06/04/2009
GENEVA — Business leaders consider monitoring of supply chains and factories for violations of core labor standards to be largely ineffective and unreliable, said the United Nations’ top expert on corporate social responsibility.
“We keep hearing now, from just about everywhere…monitoring doesn’t work,” said John Ruggie, special representative of the U.N. secretary-general for human rights and transnational corporations and other businesses. “Just about everybody, at least off the record, will tell you that monitoring doesn’t work and auditing of supplier factories doesn’t work because people cheat.”
Many companies use either internal monitors or hire outside specialists to conduct inspections of their foreign factories to ensure they are operating under proper labor conditions. This would include working conditions at the factories, as well as auditing to make sure hourly wage and overtime laws are followed.
Ruggie, who submitted a report to the 47-member U.N. Human Rights Council, said the head of a large multinational company told him “up to 70 percent of the audits they get have serious flaws.”
In the report, Ruggie said, “It is often overlooked that suppliers are also companies, subject to the same responsibility to respect human rights as any other business. The challenge for buyers is to ensure they are not complicit in violations by their suppliers. How far down the supply chain a buyer’s responsibility extends depends on what a proper duel diligence process reveals about prevailing country and sector conditions, and about potential business partners and their sourcing practices.”
Ruggie also warned countries and companies against using the economic crisis to loosen up on human rights standards because it “would worsen the backlash against companies.”
Ruggie, who is also professor of international affairs at Harvard University, said some brand-sensitive companies faced with problems “have just simply slammed the door and said they’re not going to do business” with suppliers that have breached core standards.
As for viable options, Ruggie noted that some leading initiatives include the Fair Labor Association, which has decided to take some of the money earmarked for monitoring and use it instead to train factory managers to better oversee the production process and help report problems. In China, the FLA has even started to train state labor inspectors.
“The more brand-visible and the more brand-sensitive the company is, the more resources they put into this problem,” he said.
However, Ruggie said a sustainable solution will have to involve governments.
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June 10th, 2009
Travel habits prompt conflict of interest concerns
Center for Public Integrity: http://www.publicintegrity.org/
By RICHARD LARDNER
WASHINGTON (AP) — Pentagon employees have received millions of dollars in free travel and lodging from foreign countries, trade groups and companies with an interest in shaping policies or doing business with the U.S. military.
Defense officials say the arrangement is legal, saves taxpayers money and is carefully monitored to ensure there are no conflicts of interest. But government watchdogs say it allows donors to subtly exert influence for a small investment compared with the potential gain.
Between 1998 and 2007, hundreds of outside sources, including athletic shoemaker Nike Inc., the Chinese government and pharmaceutical giant Johnson & Johnson, footed the bill for more than 22,000 trips at a cost of $26 million, according to an analysis of government travel disclosure records by the Center for Public Integrity in Washington.
Rome, Paris, Rio de Janeiro and Las Vegas were among the destinations. Travelers ranged from four-star officers — one was then-Adm. Dennis Blair, now the Obama administration’s director of national intelligence — to junior enlisted troops.
The Defense Department is allowed to accept paid travel on behalf of employees so they can attend meetings, conferences and other functions. The event must be related to an employee’s official duties and has to be beneficial to the military. Employees cannot solicit trips.
“We have a fiscal responsibility to take every opportunity to reduce government expenses on travel,” said Eric Rishel, a senior attorney in the Pentagon general counsel’s office.
But Winslow Wheeler, director of the Straus Military Reform Project at the Center for Defense Information, says the Defense Department, which has an annual budget of more than $500 billion, should pay its own way to eliminate the perception of any impropriety.
“This isn’t even pocket change for the Pentagon,” Wheeler said of the $26 million. “It’s loose money under the couch cushions.”
The analysis provided to the Associated Press by the Center for Public Integrity, a Washington-based investigative journalism organization, describes a sometimes-inconsistent review process that has led to questionable trips.
In one 2005 example highlighted by the center, Richard J. Millies, then a senior Pentagon official overseeing foreign weapons sales, and his wife flew first-class to Saudi Arabia. They spent eight days there enjoying camel races, banquets and a musical production.
The entire $24,000 tab was paid by the oil-rich Saudis, a major buyer of U.S.-made military gear.
Millies no longer works as deputy director of the Defense Security Cooperation Agency; he is vice president of international strategy and business development at BAE Systems, a major defense contractor.
Millies defended the visit as an important opportunity to exchange information. Turning down the invitation, he said, would have offended the Saudis.
“Hospitality is very important in Arab cultures,” he told the center.
Kay Cannon, the agency’s general counsel, said Millies’ trip was “thoroughly vetted and approved.”
Foreign governments sponsored 1,500 trips worth $2.6 million. Australia, Singapore and Japan were the leaders, with China, Russia and the United Arab Emirates also paying for travel.
In March 2001, Blair, then commander of U.S. Pacific Command, took a $3,600 trip to China paid by the Chinese. Blair, who retired from the military in 2002, now oversees the nation’s intelligence operations.
Michael Birmingham, a spokesman for Blair, said the visit was a “military to military” exchange that complied fully with the rules and reporting requirements. He said it’s customary for a U.S. official to accept accommodations and meals when a host country invites that person on official business. As with the Saudis, Birmingham said, it would be rude to say no.
Commercial firms selling goods and services to the military also provided similar largess. Retail firms focused on managers at the military’s vast network of base exchanges that sell clothes, shoes and electronics to service members, the analysis found.
Nike spent more than $80,000 on nearly 100 trips by Navy merchandise managers for displays of product lines. Skechers USA Inc., another shoe manufacturer, toy maker Mattel Inc. and electronics titan Sony Corp. also paid for trips taken by buyers and managers from military exchanges.
Medical companies, trade groups and professional associations sponsored 8,700 trips at a cost of more than $10 million — nearly 40 percent of the total. Employees in the military’s sprawling pharmacy system, which buys billions of dollars in prescription drugs each year, accounted for 400 of those trips at a cost of nearly $400,000.
Dr. Adriane Fugh-Berman, an associate professor at Georgetown University’s medical school, says drug makers and medical device companies view the trips as tools for persuading doctors and pharmacists to use their products.
“It creates the illusion of a partnership,” said Fugh-Berman, who studies the influence of pharmaceutical companies. “And there shouldn’t be a partnership between government and industry.”
Medtronic, a multibillion-dollar medical technology company, spent $93,000 on 86 trips. Fifteen of those, totaling more than $13,000, were taken between 2001 and 2006 by Dr. Timothy R. Kuklo, a surgeon who became a Medtronic consultant after retiring from the military in 2007.
The company recently suspended its agreement with Kuklo after an Army investigation revealed he falsified information in a medical journal article that overstated the benefits of a drug sold by Medtronic to treat combat-related bone injuries.
Marybeth Thorsgaard, a Medtronic spokeswoman, said military physicians, and ultimately their patients, benefit from attending conferences and training sessions the company sponsors. When Medtronic pays, travelers are required to sign an agreement stating government rules are being followed.
The travel records, submitted by the Defense Department in paper form to the U.S. Office of Government Ethics, were digitized and sorted in a joint project by the Center and Northwestern University’s Medill School of Journalism.
Craig Holman of Public Citizen in Washington said this is the first public and searchable database of the records. “We’re going to get a good look inside and see if there are any abuses,” he said.
June 9th, 2009
By Michael Marlowe
Originally posted at: www.sharedleadership.com
For the past decade Nike’s business journey is characterized by two distinctive qualities - business growth and learning to take responsibility. Since 2003 they have exceeded the Dow, split their stock in 2007 and weathered the global financial crisis better than most. They are now reclaiming their former wealth showing an aggressive steady climb over the last six months. This is a testament to Nike’s sound business basics, good products and superb marketing.
Nike is one of the pioneers of outsourcing manufacturing overseas. This is one of their major engines for profit. Cheap labor allows for high profit margins in shoes and apparel. Over the last twenty years they have moved manufacturing to various countries to catch the wave of the lowest labor costs. Today it is estimated that their supply chain funds the employment of over 800,000 people primarily located in Malaysia, Indonesia, Vietnam,Thailand and China.
During 1990’s Nike held center stage as a company whose partners engaged in child labor, employee abuses, and sweatshop working conditions. Nike’s initial response was characterized by adamant denial and aggressive self-defense. They did not own the manufacturing and could not be held responsible for labor practices in countries outside the United States. This was legally and technically true. Human rights activists had another view. For the next decade Nike would engage in a policy of monitoring and beleaguered enforcement of violations against Nike’s Code of Conduct.
In 2006 Nike made a bold move to be more transparent and turned over its monitoring data to Richard Locke of MIT’s Sloan School. Locke spent three months just organizing the data, which suggested to him that Nike had not been trying to actively learn from it. Locke’s final conclusions would state that despite “significant efforts and investments by Nike … workplace conditions in almost 80% of its suppliers have either remained the same or worsened over time.”
Expanding Corporate Responsibility
Today Nike is engaged in new series of projects, which are bringing results to the bottom line and external accolades from environmentalists. Using quality methodology and new design techniques they are committed to reduce over $800 million dollars of annual product waste and to use environmentally friendly materials. This led to Nike being rated third in the top 100 companies in 2008 committed to Corporate Social Responsibility. (However in 2009 they dropped to 23 primarily based on CRO placing more weight on human rights.)
Even more significant, Eguenia Levinson in her article Citizen Nike reports that for the first time Nike is thinking about its deeper connection to it’s supply chain. Nike is realizing that as they make decisions they drive behavior inside manufacturing plants.
When the employees in Beaverton, Oregon link themselves and their work processes to their outsourcing partners plants, a new set of possibilities are open for consideration. Seeing the creation of a shoe as a full process and specifically seeing how design decisions directly impact manufacturing is new to Nike’s way of thinking. Further learning how the use of hazardous glues effects safety in plants or even how last minute design changes or delays impact schedules and drive overtime and working conditions inside plants sometimes leading to Code of Conduct violations. This is a tremendous leap from twenty years ago when they said they had no connection to their manufacturing partners. This learning brings about another level of cooperation and responsibility.
Leadership Bubble of Self-Interest
Yet Nike’s business still operates within the bubble of self-interest. This is the predominate filter which drives what possibilities are open for consideration. Now to be fair, Nike is no different than their competitors or the majority of American businesses. What we are learning from Nike’s behavior and other companies engaged in sustainability efforts is that there is room for change. The bubble of self interest can be expanded, if and when the new behavior is carefully couched in terms of how this is “good for business.”
An expansion of the bubble of self-interest for any business is a significant change in the right direction, especially in the area of sustainable growth practices. However this stance still limits a company’s ability to explore other options.
The prime example of this is paying “living wages.” For the past fifteen years Nike has refused to consider setting the standard in it’s Code of Conduct to pay living wages to it’s workers. They do agree to pay the country’s minimum wage. However, in many countries minimum wage does not equate to living wages. It is a known fact that many countries like Indonesia arbitrarily set minimum wage low to attract foreign companies.
A second example is seeing the connection between competitive outsourcing, based on driving lower prices, and how it drives specific work practices in a factory. Richard Read of the Oregonian wrote specifically about this issue last August. In his article he quotes Jeffrey Ballinger, a longtime anti-Nike activist, who says “If Nike put four factories in competition for 100,000 Air-whatever shoes, they can’t go back and say, ‘Give the workers Saturdays off,’ because the contractor needs to make money.” Scott Nova, the executive director of the Worker Rights Consortium which monitors labor rights in foreign countries who says “factory owners are being asked to do two mutually contradictory things: improve standards and cut prices. The factories do everything they possibly can to hold down labor costs, and they hope nobody catches them for violating labor standards.” This is another example how the competitive nature of the stance of self-interest sustains extremely negative working conditions.
The stance of self-interest also drives behavior and prevents people or companies from direct involvement in learning and discovery.
If we go back ten to fifteen years when Nike began their more active inquiry into the state of working conditions, the did so by hiring outside resources to do the work for them. As they began to learn more of what was happening, they would put plants on notice. Much as a health inspector might do. Their initial follow-up cleared up the worse cases of sweatshop management and child labor. However until recently their follow-up always been characterized by patience.
Nowhere is it documented that a practice evolved in Nike for executives or even middle level managers to go to their manufacturing facilities and for a week or even a day work the same jobs, under the same conditions, with the same hours as the women on the factory floor.
It would seem that a decade of slow to little change might have sped up considerably if one executive had personally experienced breathing problems, chemical skin irritations, suffered from heat stroke or exhaustion, been verbally or physically harassed. No executive at Nike has tried to live on a weekly wage that is paid in the factories.
Nor it is documented anywhere that a regular practice of surveying employees or holding focus groups with employees and learning from this data is used. It would seem the authentic listening or interviewing of employees has been left to journalists and human rights activists. Historically Nike has relied on other measures having factories self report the age of employees, hours worked, overtime, pay practices and days off. More recently they focus on safety practices and air quality.
Behaviors that create high contact and connection are consistent with abandoning self-interest and adopting a true learning position, which in turns always leads to being influenced. The value of the stance of self-interest is that it limits the influence others have on you, because you are less connected and your are committed to certain ways of doing business which are unquestioned.
Nike is now recognized as a leader in Corporate Social Responsibility. Yet today we have a host of global problems, which cannot be solved by institutions that operate from a stance of self-interest, even Nike’s more expanded version of self-interest.
Self-Interest and the Millennium Development Goals
I would imagine that only a handful of American and European business executives could name the United Nations’ Millennium Goals and a many would not even know what the Millennium Goals are. Why should they? The Millennium Goals are not in their bubble of self-interest. To directly support the Millennium Goals requires people (leaders) and institutions (governments and businesses) to step out of their bubble of self-interest.
The Millennium Development Goals are End Poverty and Hunger, Universal Education, Gender Equality, Child Health, Maternal Health, Combat HIV/AIDS, Environmental Sustainability, and Global Partnership.
Nike’s improvement projects do contribute directly to Environmental Sustainability. At the same time their unwillingness to dialogue and take responsibility for not paying living wages directly contributes to the status quo of sustaining poverty and preventing gender equality (remember that 80% of the people who produce NIKE shoes and apparel are young women) Without the active involvement of business, countries are not capable of meeting the Millennium Development Goals. The problems are too large, too complex, too interconnected.
Nike is the market leader controlling approximately 45% of the global market in shoes. They have a growing revenue stream of 18.6 billion dollars, a sales increase of 52% since 2004, a gross margin of 45%, and a net income of 1.88 billion.
So why can’t Nike “Just Do It?”
In regards to working conditions Nike says they personally can’t shift industry conditions, without help from other companies, governments and workers’ rights groups. According to Erin Dobson, Nike’s director of corporate-responsibility communications. “The real way to address this is for the brands to collaborate and agree on a core set of standards. Our monitors aren’t going to catch everything.” Of course the deeper fear, which has been stated over the last fifteen years, in more direct ways, is that by paying living wage without competitors agreeing to the same standards Nike will lose some of its competitive advantage.
Yet there is nothing preventing Nike from creating a goal to wherever possible award contracts to companies who pay living wage. Of course this might be in direct conflict with their goal of awarding contracts to the suppliers who bid at the lowest cost in and industry, which competes on the low cost of its labor. Ironically because Nike is dominates the market many of its competitors copy or follow its lead. Companies like Adidas frequently award contracts to the same suppliers Nike already is using. Since Nike has never experimented with paying living wage their fear is untested. The industry may follow. Nike might generate extraordinary good will leading to increased sales and customer loyalty.
Nike just doesn’t do it because they still work within a bubble of self-interest surrounded by an industry, which operates in a larger bubble of self-interest. And currently the pressure is off on human rights. The public has cooled to this issue in regards to Nike and there halo of good will created by Nike’s aggressively publicized their green efforts does not invite criticism. So in large part Nike doesn’t do it because we don’t ask them to do it.
So how does all this change. The answer is through one person at a time. The degree of freedom for CEO’s to operate in a larger field of self interest is proven by Nike. However it is only when leaders abandon self-interest for themselves and their companies that we see a new form of leadership emerge. In this form of leadership business success is possible as negative cycles of harm to the environment and humans cease, and being of service to becomes a predominate characteristic
A Lesson in Leadership
The Haudenosaunee or as they are more commonly known The Iroquois Confederacyunderstoodthe importance of leaders abandoning self interest. Each new chief followed these principles and was held accountable by the people of the tribes. They were told:
“In all of your deliberations in the Confederate Council, in your efforts at law making, in all your official acts, self interest shall be cast into oblivion. Cast not over your shoulder behind you the warnings of the nephews and nieces should they chide you for any error or wrong you may do, but return to the way of the Great Law that is just and right. Look and listen for the welfare of the whole people and have always in view not only the present but also the coming generations, even those whose faces are yet beneath the surface of the ground — the unborn of the future Nation.
June 9th, 2009
Just-Style.com. June 1, 2009
Top sports and fashion brands including Gucci, Adidas/Reebok, Timberland, Geox, Clarks and Nike, have been accused of contributing to the destruction of the Amazon rainforest by using leather from cattle reared on farms responsible for deforestation.
The allegations by environmental campaign group Greenpeace follow a three-year investigation into links between Brazil’s booming cattle industry and some of Britain’s biggest-selling brands.
“Running shoes, handbags and ready meals aren’t normally associated with rainforest destruction and climate change, but we’ve found a smoking gun,” Greenpeace forest campaigner Sarah Shoraka.
“This new evidence shows how UK companies are driving the destruction of the Amazon by buying beef and leather products from unscrupulous suppliers in Brazil.”
Greenpeace says cattle ranching in the Amazon region is now the single biggest cause of deforestation in the world, and the expansion of this industry is being driven by the global export market.
Its new report, entitled ‘Slaughtering the Amazon’ tracks beef and leather products from ranches involved in illegal deforestation back to the supply chains of sports and fashion brands.
The report also accuses the Brazilian government of bankrolling the destruction and undermining efforts to tackle the global climate crisis.
Greenpeace says Chinese tanneries supplied by Brazilian cattle giant Bertin produce trainers for Nike and Adidas/Reebok.
Bertin also supplies leather to the two leading Italian processors (Rino Mastrotto Group and Gruppo Mastrotto) whose customers include Boss, Geox, Gucci, Hilfiger, Louis Vuitton and Prada.
None of the companies contacted by just-style today (1 June) was able to comment.
Greenpeace is now calling on companies to stop purchasing from Brazilian suppliers who refuse to commit to cleaning up their supply chains and must support a moratorium on all deforestation for cattle ranching.
June 9th, 2009
WASHINGTON (AP) - Nike Inc. spent $120,000 in the fourth quarter to lobby on physical education, trade and other matters, according to a recent disclosure report.
The Beaverton, Ore.-based athletic shoe and apparel company also lobbied on issues involving cyber security, patent reform and other business concerns.
Besides Congress, Nike lobbied the U.S. Trade Representative and the departments of Health and Human Services, State and Treasury during the January-March period, according to the report filed April 20 with the House clerk’s office.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
June 3rd, 2009
Team Sweat:
Here are more consumers that have joined the fight against Nike’s sweatshop abuses. If you would like to speak out as well, send Team Sweat a message with your comment.
Peace, Jim Keady
I saw (Behind the Swoosh) and I really want to help the workers get fair wage.
- Katie
I think Nike is very S*CK!! It’s the most capitalism product I ever known…
- Kristina Grani (Indonesia)
First of all, I’m from Indonesia and there’s a lot of people from my country that work on this GIANT CORPORATION called NIKE who have become a victim rather than a worker. Victim of deception, tricking, and insulting us as a human - who have been attacking by tens of years without knowing their rights as a worker. without knowing their rights as a human, without knowing their future has been robbed by a big big greedy giant corporation. I’m joining TEAM SWEAT to let international people know that there’s a big case of human right violation that this “BIG GREEDY GIANT CORPORATION” that have been done by tens year and counting. And until now, all the worker in here still didn’t get any rights as a human or as a worker it self from serving “the big greedy giant corporation.” By joining this team, I wish it’ll be brings a progress and hope for them.
- Boyd Soedargo
Today more than ever what is needed in the world is a sense of CONSCIENCE. When human beings are being exploited and forced to live in sub-human conditions so that other people may live in luxury this is a sin that cries to the heavens. For all the invisible, voiceless people who are enslaved by this practice I pray that the eyes and hearts of those causing the enslavement may be opened and changed.
- Sister Beth Woodward, IHM
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