Nike Fair Labor

In 1999 Nike began the Fair Labor Association, which is a non-profit group “that combines
companies, and human rights and labor representatives to establish independent monitoring
and a code of conduct, including a minimum age and a 60-hour work week, and pushes other
brands to join” (citation 11). Since its formation, the FLA has done work in many third world
countries to eliminate unfair working conditions. In
January 2009, two factories in Honduras that Nike
subcontracted with were closed, leaving thousands
without jobs or severance packages. “The U.S.
sports-apparel giant Nike suddenly closed their
doors and did not pay workers the $2 million in
severance and other unemployment aid they were due
by law. Following proper public-relations

protocol,
Nike lamented the situation — while insisting that
it wasn’t responsible for the actions of the plants it contracts. Nike did not match its regrets
with dollars; the company was, in effect, taking advantage of the cover that the rules of
globalization tend to afford so many companies like it today” (Padgett, 2010).

However, in 2010
the company finally made actions to compensate the workers who were left jobless in Honduras.
“The FLA facilitated an agreement between Nike
and Central General de Trabajadores de Honduras
(CGT) regarding assistance to workers affected
by the closure of Hugger and Vision Tex, the
two factories that were shut down. Nike and the
CGT engaged in productive dialogue that resulted
in a package of measures that benefit workers,
including a relief fund, vocational training programs, hiring priority, and health coverage”
(citation 10). Tim Padgett, of Time Magazine, goes on by saying that “the root of the problem
is globalization’s unwritten code: politicians in impoverished countries like Honduras, which has
a near 70% poverty rate and whose economy is run by a small clique of wealthy families, get
elected by writing strong labor laws, but they’re convinced that they get foreign investment by
allowing
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MKT 201 Plan Proposal NIKE Crisis Aversion
weak enforcement of those laws. Nike has at least made a strong start in correcting that
perverse principle” (Padgett, 2010). Although Nike has actively portrayed itself as a caring
company that wants improved lives for its

outsourced
workers, there are many critics who view Nike’s
solutions as PR stunts, and feel the company is only
concerned with its image. In 1998, in the pit of
the controversy, the company used their marketing
proficiency to help with its corporate reputation.
“[Nike] hired a former Microsoft executive to be vice
president for corporate and social responsibility and
expanded its Corporate Responsibility (CR) Division
to 70 people” (citation 6). Since then, Nike’s PR
campaign has been targeted at improving its own code of conduct as well as joining the FLA
and working towards having a more sustainable
company. The FLA has also designed the Sustainable
Compliance Initiative (SCI) that aims to monitor
the methods used by companies to create more
sustainable ways to follow labor codes. “Through the
SCI, the FLA is developing an assessment methodology
that uncovers the systemic causes of labor code
violations and identifies sustainable ways to improve
conditions and reduce risks. It does this through the
use of an assessment tool that focuses on factory
capabilities to manage these issues proactively”
(citation 7).
Nike’s approach of being transparent with
providing detailed information regarding its factories, and initiatives toward better conditions for
its workers and the environment has been key for their success in the past 15 years. Nike’s
image has been repaired, and is seen as a company that wants to provide work on a global
standpoint while doing so in an ethical way.