Running Head: Crisis Management Case Study: Nike 1

Crisis Management Case Study: Nike Labor Issues

Jordan Cox-Smith
Professor Liz Kerns
Central Washington University
Crisis Management Case Study: Nike 2
Table of Contents
1. Cover Page
2. Table of Contents
3. Executive Summary
4. SWOT Analysis
5. SWOT Analysis
6. SWOT Analysis Review
7. SWOT Analysis Review
8. SWOT Analysis Review
9. Potential Crisis Comparison
10. Potential Crisis Comparison
11. Potential Crisis Comparison
12. Nike Labor Issue Crisis
13. Nike Labor Issue Crisis
14. Nike Labor Issue Crisis
15. Nike Labor Issue Crisis
16. 16- 28 Crisis timeline

29. References
Crisis Management Case Study: Nike 3
Executive Summary
On every continent, most people will recognize the Nike brand and symbol. This can be

credited to a strong campaign that targeted a vast audience on an international level. The Nike

organization can be viewed as one of the most, if not the most successful apparel company at

influence a mass amount of individuals to believe that they need a product. Using a variety of

persuasion tactics, Nike then went to develop the Air Jordan line which featured basketball

superstar Michael Jordan. Using such a large celebrity endorsement, Nike then went on to

develop the Air Jordan brand and it exploded in popularity worldwide.

Nike, Inc. was originally founded in 1964 as Blue Ribbon Sports by Oregon University

track coach Bill Bowerman along with Oregon track athlete Philip Knight. After graduating from

the University of Oregon, he then went on to earn his Masters in Business Administration in

finance from Stanford University. It was at Stanford that Knight found his inspiration to get into

the manufacturing of running shoes. During graduate school, Knight wrote a paper that proposed

quality running shoes could be manufactured in Japan that could compete with more established

German brands. Knight presented his concepts to Bowerman and that was how they became

business partners. It was not until 1978 that the name of the company was changed to Nike.

(Nike Inc., 2009).

The mission statement To bring inspiration and innovation to every athlete in the world,

if you have a body, you are an athlete. that Knight and Bowerman created for Nike was

essential in allowing them to reach a large variety of demographics all over the planet.
In this case study, I will be analyzing Nikes labor issues crisis that involved the

manufacturing of shoes at sweatshops in other countries because of cheaper wages. Nike allowed

for their workers to work in inhumane work environments for below minimal living wage. I will

also go over the strengths, weaknesses, opportunities and threats to Nike. A potential crisis

comparison will be done that could potentially develop in the company.

Crisis Management Case Study: Nike 4
SWOT Analysis

Strengths

Strong internal and external communication

Brand loyalty
Large Market Share
Marketing Research
Multiple corporate offices across the globe
Social responsibility improvement after the crisis
Evaluation of Performance
Management of separate departments
Effective micromanagement
A lot of money to play with
Establishment of Values and Morals
Experience of implementing strategies
of finances
Research and development
Innovation
Advertising and promotion
Centralized focus on specific demographics
Leadership
Strong management

Weaknesses

Ethical issues and stigma of labor issues that seem to still linger
o Labor issues in China and Indonesia with the manufacturing of Jordan sneakers
Nike and Air Jordan are becoming repetitive
Excessive spending on campaigns that are not successful
Nikes facilities not open to public enough
Slimming profit margin because of other departments taking up extra expenses

Opportunities

Emergence of Mixed Martial Arts

Olympics
Reconstruction of business assets crate for more spending for Nike
Sponsored Olympic Athletes can receive personalized commercials to promote new track
and field gear for 2012
Research and development
New Nike ID customization options
Crisis Management Case Study: Nike 5
Increasing financial recovery in overseas markets proves to be an area of expansion for
the athletic footwear and apparel industry.
The emergence of social media has made it easier for Nike to communicate with its
publics.

Threats

Other brands are catching up with the plateau of shoe technology

Price Inflation
Addidas signing of NFL Rookie QB Robert Griffin
Rebooks new summer line
Consumers are looking for cheaper, discounted gear in this inflated economy
Prices for Jordan sneakers continue to rise with re-releases
Brand image has been the same for a long period of time
Crisis Management Case Study: Nike 6
SWOT Analysis Review
Strengths
Nike is a globally recognized for being the number one sportswear brand in the World.

With this being the case, it game the Air Jordan Brand a much higher chance of becoming a

strong brand on its own. Across multiple cultures, Nike and the Jordan logo have become a status

symbol that can be recognized on every continent. Nike makes sure that they are always keeping

strong lines of communication to both their internal and external audiences.

Nike and the Jordan brand have an extremely loyal audience that Nike capitalizes on. The

Jordan brand of Nike does a great job of market research and using the data to implement

strategic advertising campaigns. Such a large organization has the resources to run multiple

campaigns to target multiple demographics. Research is a key element for Nike and social media

is a great way to do so. Nike takes advantage of social media by running hundreds of different

Nike pages that are constantly in communication with consumers. Innovation is what has kept

Nike at the top of the sports apparel market, Nike continues to come up with revolutionary

technology that changes the game.

Even after the labor crisis, Nike was able to try to make a positive spin to the situation.

After these unfortunate events, Nike went on to improve their social responsibility and corporate

reach into the community. Nike had to do more than just throw money at charities, they made

sure that the employees were getting out in the community and actually being active. Another

strength of Nike is the almost infinite amount of resources that seem to be at their disposal;

These strengths are the reason why Nike is at the top of the sports apparel market.

Weaknesses
One of the main weaknesses that I found to have a large effect on the brand is its high

prices. Jordan sneakers are originally sold between $150 and $1000 which makes then very

expensive compared to other shoes in the market place. Also all of the controversy regarding
Crisis Management Case Study: Nike 7
Nikes labor issues plays a major role in the flaws of the organization. Nike has had multiple

crises come about all over the world about how employees at international manufacturing sites

were being over worked and treated inhumane; this caused an issue with Nikes public

reputation.
Even though the re-release of Air Jordans is still extremely popular, it is repetitive which

may hurt Nike down the road. Nike has become a bit repetitive in the demographic that they

target as well, it will be in Nikes best interest to start looking at another audience to target.

While looking at the Twitter and Facebook of Nike, I noticed that there were a good amount of

comments that were complaining about how the facilities were not appealing because they did

not offer enough events to the public.

Opportunities
It seems that Nike has capitalized on just about every opportunity the market had to offer.

But with the growth of women sports, Jordan has the opportunity to expand its demographic and

start targeting women sports such as football and also Mixed Martial Arts. Nike just recently

signed Ultimate Fighting Championship Middle Weight Champion Anderson Silva from Brazil

to an endorsement deal. Making a move to the MMA market was a great move by Nike since it is

the fastest growing sport at this time. Another opportunity for Nike is to take advantage of the

Olympic Games this summer to use sponsorship of Nike Athletes to help promote new line.
Nikes research and development team continues to be one of the strongest assets of the

company; annual report stated they are looking forward to new developments for the 2012-2013

lines which feature new Olympic gear. New shoes and apparel are being added to the Nike ID

webpage which gives customers more options to choose from in the customization of Nike gear

Threats
It is now the summer of 2012 which means it is time for the Olympics. Other sports

apparel brands like Rebook and Adidas will be releasing a plethora of new lines at cheaper prices
Crisis Management Case Study: Nike 8
than Nike and the Jordan brand. This can cause a drop in numbers for the summer for the Jordan

brand and Nike. Another threat to Nike is that there inflated prices may cause them to lose

customers. The economy is still struggling right now which means that consumers will find it

harder to pay the inflated prices for their merchandise.

Rebook and Adidas will always remain a threat to Nike, especially now that the gap is

slowly starting to close in between Nike and its competitors.

Crisis Management Case Study: Nike 9
Potential Crisis Comparison
The Nike organization hangs its hat on its research and development skills to help them

maintain the innovative trend that continues to rise. Nike has always been the shoe company to

come out with new shoe and apparel technology, and we all know the Nike is willing to do

whatever it takes to insure that.

Some examples of this include the Nike Fit which keeps track of how much you are

moving and your heart rate when you work out, the air bubble, and also dri-fit clothing. The

problem with Nike is that they have a history of doing whatever it takes to get to the top, and I

believe that with that history, they may try to take short cuts in other departments of the

organization.
The potential crisis that I cans see happening again will once again have to do with the

labor and manufacturing of the product. I believe that a potential crisis can develop when it

comes to the innovation of new products since the gap between first and second place in the

sports apparel world is becoming smaller. Organizations like Adidas and Rebook are quickly

catching up when it comes to the technology of the shoe, Nike has to realize this and make sure

they are staying one step ahead.

A similar situation came up recently with technology power house Apple Inc. Apple was

criticized for faulty ethical and business practices which included child labor and unsavory

practices. Wintek, one of Apples suppliers, was reported to have been using a chemical, n-

hexane, which had poisoned 49 workers. Some of these workers were children under the legal

working age. This was a big blow to Apple even though they were not directly involved

(Enderle, 2010).
What surprised me was the way that that Steve Jobs and Apple handled the situation; they

seemed to take the same road that Nike took in its early allegations. Jobs went on to express that

this situation in 2010 was not Apples problem. Once again, a major CEO was making statements
Crisis Management Case Study: Nike 10
to the media about the situation before all of the facts were out. But unlike Nike with its crisis in

Indonesia, Apple and Jobs were correct about the accusations technically.
How I think a situation like Apple had could possibly happen with Nike is that Nike is

always coming up with new technology and there is potential that development of these

technologies may lead to unsafe working environments. Even though Nike has become a lot

more socially responsible after their labor issues, it can still be potentially dangerous to work

with some products.

It is essential that Nike has learned from their previous failures and do a lot better job of

communicating to the public about this situation. Nike has to make sure they wait before all the

facts are out and also pay attention to prodromes that occur before the actual crisis breaks out.

Crisis communication of course will be a lot easier to do compare to now because of the

emergence and exponential growth of social media. Social media is a great way for organizations

to gain a pulse on their publics and micromanage potential crises and prodromes. Stopping a

crisis in its beginning stages when it is still small is an extremely effective way to prevent a crisis

that could hurt your organizations reputation.

Other potential crises that have the potential of developing within Nike include sponsored

athletes getting into legal trouble, Nike executives making unethical statements to the press about

the aftermath of the Labor issues in Asia. Hopefully Nike has learned from their mistakes on the

way that they handled the Labor crisis in its early stages and figure out that the best way to stop a

crisis is in its early, prodrome stages.

Nike Labor Issues Crisis
Nikes major ethical and legal issues all pertain to Labor. Nike has been in the news

multiple times for labor issues and running what pop culture called Nike Sweat Shops in

China, Vietnam, and also Mexico. Over the past couple of years, Nike has been progressive in

moving past its labor issues while at the same time becoming environmentally sound, this is a

step in the right direction for both the Nike and Jordan brand.
Crisis Management Case Study: Nike 11
Allegations of Nike running sweatshops began as early as the 1970s when Knight

decided to make his products in Taiwan and South Korea. Knight took advantage of the low

wages and cost of living in these countries at the time to produce mass amounts of shoes. After

some success in these countries, the economy began to rise and workers then demanded higher

wages and if not given them, would move to higher paying jobs that offered more opportunities.

A major factor in Nike leaving Taiwan and South Korea was the development of unions.
Labor Unions began to form in South Korea and Taiwan that helped organize workers so

that they are able to protect them when there rights are being violated; they served almost as a

safety blanket. Labor unions developed as the economy did in both Korea and Taiwan Nike then

went on to move their facilities to other countries where they could save more money. Some of

the countries that Nike targeted include Indonesia, China, and Vietnam along with many others.
In the effort to increase profit margin by cutting cost, Nike made some costly ethical

mistakes that would rattle the foundation of the organization. With the opportunity of cheap

labor, Nike went on to move locations to a more poverty dense area. Nike tried to capitalize on

areas where labor unions were unable to form which made the workers vulnerable.
Accusations of Nikes labor issues began to raise its head in main stream media when a

newspaper of Indonesian trade union published an investigative report on a shoe company out of

South Korea producing shoes for Nike (Ballinger, 2000). The report resulted in articles of other

newspapers reporting that Nike contractors Tae Hwa and Pratama Abadi were illegally paying

factory workers a training wage which was less than the standard 86 cents a day. For Nike,

these accusations were definitely a prodrome to a much larger crisis that was developing.
After the story of workers getting paid lower than standard wages, strikes occurred at

both facilities multiple times over the next year. In 1991 the issues pertaining to the strikes by

workers took a turn for the worst. At the strike at Hardaya (HASI) factory, a fire broke out

towards the end of the strike which killed 2 workers. Even though Nike was not directly involved
Crisis Management Case Study: Nike 12
in the situation, a lot of attention was brought to the issue and the public wanted questions

answered.
Oregonian (US) newspaper printed a lengthy article on Nike's Indonesia operations where

Phil Knight denies the allegations in an angry manner (Ballinger, 2000). The article and the way

Knight addressed the situation hurt Nikes public image because not all of the facts were out yet.
In 1992, the Los Angeles Times and the New York Times wrote articles covering the

Indonesian Wage War (Ballinger, 2000). Nikes early prodrome now became a full blown crisis

because the story was now in mass media in the states. Sports Illustrated got in on the action as

well when they wrote a feature on the Nike Wage War in 1993. Nike continued to deny the

allegations repeatedly and took it even further too completely deny the physical abuse of

workers. It is important as an organization that in a situation like such, that you wait until all of

the facts to come out before you address the situation. Whatever you say to the media will go on

record and I felt that if Knight could, he would of taken back, or at least alter some of his

statements that he made in that interview.

In 1995 at Pratama Abadi, Nikes producing plant, the manager was not happy with the

work that the quality control department was doing, so he decided to discipline them. The

workers of the quality control department ended up being lined up in a row on their knees only to

be slapped one by one by the manager. The incident was leaked by a witness who was working at

the factory who was also assaulted in a previous dispute. Unfortunately, one of the main shoes

that were being produced by this company was of the Jordan Brand. This was a bone crushing

blow to Nike. Indonesia is Nikes third largest base for production is Indonesia; so Nike had a lot

at stake with the internal issues that were going on in Indonesia.

The Nike offices in Oregon and also Indonesia were informed of the incident and they did

the worst thing that you could do in a crisis, not respond to it. Nike ignoring the situation led to a

mass media frenzy that resulted in social movements such as Justice, Do it Nike out of
Crisis Management Case Study: Nike 13
Portland and Press for Change to rise and challenge Nikes unethical ways. These social

movements organized strikes at Nike stores all over the country, especially in Oregon.
The organization, Global Change, was a big player in the mass media storm that focused

on Nikes unethical practices. Nike was all over the press for their issues with labor in other

countries. More protest groups began to develop not only across the country, but also across the

world. Mass media power house CBS aired a special on the crisis that was occurring in

Indonesia, Japan, China, Vietnam, and also Taiwan. On this primetime special, there was actual

footage of the factories that Nike was making their products in.; these facilities did not look up to

standard in any way shape or form. Interviews were also conducted where former workers

discussed how inhumane there working conditions were.

Not too long after the documentary airing, another report leaked about more physical

abuse within these international production plants that Nike continued to try to take advantage

of. Allegations once again came out at another Nike processing plant on the Pou Chen Group

factory in Sukabumi, Indonesia. AP writers went on to interview dozens of workers at this plant

and there was an incident where a worker was cutting the rubber soles of the shoes and made a

mistake that resulted in the manager kicking the worker in the head. The worker had to be taken

to the hospital and was still forced to return to work for what some reports said, even less pay. At

the same plant a supervisor ordered six female workers to stand in the hot sun after they failed to

meet their target of 60 dozen pairs of shoes on time (wsws.org).

Anti-Nike activist did a way better job communicating with their publics than Nike did,

even though Nike had the resources and reason to do so and didnt. Nike seemed to have wanted

to repeatedly shoot themselves in the foot. One of Phil Knights top advisors, Joseph Ha, sent a

letter to the highest-ranking labor official in Viet Nam portraying anti-sweat activists as

enemies of the state with a political agenda (Dept. Wash).

Crisis Management Case Study: Nike 14
Denying or ignoring the situation was not going to cut it this time for Nike. Too much

damage has been done in Indonesia alone to try to avoid the situation like they have been doing

in the past. After all of these accusations, it was time for Nike to become socially responsible and

make a difference. Nike went on to develop the Nike Responsibility campaign which was created

to improve the culture of the company by righting their wrongs and becoming socially

responsible. Nike responsibility breaks down their goals by chapters which include impacts

overview, energy and climate, labor, chemistry, water, waste, community, people and culture, and

also public policy. For Nikes labor section they go on to state the following:
NIKE, Inc. has worked to improve labor conditions in our footwear, apparel and

equipment supply chains for more than 15 years. Key issues in which we have engaged include

the health and safety of the workers who make our products, excessive overtime, the ability of

workers to freely associate, and child labor and forced labor ("Nike responsibility," 2011).
There were a number of prodromes that were obviously apparent. Nike went the wrong

route the way that they tried to fix the situation. The best thing to do when addressing your

audience during a crisis is be honest with them. As an organization, you have a lot better chance

of keeping your audience if you are honest with them, honesty is the best policy. Nike also has to

make sure that all of the facts are out before you address the crisis.
Crisis Management Case Study: Nike 15
Timeline of Labor Issues Crises
Timeline provided by University of Washingtons Center for Communication and Civic Engagement

1988
Newspaper of Indonesian trade union publishes investigative report on South Korea-based shoe
company producing for Nike.

1989
Articles appear in Indonesian newspapers about wage protests at Nike contractors Tae Hwa and
Pratama Abadi. Most shoe factories illegally paid workers "training wage," which was less than
the standard eighty-six cents a day.

U.S.A.I.D.-funded study on minimum wage compliance finds major shoe companies persistent
violators.

Labor rights complaint against Indonesia submitted to office of US Trade Representative by

International Labor Rights Research and Education Fund and Human Rights Watch. Calls for
review of country's benefits under Generalized System of Preferences.

1990
Strike at Tae Hwa and protests at Sung Hwa. Latter action in response to workers killed in crash
of overcrowded company bus.

Rise of Setia Kawan (Solidarity) independent trade union -- subsequently crushed by Indonesian
authorities after less than a year.

1991 (top)
Strike at Hardaya Aneka (HASI) factory after fire kills two workers.

Strike at Pratama Abadi.

Indonesian daily Media Indonesia runs three-day report on abuses at shoe factories. Headline
second day: World Shoe Giants Rape Worker Rights.

Korean businessmen repeatedly warned in newspapers about abusive labor practices.

Thames TV (UK) broadcasts investigative report on Nike contractor in Indonesia.

The Economist reports on unrest at shoe factories producing for Nike.

Departmental strikes at Tae Hwa and Pratama Abadi.

Knight Ridder (US) wire report on Nike-producing shoe factories. Correspondent spoke with
Indonesian workers.

Institute of Technology (Bandung, W. Java) and Dutch Institute for Social Studies publish report
on shoe industry in Indonesia. Leads to attack by Indonesia's Minister of Investment
Crisis Management Case Study: Nike 16
Coordination and subsequent restriction on press reports about low wages and abusive conditions
at shoe factories.

1992 (top)
Oregonian (US) newspaper prints lengthy article on Nike's Indonesia operations -- Phil Knight
(Nike CEO) writes angry denunciation (which includes substantial factual inaccuracies).

US State Department report to Congress on Human Rights highlights shoe factories' refusal to
pay Indonesia's minimum wage.

Strike at Sung Hwa.

Nike formulates "Code of Conduct and Memorandum of Understanding" for contractors.

Cover story of Far Eastern Economic Review looks at Nike's Asian operations -- cites "rough
side" to Nike's "Just Do It dream: the ruthlessness with which Nike pares its costs. The
company is forever on the lookout for cheap production sites ".

Harper's magazine publishes "Nike: The New Free-Trade Heel" by Jeff Ballinger.

Los Angeles Times -- "New Shots Fired in Indonesia Wage War" (Nike and GSP)

1993 (top)
Sung Hwa protest leaders sacked after ten-week investigation by local security forces -- included
intimidation and interrogations. Twenty-four workers subsequently won case against contractor
at Supreme Court of Indonesia (1997).

Critical reports published in New York Times, The International Herald Tribune, The Economist
and Jakarta Post.

Sung Hwa protest leader (Sadisah) attends meeting in Paris hosted by advocacy group Agir Ici
and travels to UK, Germany and Holland.

Sneaker campaigns undertaken in Holland (IRENE & Komitee Indonesie) and Italy (Centro
Nuovo Modello di Sviluppo).

Nike Boycott launched in Germany by Evangelische Kirchengemeinde Duisburg-Neumuhl.

Strike at Pou Chen (locally known as Nikomas).

CBS-TV (US) broadcasts highly critical report on Nike contractors' labor practices in Indonesia.

Press for Change organized to report on Nike shoe factories in Indonesia.

Sports Illustrated cover story dubs Nike "The most powerful force in sports" owing to the
marketing/promotion budget of several hundreds of million dollars.
Crisis Management Case Study: Nike 17

Indonesia's highest labor court rules in favor of Sung Hwa protest leaders. Nike contractor
appeals order to re-hire workers and pay restitution.

1994 (top)
Amsterdam-based SOMO (Center for Research on Transnational Corporations) completes study,
"The Nike Method".

New campaigns launched in UK (Christian Aid) and France (Agir Ici).

Research grant from Press for Change to Jakarta-based Urban Community Mission provides
information for first Nike in Indonesia newsletter.

Criticism of Nike contractors in New York Times Op-Ed (Cavanagh & Barnett), ABC-TV (US)
Prime Time Live and The Economist.

Extensive Indonesia sweatshop report in The Rolling Stone (US).

First meeting of ad hoc Sport Shoe Campaign Group at IRENE-sponsored conference in

Brussels.

Nike hires accounting firm, Ernst and Young to do "social audits" at Indonesia-based contract
factories.

Random House publishes Donald Katz' Just Do It. Katz characterizes Indonesian operations as
"management by terror and browbeating." CEO Knight appears with Katz for Portland book-
signing.

IRENE newsletter reports on international campaign to pressure Nike's contractors.

Press for Change study in Indonesia documents continued wage-cheating.

Strikes at Nagasakiti Paramshoes (NASA) and Tae Hwa.

Major investigative reports in Boston Globe and Los Angeles Times.

Corrupt Indonesian Minister of Manpower overrules top labor court on Sung Hwa case, in favor
of Nike contractor.

Strikes at Pou Chen and Pratama Abadi.

Press for Change runs ads in alternative weeklies in three major cities. Nike lawyers respond
with libel action threats against two publications.

Chicago Tribune report, "Wages of Shame", details struggle of workers making Nike shoes in
Indonesia and quotes Nike's Indonesia manager, Tony Nava, who says company "can't know" if
Crisis Management Case Study: Nike 18
labor practices reports by contractors are actually true. Nava criticizes newly-formed
independent trade union only weeks after Indonesian authorities jailed the group's leader.

1995 (top)
Manager at Pratama Abadi lines up and slaps fifteen women from quality control section. (Press
for Change interviewed witness who was herself slapped in a separate incident.) Nike offices in
Jakarta and Oregon informed -- no response received.

Ms. Magazine (US) publishes "The Globe-Trotting Sneaker" by Cynthia Enloe.

US A.I.D.-sponsored research wraps up three-year research study -- 155,000 Indonesian workers

interviewed at several hundred factories. Over 500 workers at Nike-producing factory in
Majalaya, W. Java report problems such as forced overtime and illegal wage deductions.

Canadian group, Developpment et Paix, begins two-year campaign to monitor and report on
overseas production of Nike footwear and Levi's jeans. Director travels to Indonesia and
interviews dozens of workers.

Article in Marie Claire: "Worked to Death" mentions Nike's Indonesia production and "Code of
Conduct."

Administrative Court in Jakarta overturns Manpower Ministry's arbitrary and capricious ruling
on Sung Hwa protest organizers. Ministry appeals to Indonesia's Supreme Court.

Oxfam brochure "Made in Dignity" describes abuses in Nike-producing factories in Indonesia.

Coalition for Development Action (Brussels) publishes report of IRENE's Peter Pennartz:
"Competition Policies -- The Case of Nike" in ICDA Journal.

Sisbikum, and Indonesian NGO, helps shoe workers to form new advocacy group (Perbupas)
with elected leaders from rank-and-file.

Developpment et Paix supports new research by Press for Change in Indonesia. Information sent
out in two new Nike in Indonesia newsletters.

The International NGO Forum on Indonesian Development (INFID -- Jakarta and The Hague)
begins series of discussions on worker rights with New York-based Council on Foreign
Relations. Nike rated "worst" U.S.-based multinational in worker rights area.

Amnesty International publishes in-depth look at problems of women in Indonesia and E. Timor
with lengthy examination of female labor activists' plight.

Deborah Spar, Asst. Prof. at Harvard Business School (HBS) does study of impact of foreign
investment on labor rights in Indonesia.

Strike leads to dismissal of 13 activists at Pou Chen.

Crisis Management Case Study: Nike 19

Nike increases bloated advertising by 22% while The Economist quotes Korean contractor for
Nike in Indonesia, "Wages go up, but the buyers still try to force costs down." (Referring to 30%
increase in Indonesia's minimum wage -- now $155 a day.)

Ballinger presents paper on Corporate Responsibility to conference on international development

(jointly sponsored by HBS, Kennedy School of Government and Tufts).

Conference in Pisa, Italy -- presentation by Press for Change on Nike in Indonesia and address
by newly-released Indonesian independent union leader, Muchtar Pakpahan. Second meeting of
Sport Shoe Campaign Group.

Dutch "Fair Play" campaign is launched. In Switzerland, Declaration de Berne and Pain pour le
prochain launch a study on sweatshops; researchers travel to Thailand and Indonesia.

London-based Christian Aid commissions study of shoe factories in four Asian countries.
Published report has tremendous media impact in UK.

Australian researcher, Peter Hancock, does in-depth report on Nike-producing factory in

Majalaya, W. Java.

PhD candidate, Bama Athreya (University of Michigan), finishing field research for dissertation
on Indonesian women workers, interviews dozens of workers from HASI and Pou Chen
factories.

Sydney-based Community Aid Abroad (CAA) contacts Press for Change and compiles useful
bibliography on struggle of Indonesian workers making Nike shoes.

Washington-based Multinational Monitor names Nike to annual "Ten Worst" list and publishes
article by Jeff Ballinger.

Students at U. Wisconsin battle proposed endorsement contract with competing shoe companies.
Reebok ultimately wins deal, but an embarrassing "non-disparagement" clause is deleted because
of student activism.

Press for Change contacted by Interfaith Center for Corporate Responsibility (ICCR).

1996 First 6 Months (top)

Portland organization, Justice, Do It Nike, begins regular protests at Nike store.

Press for Change organizes first protest at Reebok's annual Human Rights Award ceremony.

New research by Press for Change in Indonesia uncovers widespread violations of Nike's own
"Code of Conduct". Reports in several Indonesian newspapers lead with "forced overtime" issue,
due to death of worker at Reebok-producing factory (Dong Joe).
Crisis Management Case Study: Nike 20
Five NGOs in Indonesia form Independent Sportshoes Monitoring Group (ISMN) and pledge to
increase pressure on shoe companies.

Continuing discussions with Press for Change, ICCR and General Board of Pensions, United
Methodist Church leads to submission of "anti-sweat" resolution to Nike shareholders meeting.
Meeting covered by CBS-TV.

Joint report on Indonesia's suppression of labor rights by Human Rights Watch and RFK
Memorial Center describes shoe factory protest led by courageous young labor activist, Dita
Sari. (She was jailed for unrelated protests organized six months later.)

An AFL-CIO "Impact Project" in Indonesia surveys workers in factories producing for Nike and
finds that 36% of them had been involved in strike actions.

mid-1996 (top)
National Labor Committee (NYC) brings unprecedented attention to sweatshop issue with
Kathie Lee Gifford controversy. Almost overnight, Nike's labor record is examined in dozens of
publications. This is due in part to the incredible media activism of Global Exchange, the protests
coordinated by Campaign for Labor Rights and the tremendous archives documenting the
struggle of Indonesian workers. Contributing to the archives were several European groups, a
couple each in Australia and in N. America and, first and foremost, the brave workers and
activists in Indonesia.

Press reports from mid-1996 forward are far too numerous to mention; following is a brief
description of NGO and worker activism:

White House forms "Apparel Industry Partnership" to deal with the acutely embarrassing issue of
U.S. corporations involved in labor rights violations in the world's most corrupt and repressive
countries. Sacked worker from Nike-producing factory in Indonesia is denied chance to speak at
AIP's founding conference in Washington.

Rev. Jesse Jackson is refused visit to Nike-producing factory while in Indonesia.

Community Aid Abroad publishes "Sweating for Nike" report, based on research in Indonesia.

Press for Change confers with European groups and two Indonesians from ISMN group at
IRENE-sponsored conference in Duisburg, Germany.

Agir Ici distributes 150,000 post-cards in sport shoe campaign in France.

Swiss groups, led by Declaration de Berne, undertake Indonesia sport shoe educational activities.

Developpment et Paix undertake second year of research and educational activities; over 80,000
postcards are sent to Nike and, across Canada, newspaper ads are bought to draw attention to
campaign.
Crisis Management Case Study: Nike 21
Fired Nike workers' lawyer, Apong Herlina, visits New York for CEDAW meeting -- reports that
case of 24 workers now sits before Supreme Court in Indonesia.

Brutal political crackdown in Indonesia leads to re-arrest of Muchtar Pakpahan and the
suspension of most worker rights educational activities.

Fired Nike worker tours U.S.

Thuyen Nguyen, after consulting with Press for Change, organizes Vietnam Labor Watch, based
in New York.

Nike sends five-page letter to universities across N. America to "explain" child labor controversy.

Chicago Tribune article: "Indonesia's Big Crime: Oppressing Workers -- U.S. Plays Role by Not
Imposing Trade Sanctions."

1997 (top)
Phil Knight, Nike CEO becomes sixth richest person in U.S. with $5.3 billion (all from
shoes/apparel).

Several Nike shoe contractors in Indonesia apply for exemptions from paying new minimum
wage in Indonesia. Increase is from $2.25 to $2.46 a day.

Massive protest march by HASI workers to regional parliament building.

Australian CAA launches post-card campaign and inaugurates Nike campaign email list-serv.

Strikes by thousands of Nike-producing workers in Vietnam.

Canadian Auto Workers sponsor second N. American tour of Cicih Sukaesih, fired Nike worker.

Nguyen of VLW meets workers in Viet Nam. Global Exchange organizes press conference for
Nguyen -- also attended by Press for Change and AFL-CIO Vice-President, Clayola Brown.

Portland's Jobs With Justice helps to organize big May Day protest at Nike store.

Tiger Woods shrugs off sweatshop question at British Open.

Nike hires former UN Ambassador, Andrew Young, to tour Asian factories. Young uses Nike
translators and his report is viewed as shallow and unhelpful.

Protests conducted at new Nike store openings in Seattle, San Francisco and Boston.

50,000 more postcards delivered to Nike from Canadians -- organized by Developpment et Paix.
Crisis Management Case Study: Nike 22
Massive protest and three-day strike at Garuda Indawa -- severance pay issue.

Asian economic crisis brings Nike contractors' per-day labor cost down from $2.50 a day to $.70.
Subsequent strengthening of Indonesian rupiah to dollar brings wage back to about $1.10 by
year-end. Indonesian owner of HASI factory complains that Nike demanded all savings
attributable to crash of rupiah.

Campaign for Labor Rights organizes world-wide day of protest concerning Nike's labor
practices. Actions in fifty cities.

Centro Nuovo Modello di Sviluppo debate with Nike official before crowd of 300 in Rome.

Joint report on Nike contractors in China by Hong Kong Christian Industrial Committee. and
Asia Monitor resource Center.

White House panel on sweatshops announces "standards" for apparel and shoe companies.
Severely criticized by most anti-sweat groups.

Study by NCOS (Belgium) about Nike production in Indonesia leads to 85,000 protest signatures
gathered by union and community groups.

Nike objects to second shareholder resolution by General Board of Pensions, United Methodist
Church. U.S. Securities and Exchange Commission backs Nike objection, rules that resolution
will not appear on the proxy statement.

Berkeley-based Transnational Resource Action Center releases report documenting severe health
problems at Nike shoe factory in Viet Nam.

Student protests against Nike links with universities erupt at Univ. Illinois, Penn State, Univ. N.
Carolina, Colorado, Florida State, Michigan and others.

Nike official complains about modest rise in minimum wage in Indonesia (20 cents per day);
veiled threat to move production.

Nike announces 10-year $200 million deal with Brazil's national football team.

International Confederation of Free Trade Unions issues report documenting Nike "Code"
violations in Malaysia -- paying Bangladeshi "migrant" workers less than Malaysian co-workers.

1998 (top)
Nike official tells Newsweek reporter that the company would like to raise wages in Indonesia,
but the government had banned all pay hikes as "inflationary."

Inflation reaches 80% in Indonesia so that shoe workers' real wages fall 40% behind 1997 (pre-
Crash). This is taking into account Nike's emergency 30% pay increase for shoe workers. (The
first time contractors there were ever forced by Nike to pay above the statutory minimum.)
Crisis Management Case Study: Nike 23

Nike CEO, Phil Knight, gives talk on Nike's Asian labor practices at National Press Club in
Washington, D.C. Announces new initiatives such as education for workers and micro-enterprise
loan programs. Vows to eliminate hazardous chemicals from shoe production.

Pharis Harvey, head of International Labor Rights Fund, is denied tour of Indonesian factory by
Nike officials. (ILRF has been Nike "partner" on White House panel for over a year, at this
point.)

CAA Sydney begins intensive effort to establish ties between campaign groups and worker
advocacy organizations in Indonesia.

Unions and Interfaith Center on Corporate Responsibility leave White House panel on
sweatshops due to irreconcilable differences on monitoring and reporting compliance.

Indonesia's Supreme Court rules in favor of 24 "Sung Hwa" protest organizers.

Doson workers stage protest after Nike contractor reneges on meal allowance pledge.

Universities under increasing pressure from students; "sweatshop" concern spreads to apparel
made for college bookstores bearing university-licensed logos.

Filmmaker Michael Moore, interviews Phil Knight for movie, "The Big One."

Fired Nike worker Cicih Sukaesih honored by US-based "100 Heroines" group.

Workers from NASA ("Nagasakti" Nike contractor in Tangerang) join "Greater Jakarta Labor
Organization" to increase chances of effective collective bargaining.

Nike announces second pay increase (25%) for Indonesian shoe workers. Wage now 250,000
rupiah ($23) per month. "Real wages" still 30% behind mid-1997 figure. First year, post-Crash
wage savings for Nike exceeds $10 million -- even given the two "increases" above the
Indonesian minimum wage.

Michael Jordan, Nike's premier endorser, makes the first of several promises to visit Asian
production facilities.

Manager at Pou Chen factory in Viet Nam pours paint on the head of a worker for making a
mistake. She is paid $15 compensation.

Organizers at Nike apparel maker, PT Tainan are sacked. Both begin labor court cases.

Julia, a worker at Nike-producing "Formosa" factory in El Salvador, is beaten and fired for
taking a day off to care for her sick child.
Crisis Management Case Study: Nike 24
Hero of E. Timor independence struggle, Jose Ramos Horta, likens Nike contractors' operations
in Indonesia to Japanese occupation of the archipelago.

1999 (top)
Joseph Ha, a top advisor to Phil Knight, sends letter to highest-ranking labor official in Viet Nam
portraying "anti-sweat" activists as enemies of the state with a "political" agenda.

Par Garment (Thailand): the Pathum Thani provincial office of the Thai Ministry of Labor rules
against the Nike contractor, and orders them to pay the 50% of back wages for 45 days to 161
employees. Par Garment contests the judgment. (There are also two other cases outstanding, one
regarding fired workers and another regarding a dispute over the collective bargaining
agreement.)

Nike goes on trial in Australia for refusing to comply with "home-work" rules. It is the only
apparel-maker to contest issue.

Ms. Nurhayati, union activist at PT Doson is sacked (a strike had taken place six months earlier).

Nike offers consumer advocate Ralph Nader $25,000 to endorse a running shoe. He declines.

Launch of "The Global Alliance for Workers and Communities" -- Nike, Mattel, World Bank and
the MacArthur Foundation. Do-gooder activities to be carried out by U.S.-based International
Youth Foundation.

Retired generals in Indonesia offer to sell intelligence information to foreign businesses.

Viet Nam survey shows that worst manufacturing pay rates are in footwear sector.

Nike refuses to allow local worker advocacy NGOs to accompany ILRF representatives on
Indonesia factory tours. (Nike and ILRF are both members of "Fair Labor Association.")

US students and activists meet Indonesian workers with Press for Change director, Jeff Ballinger.
Group meets with surveyors about to undertake six-week study of workers in shoe and apparel
factories.

Nike increases advertising spending by 53% for coming year.

Strike and protest over holiday bonus at Pou Chen factory and violent demonstration over same
issue at PT ADIS.

"Free Speech" lawsuit filed in federal district court in Manhattan against Nike and St. John's
University. Former asst. coach of soccer team, Jim Keady, claims that head coach insisted he
wear jacket with Nike "Swoosh" in order to continue coaching.
Crisis Management Case Study: Nike 25
Haryanto, fired former Nike worker, tours U.S. -- organized by Campaign for Labor Rights. He
tells audiences about his attempts to inform fellow workers about their rights, which led to his
dismissal. Efforts by CLR and CAA force Nike to insist that contractor re-hire him (a "first").

Nike signs new sponsorship agreement with the University of Texas for a reported $20 million.

Nike factory in Viet Nam was scene of country's largest food-poisoning incident of the year.

Urban Community Mission completes survey of 4,000 workers in Nike-producing factories near
Jakarta.

Protests in Seattle support efforts of workers in all countries to insist on the right to form
independent unions and to demand that employers sit down in dignity for collective bargaining.

New book, "No Logo; Taking on the Brand Bullies" by Naomi Klein (Picador, 1999) gives good
review of rise of anti-sweatshop struggle.

2000 (top)
Shoe-industry group in Indonesia makes publicity campaign against strikes in shoe factories.

Wall Street Journal profile of Yue Yuen -- Nike's biggest contractor in the world --describes very
profitable company.

Indonesian official links bribe-taking by police and military to low wages paid to factory
workers.
(Ballinger, 2000)
Crisis Management Case Study: Nike 26
References
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Ballinger, J. (2000). Center for communication and civic engagement. Retrieved from

http://depts.washington.edu/ccce/polcommcampaigns/NikeChronology.htm
Bloomberg Business Week. (1994, September 19). Online extra: Nike. Retrieved from

http://www.businessweek.com/stories/2004-09-19/online-extra-nikes-new-game-plan-for-

sweatshops
Braddock, J. (2011, September 8). Nike faces allegations of worker abuse in indonesia.

Retrieved from http://www.wsws.org/articles/2011/sep2011/nike-s08.shtml

Enderle, R. (2010, March 10). Itbusinessedge. Retrieved from

http://www.itbusinessedge.com/cm/blogs/enderle/apple-and-the-ethicalbusiness-

problems-of-child-labor-and-other-unsavory-practices/?cs=39724
History of air jordan. (2011). Retrieved from http://www.nike.com/jumpman23/
Nike inc. (2009, 12 24). About nike, inc.. Retrieved from http://nikeinc.com/pages/about-nike-inc
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http://www.nikeresponsibility.com/report/content/chapter/labor