Nike on the ropes
By DON HAZEN
The giant Oregon-based athletic wear and gear company Nike, one of the big
growth, mega-corporations of the '90s that many Americans have grown to
hate, is encountering some hard times. Facing declining demand, Nike in
March announced that it planned to eliminate 3.5 percent of its work force
-- about 450 jobs. Further job cuts outside the United States are anticipated.
When the company reported substantially lower earnings in the last week
of February, Nike stock dropped 8 percent. In fact, while once one of the
hottest stocks of the '90s, Nike's shares have dropped 43 percent in the
last year, despite a booming stock market.
Simultaneously -- and maybe even interrelated -- the Nike empire's polices
and practices have led to a growing avalanche of negative publicity; perhaps
karmic retribution for the company's commercial hegemony and hard ball tactics.
The most recent media calamity was during the Winter Olympics, when news
about a CBS/Nike contract requiring all CBS personnel to wear swoosh Nike
apparel on air -- including news reporters -- led a chorus of critics to
question CBS' integrity and Nike's judgment. At the same time, a well publicized
blast by CBS 48 Hours Producer Roberta Baskin asserted that the network
had undermined her efforts to follow up her powerful original reporting
on horrible working conditions on Nike factories in Vietnam, claiming that
CBS had likely knuckled under to Nike because of their huge advertising
investment during the winter games.
Long before the Olympics, Nike has had the harsh public light shining on
its operations. During 1996 and 1997, especially following Baskin's exposé,
Nike was the object of intense media scrutiny, in a large part due to these
various reports of labor abuse by its subcontractors in Asia. "In Vietnam,
800 laborers walked off the job in protest of what they said were poor working
conditions; in Indonesia, thousands of workers ransacked their factory last
spring, claiming that Nike hadn't been paying the $2.50 a day minimum wage,"
wrote Stephen Glass in The New Republic.
During the 1970s, most Nike shoes were manufactured in South Korea and Taiwan.
But workers organized and gained wage increases, motivating Nike to move
to lower-wage markets. Today, Nike shoes are made almost exclusively in
China, Indonesia and increasingly Vietnam. These countries have little in
the way of protective labor laws, albeit large supplies of cheap labor.
In some cases, authoritarian leaders have even outlawed independent labor
By 1997, the attention to Nike labor practices provoked a number of demonstrations
in various U.S. cities, including a large showing at a multi-floor "Niketown"
super store in San Francisco. In response to such erosion of it's public
image, Nike hired former UN Ambassador Andrew Young, who had just started
a new business, Good Works, to help stimulate investment in developing countries.
Nike was to be Good Works' first client, and Young came through with a positive
report after inspecting 15 Nike factories during the spring of 1997. As
the New York Times reported: "After completing his two-week
tour covering three countries, he informed Nike it was doing a good job
in treating its workers, although he allowed it 'should do better.'"
But Young was widely criticized by human rights and labor groups for not
focusing on wages, for not having his own translators and for doing very
superficial inspections -- in some cases for just several hours during his
Several months later, after Nike had taken out full page newspaper ads trumpeting
the Young findings, a devastating report about unsafe working conditions
at Nike plants was leaked by a disgruntled employee through the advocacy
group Transnational Resource and Action Center ( TRAC). The confidential
report clearly contradicted Young's findings and undermined
Nike portrays itself as squeaky clean
Steven Greenhouse of the New York Times explained: "In
an inspection report that was prepared in January for the company's internal
use only, Ernst & Young wrote that workers at the factory near Ho Chi
Minh City were exposed to carcinogens that exceeded local legal standards
by 177 times in parts of the plant and that 77 percent of the employees
suffered from respiratory problems. The report also said that employees
at the site, which is owned and operated by a Korean subcontractor, were
forced to work 65 hours a week, far more than Vietnamese law allows, for
$10 a week.
"The inspection report offers an unusually detailed look into condition
at one of Nike's plants at a time when the world's largest athletic shoe
company is facing criticism from human rights and labor groups that it treat
workers poorly even as it lavishes millions of dollars on star athletes
to endorse its products."
Nike, more than any other corporation (except perhaps Microsoft), represents
the "over the top" '90s approach to market dominance and near
monopoly through saturation advertising, endorsement contracts and penetration
into high school sports. This approach of overwhelming the market -- shared
by bookseller Barnes and Noble, by Starbucks, the Gap, McDonald's and a
few other huge companies -- has alienated increasing numbers of consumers
and retailers alike.
If you haven't noticed, and perhaps a cave dweller may not have, the swoosh
is everywhere -- billboards, sportswear, television commercials, on the
lapel of famous coaches and on and on. Part of the Nike approach is to literally
buy anything that moves in the sports and media world, from uniforms to
stars, providing free equipment along the way. Further, Nike has taken its
brand into areas where commercially intrusion has never trod. As a result,
top-tier amateur sports have been transformed into swoosh events, commercial
enterprises which know no bounds.
Consequently, many in the sportswear business now see the swoosh as double
edged sword, with its footwear taking up as much as 60 percent of shelf
space. "This is a very unhealthy environment we're dealing with now,"
said Mark Anderson, sportswear buyer for Chicks Sporting Goods. "Nobody
in the history of the business has dealt with a giant like this." The
result is unprecedented market dominance and fear on the part of many small
Ed Sherman, a sports columnist for the Chicago Tribune, thinks Nike
sales efforts have gone too far. "Sporting events, athletes and coaches
have become nothing more than billboards for sponsors bombarding spectators
and viewers with one long continuous advertisement. Where does it end? The
answer is, it doesn't. The crack in the dike has been blown wide open. It's
just a matter of time before the pitcher's mound is engraved with a Budweiser
Still, some may hold out. With Nike negative publicity turning up regularly,
the company has become the target of the socially conscious investment movement
and recently even poetry got into the mix of bad Nike press. As reported
by The Progressive magazine and Stephanie Salter of the San Francisco
Examiner, radical poet Martin Espada drafted a biting letter to Nike
after he was appalled that an advertising agency offered him $250 to submit
a trial poem for a Nike Poetry Slam commercial. Espada would have received
$2,500 if the poem was accepted. Espada told Salter: "There are a lot
of things I'd do for $250. I'm broke all the time, but there are some lines
in your life you cannot cross and still remain human."
Phil Knight and Michael Moore's new movie
Apparently, Nike can look forward to more negative attention. In New York
City last fall, guerrilla filmmaker Michael Moore previewed his new film,
The Big One, at the 1,200-person Media and Democracy Congress. The
film features an encounter with Nike billionaire CEO Phil Knight. According
to Moore, "Nike obtained a bootleg of the film and Lee Weinstein, director
of PR, called me and said he was flying to New York and could we meet. I
met him for breakfast and he asked me, 'What would it take to have two scenes
removed?' He wanted the scenes where Knight says he doesn't care if 14-year-olds
are making his shoes, and the one where he tells me that in five years 'one
of those little Indonesians' is going to be my landlord. I told him nothing
would ever be removed from the film and, to tweak him, I said I would add
a scene at the end of the film -- a scene showing Knight breaking ground
for that new shoe factory in Flint. He wrote it all down and said he would
get back to me -- and never did."
In terms of the high-flying Nike's change of financial fortune, company
flacks are blaming changing preferences in the youth market and economic
problems in Japan, one of Nike's biggest markets. In the U.S., Nike has
almost reached the point of saturation, with 47 percent share in the sneaker
market and 61 percent in basketball shoes.
But others think something much larger is at play: backlash. Nike's unrelenting
hunger to dominate the marketplace has led to overexposure and over intrusion.
It's eagerness to find the cheapest wage markets -- often in Asian sweat
shops with slave-like conditions -- to maximize growth has led to a resentment
against the company. As stock analyst Joise Esquivel from Morgan Stanley
Dean Witter notes, "Clearly Asia is a problem, but they have a huge
problem in the U.S. as well. Nike's basic fundamental challenge today, we
believe, is not their competition. We believe it's Nike itself. The world
As Julie Winokur writes in the book We the Media, commercial efforts
like Nike's are the Western equivalent of the kamseen, the legendary dust
storm that sweeps across the Sahara desert with such force that it buries
people alive and burrows its grit into seemingly impossible places. Advertising
is everywhere and Nike leads the way. Having exhausted traditional venues,
advertising has metastasized into what was previously considered sacred
Perfume on A Skunk
Apparently Nike has sensed that they need more help stemming the flood of
negative publicity. One step was the hiring of Maria Eitel to be Vice President
for Corporate and Social Responsibility, whose duties include shaping up
Nike's labor practices. Company President Thomas Clark declared that the
hiring of Eitel "signals Nikes commitment from the top to be a leader
... in global citizenship."
This new information brought a shriek from populist radio commentator Jim
Hightower. "It'll take a tough cookie to bend the Nike Swooshtika toward
justice, so let's check her credentials: Ms. Eitel has been a television
reporter, a White House spokesperson for the Bush administration, and corporate
affairs manager at Microsoft. What? She's a PR flak, a political spinmeister,
a corporate con artist. We're to believe that she'll hold Nike's golden
feet to the fire?"
Hightower continues: "In her Nike debut, Eitel sounds more like a lap
dog than a watchdog, declaring that criticism of the company's labor practices
have not been justified because this is a 'very complex issue' ... There
is nothing complex about the fact that Nike hires teenage girls in Asia
to make its pricey shoes, pays them sub-poverty wages and allows them to
be abused in the workplace." Hightower adds: "They can put French
perfume on a skunk, but it won't hide the stink. "
The swoosh -- a simple aerodynamic design, a winged check mark, a boomerang,
a whatever -- is clearly the most ubiquitous sports symbol in history. Swoosh
recognition is so high the name of the company no longer accompanies the
symbol, not even on shoes, or on the company's stationery. David Armstrong
of the San Francisco Examiner reports that the swoosh has a 90 percent
consumer recognition rating, about the same as the McDonald's arches. Funny
thing about that swoosh, though: it was created 30-some years ago by a student
named Carolyn Davidson, who the company is not in touch with. She was paid
Tiger Woods wears the Nike swoosh on the front of his shirt. And on the
back. "It gets worse," complains Gary Peterson of the Contra
Costa Times. "Woods now wears the Nike swoosh on the front of his
cap. And on the back and on the sides. Ken Griffey wears the Nike swoosh
on the back of his batting glove. And because the center field camera doesn't
see the back of both hands as he stands at the plate, on the index fingers
of his glove."
As Chicago Tribune columnist Sherman explains, "The selling
out of sports is in full throttle and Nike is the biggest player or offender,
depending on your perspective. With almost every big name star in its portfolio,
Nike is now buying up college sports. Virtually every big name school has
a big money endorsement contract from Nike." As does virtually every
big name coach.
Into the High Schools
Nike has invaded high schools as well. Principal Yvonne H. D. Noble of Crenshaw
High School in Los Angeles says that a Los Angeles Times reporter
asked her about the relationship of Nike to her school. She told him the
company gave each member of the boys basketball team a pair of tennis shoes.
But the reporter figured there was probably more to the relationship than
the 15 pairs of shoes. Turned out he was right.
"As I investigated, I learned that Nike practically outfitted every
member of the boy's team -- several pairs of shoes ... gym bags, hats, warm
ups and probably other items. What does Nike get from Crenshaw High School?
They get a championship basketball program to advertise for Nike. None of
it seems illegal, but is it ethical?
"In July of 1997, when I learned quite by accident that Nike had arranged
with one of our coaches to use the Crenshaw High gym to film a commercial,
I immediately stopped the project," responds Noble. "I was appalled
that Nike would totally bypass the administrative staff in seeking to use
district facilities for a profit-making enterprise.
"I am embarrassed to admit the depth of my naiveté. But I must
let those who influence my students, including Nike, know that ethical values
count in the Crenshaw community. What I want is a relationship in which
not only Nike but my student athletes prosper. The exploitation of student
athletes at Crenshaw High School must stop. For me to remain silent on this
issue is to collude with those who do not have my students' best interest
The schools and pro teams will argue that they need the revenue from advertising
deals to cover budgets, make up deficits. But the trend grows as more gets
spent and more is needed. "Every time a swoosh is placed on a coaching
giant, a football field gets named for a steak house, every time an ad is
placed on the field of play, the event becomes less special. It loses some
of its character and integrity." says Sherman.
Sporting Goods Business reports that while the Nike brand has long
been the bane of other footwear manufacturers -- Nike has swept into categories
from basketball to even indoor volleyball -- a feeling of entrapment has
emerged among retailers who feel they have less control over what they stock,
but are too dependent on swoosh revenue to do much about it. Many retailers
fear the obvious --that if or when Nike makes a slip or falls out of faith
with the consumer, the results will be disastrous. That moment may be on
In stories reminiscent of other industries where independent stores are
getting the squeeze -- like book sellers, coffee cafes, clothing outlets
-- smaller companies appear to have a more difficult time getting the service
they need to compete with the Foot Lockers and other chains who give Nike
Nike also has been in the cross-hairs of the socially responsible investment
world, a still modest but growing group of stock holders who want companies
they invest in and exercise a social conscience. Mutual fund assets linked
to social issues have grown to $96 billion, according to the Washington-based
Social Investment Forum, a huge increase from the $12 billion just two years
And many are "exercising" their social conscience. As reported
in the Sacramento Bee, for example, Laurel Kuzins does not wear Nike
Shoes. They don't measure up, she says, because the company relies on cheap
overseas labor to make them. Laurie is 8-years-old.
Laurie's parents, Matt and Nanci, have long held beliefs about human rights
and the environment and feel strongly that "Where we put our money
should reflect our view of how we'd like the world to be."
Americans are generally fair. They don't want a person (or a company for
that matter) singled out when others are to blame as well. Many people asked
the obvious questions: Aren't all shoe companies the same? Aren't workers
being paid the minimum wage at Nike factories and aren't they happy to have
Let's take a look. Like their dominance in the advertising world, Nike gets
a lot a of attention because they are the biggest shoe company in the world,
spending more than $600 million on marketing that "empowers women and
inner city youth to buy their expensive shoes."
These shoes are made by Vietnamese workers, who are paid $1.60 daily wages,
while according to Global Exchange, the cost of a single meal in Ho Chi
Minh City is 60 to 90 cents. The Indonesian government admits that their
minimum wage is only 90 percent of subsistence. As for what Nike can afford,
advocates come up with the following statistic: Just 2 percent of Nike's
$630 million operating budget could raise the salary of all 25,000 Vietnamese
workers from a meager $1.60 per day to $3.00, a livable wage. After all,
the critics say, Reebok factories pay $65 per month and Coca-Cola and Goodyear
recognize that minimum wage is not enough, while Nike pays $45 monthly --
a poverty wage. Furthermore, New Balance makes most of their sneakers in
the U.S., paying more than 30 times what Nike pays and they still make a
Look for Nike protest
The final word at this juncture goes to Michael Moore. He finished his Nike
tale: "Nike apparently has, behind the scenes, threatened to cancel
a cross-promotion they had planned to do on a unrelated upcoming film called
The Mighty. But the Miramax brothers (distributors of Moore's film
The Big One) were not the type to be intimidated. Miramax and Moore
have geared much of their publicity of the film around Nike. About 30 benefit
screenings are being held around the country and a number of them will be
to help the anti-Nike efforts. That should keep the heat on the Nike publicists."
Don Hazen is executive director of the Institute for Alternative Journalism
and co-editor of We the Media: A Citizens Guide to Fighting for Media
Democracy (New Press, 1997).
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