BEAVERTON, Ore. (Sep 16, 1996 - 20:00 EST) -- Sensitive to charges that his company's Southeast Asian factories are sweatshops where workers are underpaid and mistreated, Nike chairman Phil Knight took his case to shareholders Monday.
In a letter to shareholders, and in comments at their annual meeting where Nike reported record quarterly earnings, Knight said his company has been a leader in improving working conditions in the Third World.
"The factories are clean. They're well lit and, as we've pointed out more than once, the workers in those factories receive double the minimum wage throughout Indonesia," Knight said. "What we'd really like to have is the best pay and the best conditions for these people because we believe the best product comes out of the best factories."
In his letter, Knight said that Nike would, within the next year, invite an independent group to review conditions at the factories and make its findings public.
Two members of Nike's board of directors, former Smith College president Jill Conway and Georgetown basketball coach John Thompson, just returned from a trip to tour factories in Indonesia and Vietnam. They said that, while things could be improved, conditions are not nearly as bad as critics have claimed.
"I did not go to satisfy any critics," Thompson said. "I went to satisfy myself as an employer at Nike. ... We saw some things that were not perfect. But I did not see things that I had heard about."
Thompson said the biggest problems were cultural differences between the Korean and Taiwanese subcontractors who run the factories and the Indonesians who work there.
About 80 percent of the Indonesian workers at Nike factories are women. It is possible for a woman working on the stitch line to move up in a few years to a position where she is making as much as an Indonesian surgeon does, said Conway, a visiting scholar at MIT.
Shareholders turned down a resolution proposed by the pension fund of the General Board of Pension and Health Benefits of the First United Methodist Church to require an independent, non-government review of Nike's factory conditions.
But Knight promised that company officials would continue to talk with pension fund leaders in an attempt to resolve their concerns.
Just outside the gates of Nike's World Campus, under the watchful glare of several Nike security guards and sheriff's deputies, representatives of a human rights group that recently went to Indonesia disputed Nike's claims that conditions there were good.
The group Global Exchange was not allowed to tour Nike factories because the company says the organization is biased. But Max White and his son Evan, both members of Amnesty International who took part in the tour, said their interviews with workers showed a far different picture than Nike painted.
They said they saw pay stubs that showed workers had to put in many hours of overtime to earn a living wage. The report said workers are forced to work overtime and that managers treat employees abusively.
Evan White said Nike causes the mistreatment by setting unrealistic production goals and refusing to pay more for wages.
"Nike's remarkable financial success is due at least in part to its policy of siting production in countries with sizable pools of desperate and therefore dirt-cheap labor," Global Exchange said in its report.
Knight singled out Global Exchange as one of the critics whose motives are suspect and whose criticisms are irresponsible. Max White said that Nike labels anyone who doesn't agree with it "as a bad guy."
Nike already employs an auditor to review conditions at the factory, but the Whites said the auditor is mostly concerned about product quality.
Knight acknowledged that a shipment of soccer balls Nike purchased in Pakistan earlier this year was found to have been manufactured by a subcontractor using child labor in "horrible conditions." But he said Nike has taken steps to make sure that doesn't happen again.
"Starting about two months from now, the soccer balls that Nike orders will be stitched in soccer stitching rooms that can be easily monitored," Knight said. "They will not be stitched by child labor and they will be stitched in conditions that are well lit and neat."
He said Reebok, Nike's chief competitor in the United States, has taken similar action.
"Reebok is not exactly our best friend," Knight said, "but I will say this is a situation where Nike and Reebok are leading a change in a situation that has existed for decades."