LABOR ISSUES AT NIKE

Nike is one of the most successful manufacturers of athletic footwear, competing with Reebok, L.A. Gear and Adidas, as well as with manufacturers of casual footwear. In recent years, the company has expanded into the apparel market, to lessen its dependence on the highly fickle athletic footwear market, and has also seen significant opportunity in the international arena. Nike survived the stagnation in the industry of the early 1990s well, and is now one of the strongest companies in the industry from a financial standpoint. Nike's "swoop" trademark is protected and enforced by vigilant marketing groups at both companies. However, Nike has also been tainted by labor issues in Asian factories that were brought to light in the late 1990s. This research examines the reasons behind Nike taking its manufacturing overseas, the labor issues that have resulted, and how the company has dealt with those issues.

Nike was begun in 1964 as Blue Ribbon Sports; the name was changed to Nike in 1978. It began as a partnership between an MBA candidate and a former track coach who had manufactured running shoes in his spare time. The company built its reputation on its technological breakthroughs in athletic shoes, and helped to introduce specialized shoes for different sports. Prior to companies such as Nike bringing forth this concept, most athletes used general purpose athletic shoes regardless of the sport i

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Indeed, the costs are substantially lower to the point that it is more economical for the company to manufacture its goods in Asia and transport them to the end market than to manufacture the goods in the United States (Madden, 2000). Aside from the cost of labor, which is considerably cheaper in Asia than in the United States, Nike must have also been concerned with the labor practices in Asia. The United States tends to be a highly regulated labor market, and companies often face collective bargaining units in addition to government regulations. The number of hours that can be worked per week, the number of hours subject to overtime, the timing and length of breaks, the minimum work age and other regulations--including the minimum wage that can be paid to workers--are all part of the regulatory environment in the United States. Such regulations are generally not in force--at least to the same degree--in many other overseas markets, including those in which Nike participates (Madden, 2000). This is not an indication that Nike engages in unfair labor practices in the producing market, only that the company needs to abide only by the local laws and customs and not by American law. As a result, the company realizes lower dir

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