Nike Labor Problems

Introduction The majority of multinational corporations have elected to outsource their production processes to Asia in countries such as Indonesia, China, and Vietnam. The logic behind such practices is that moving production abroad is that costs are significantly lower when compared to the costs if production is based in the States. Companies such as Nike have embraced the practice of using foreign factories to manufacture its products. Labor conditions and wages are two issues that have courted concern for the company. The concern stems from questions about the level of responsibility that a company such as Nike has regarding working conditions in the foreign factories.
1. What responsibility does Nike have for conditions of work at foreign

The problem with the code of conduct was that it was vague in terms of how it would be implemented or what consequences would face contractors who failed to adhere to the code. Nike commissioned Andrew Young in 1997 to produce a report on labor practices in its foreign factories (Locke 40). The problem with the report was that it was likely to be biased given the conditions that Young experienced. Nike officials escorted him during visits to the factories, and he was provided with a company translator. The report was ineffective as it failed to establish the true picture concerning the working conditions in the factories. The report did not appeal to the public either and faced heavy criticism given that it did not even address the issue of low wages. Nike did the right thing in 1998 when Phil Knight, the CEO acknowledged the issues surrounding the labor practices of its contractors. The company prohibited the hiring of underage workers, enforced OSHA clean air standards for all its factories and started increasing its monitoring activities in the factories to ensure compliance. In the following year, the Fair Labor Association was created with the mandate of creating a code of conduct and establishing independent monitoring. Nike was instrumental in the creation of the non-profit group,

After the speech by its CEO in 1998, the company proceeded to implement some measures to combat issues concerning its social responsibilities (Ferrell, Fraedrich and Ferrell 412). The first step was the adaptation of United States clean air standards. This was necessary as some of the countries did not establish clear air safety standards. Records show that six hundred factory audits were conducted for a two-year period starting in 2002. The audits were focused on checking the compliance of the factories to safety, health and other standards set out in the code of conduct. Factories that had issues were the subject of multiple audits to ensure that they had complied. The approach of conducting audits instead of just monitoring saw to it that the root causes of the issues were established, and Nike had been able to strategize on addressing the