Mini Case: Nike and Sweatshop Labor
Nike, a company headquartered in Beaverton, Oregon, is a major force in the sports footwear and
fashion industry, with annual sales exceeding $ 12 billion, more than half of which now come from
outside the United States. The company was co-founded in 1964 by Phil Knight, a CPA at Price
Waterhouse, and Bill Bowerman, college track coach, each investing $ 500 to start. The company,
initially called Blue Ribbon Sports, changed its name to Nike in 1971 and adopted the “Swoosh” logo
recognizable around the world originally designed by a college student for $35. Nike became highly
successful in designing and marketing mass-appealing products such as the Air Jordan, the best selling
athletic shoe of all time.
Nike has no production facilities in the United States. Rather, the company manufactures athletic
shoes and garments in such Asian countries as China, Indonesia, and Vietnam using subcontractors, and
sells the products in the U.S. and international markets. In each of those Asian countries where Nike has
production facilities, the rates of unemployment and under-employment are quite high. The wage rate is
very low in those countries by U.S. standards the hourly wage rate in the manufacturing sector is less
than $ 1 in each of those countries, compared with about $ 20 in the United States. In addition, workers in
those countries often operate in poor and unhealthy environments and their rights are not particularly well
protected. Understandably, host countries are eager to attract foreign investments like Nike’s to develop
their economies and raise the living standards of their citizens. Recently, however, Nike came under
worldwide criticism for its practice of hiring workers for such a low rate of pay “next to nothing” in the
words of critics and condoning poor working conditions in host countries.
Initially, Nike denied the sweatshop charges and lashed out at critics. But later, the company began
monitoring
fashion industry, with annual sales exceeding $ 12 billion, more than half of which now come from
outside the United States. The company was co-founded in 1964 by Phil Knight, a CPA at Price
Waterhouse, and Bill Bowerman, college track coach, each investing $ 500 to start. The company,
initially called Blue Ribbon Sports, changed its name to Nike in 1971 and adopted the “Swoosh” logo
recognizable around the world originally designed by a college student for $35. Nike became highly
successful in designing and marketing mass-appealing products such as the Air Jordan, the best selling
athletic shoe of all time.
Nike has no production facilities in the United States. Rather, the company manufactures athletic
shoes and garments in such Asian countries as China, Indonesia, and Vietnam using subcontractors, and
sells the products in the U.S. and international markets. In each of those Asian countries where Nike has
production facilities, the rates of unemployment and under-employment are quite high. The wage rate is
very low in those countries by U.S. standards the hourly wage rate in the manufacturing sector is less
than $ 1 in each of those countries, compared with about $ 20 in the United States. In addition, workers in
those countries often operate in poor and unhealthy environments and their rights are not particularly well
protected. Understandably, host countries are eager to attract foreign investments like Nike’s to develop
their economies and raise the living standards of their citizens. Recently, however, Nike came under
worldwide criticism for its practice of hiring workers for such a low rate of pay “next to nothing” in the
words of critics and condoning poor working conditions in host countries.
Initially, Nike denied the sweatshop charges and lashed out at critics. But later, the company began
monitoring