Nike’s Past with Child Labour; Future with Innovation for Sustainability

Flyknit is a new manufacturing technology that was fully developed by Nike in

2012. It features yarn and fabric precisely engineered by machine to form a lightweight

shoe top1. Despite being one of the hugest and most innovative companies in the shoe

industry, Nike had been accused of being involved in child labor and the poor working

conditions of its factory. Hence, this paper will argue that Nike although was involved in

these practices, has been making up its reputation by correcting those practices and

striving to produce sustainably.

1 Rachel Strugatz, "Nike to Introduce Flyknit Technology," WWD 203, no. 37 (Feb 22, 2012): 4.
 The paper will be broke down to 4 parts: (1) child labor problem in Nike, (2) Nike

tackling the problem, (3) Nike working toward sustainability and (4) conclusion.

I. Child labor problem in Nike

Nike as a multinational company fails to implement its corporate social

responsibility as child labor is involved in its manufacturing process. Nike produces most

of its products in the third world, where cost could be cut without getting into big trouble.

It doesn’t directly produce its products in these countries but subcontracts it to a local

firm where Nike could get away by blaming them in case they get into trouble. To

maximize profit, Nike and the local firm work hand in hand and gets involved in illegal

labor practices such as child labor. In these less developed countries, the government

doesn’t pay much attention in these kinds of practices. These countries include Vietnam,

China, Indonesia, Pakistan, Bangladesh and India2, where Nike chooses to produce its

products in, due to its cheap labor and lack of human rights appeal. 12 year-old girls have

been seen working in Indonesian sweatshops 70 hours a week making Nike shoes3. Nike

yet doesn’t get into big trouble as the local subcontractor bears the responsibility once the

issue is being exposed.

II. Nike tackling the problem

In response to the issue, Nike had been tackling the problem by keeping up its

Code of Conduct. Glenn Carroll states, “Following protests in the late 1990s over unsafe

2 Richard M. Locke, Fei Qin, and Alberto Brause, “Does Monitoring Improve Labor Standards?
Lessons from Nike”. Industrial and Labor Relations Review 61, no.1 (2007). Sage Publications,
Inc.: 8.

3 Philip Kotler and Milton Kotler, Winning Global Markets How Businesses Invest and Prosper in
the World's High-Growth Cities (Somerset: Wiley, 2014), 183.
working conditions, low wage rates, excessive overtime, restrictions on employee

organizing, and negative environmental impacts, Nike began shifting from a reactive to a

proactive mode.4” This implies that Nike started to realize the importance of keeping its

reputation. Hannah Jones, European Director of Corporate Responsibility of Nike inc.,

also says that, “It could be argued a new fear has emerged in the last decade or so, that

the world is threatened by a deficit in ethical behavior and an absence of sustainable

development.5” People always fail to recognize the importance of humanity under the

technology and commercial-driven world. As Clive Dilnot have also noted that there is a

“loss of global compassion”6, people and children were forced to work long hours.

Having realized the issue, Nike tried to alleviate the problem, but it was a tough

job due to its global value chain. Three classes of production are involved, namely

‘developed partners’ (the premium line of production with most sophisticated

technology), ‘volume producers’ (mass produces shoes to meet the demand surges), and

‘developing sources’ (produces in even lower costs)7. This system though brought

economic benefits to Nike, it failed its Code of Conduct as the relentless price

competition forced the subcontractors to ignore the working condition of the workers.

4Glenn Carroll, Debra Schrifin, and David Brady, "Nike Sustainability and Labor Practices
2008-2013," Stanford Graduate School of Business, 2013, Accessed December 5, 2015, http://
www.gsb.stanford.edu/faculty-research/case-studies/nike-sustainability-labor-
practices-2008-2013.

5Hannah Jones, “Nike and Social Responsibility”, RSA Journal 148, no. 5485 (2000), Royal
Society for the Encouragement of Arts, Manufactures and Commerce: 20.
6Clive Dilnot, ”Ethics in Design: 10 Questions," in Design Studies: A Reader, edited by Hazel
Clark et al. (Oxford: Berg, 2009), 187

7Suk-Jun Lim, and Joe Phillips, “Embedding CSR Values: The Global Footwear Industry's
Evolving Governance Structure”, Journal of Business Ethics 81, no.1 (2008). Springer: 146.
Nike went through a lot of transformation, including joining fair labor organizations (but

refused to let third parties monitor its work), hiring authorities to conduct studies and

etc8. It was not until 1998 that Phil Knight, the CEO of Nike, “pledged to significantly

reform the company’s labor practices by (1) raising new workers minimum age to 18, (2)

meeting the U.S. Occupational Safety and Health Administration’s indoor quality

standards, (3) expanding worker education programs, (4) increasing business loan

programs for families in Vietnam, Indonesia, Pakistan, and Thailand, and (5) allowing

human/ labor rights groups to monitor factories910”. On top of that, the innovation of new

technology such as Flyknit, implies that it would be less labor intensive in producing the

shoes as machinery can almost do everything to produce the shoes 11. With this, less labor

will be required and hence people could have shorter working hours. Despite the fact that

it was really hard to implement these measures, Nike did their best to tackle the problem.

III. Working Towards Sustainability

Since recognizing that it should hold up its responsibility, Nike has been working

to produce more sustainably, which the Flyknit technology is one of their evolutionary

innovations. It is not simply a product but a whole new manufacturing process, which

eliminates footwear waste in the upper by 80% on average compared with traditional

8 Ibid., 147.

9Randy Shaw, Reclaiming America: Nike, Clean Air, and the New National Activism, (Berkeley:
University of California Press, 1999), 93.
10George H. Sage, "Justice Do It! The Nike Transnational Advocacy Network: Organization,
Collective Actions, and Outcomes." Sociology of Sport Journal 16, no. 3 (1999): 226.

11 Austin Carr, "NIKE: THE NO. 1 MOST INNOVATIVE COMPANY OF 2013," Fast Company,
2013.
production methods12. Nike claimed that Flyknit has reduced nearly 2 million pounds of

waste since 201213. It is made possible by engineering machines so that they knit yarn to

form the structure without creating much waste. Below is a brief comparison of different

aspects of sustainability of Nike’s shoes.

!
Figure 1. Comparison chart of sustainability14

According to Figure 1, energy, greenhouse gas, water, waste and chemicals are

significantly reduced by at least 13% for using the Flyknit technology. This implies that

with technology innovation, new manufacturing process like Flyknit can significantly

reduce the amount of waste in the shoe industry. The product could be recycled by

returning it to Nike, where they could grind the product to create floor surfaces, soles of

12Nike, inc., Nike, inc. FY12/13 Sustainable Business Performance Summary, Oregon: Nike, inc.,
2013: 11.
13"Nike Better World," Nike, Accessed December 8, 2015. http://www.nike.com/us/en_us/c/
better-world/Flyknit/innovation.

14Nike, inc., Nike, inc. FY12/13 Sustainable Business Performance Summary, Oregon: Nike, inc.,
2013: 25.
shoes and other products15. Julie Doyle says that “One aspect of this difficulty was the

‘unseen’ nature of climate change, in a Western culture invested in the notion that seeing

is believing16,” claiming that most people in the world have not quite realize the threat of

climate change. Nike on the contrary had lead the leading role in the industry on

innovation to produce sustainably.

Conclusion

In conclusion, Nike though had been through accusations of being involved in

child labor, poor working conditions and low wages, Nike had paid attention to the issue

and properly tackled the problem by reinforcing its Code of Conduct. In addition to the

alterations made, it also worked on innovation towards sustainability, hence the invention

of Flyknit technology. It significantly reduced the amount of water, energy, greenhouse

gas, waste and chemicals used or emitted.

15"Nike Better World," Nike, Accessed December 8, 2015. http://www.nike.com/us/en_us/c/

better-world/reuse-a-shoe

16Julia Doyle, ”Seeing the Climate?" In Ecosee Image, Rhetoric, Nature, edited by Sidney I.
Dobrin and Sean Morey, 279-293, Albany: SUNY Press, 2009.
!
Bibliography

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Strugatz, Rachel. "Nike to Introduce Flyknit Technology." WWD 203, no. 37 (Feb 22, 2012): 4.