The new free-trade heel: Nike’s profits jump on the backs of Asian workers

Jeffrey Ballinger, The new free-trade heel: Nike’s profits jump on the backs of Asian workers. Harper’s Magazine, August 1992. “Her only name is Sadisah, and it’s safe to say that she’s never heard of Michael Jordan. Nor is she spending her evenings watching him and his Olympic teammates gliding and dunking in prime time from Barcelona [1992]. But she has heard of the shoe company he endorses–Nike, whose logo can be seen on the shoes and uniforms of many American Olympic athletes this summer. Like Jordan, Sadisah works on behalf of Nike. You won’t see her, however, in the flashy TV images of freedom and individuality that smugly command us to JUST DO IT!–just spend upward of $130 for a pair of basketball shoes. Yet Sadisah is, in fact, one of the people who is doing it–making the actual shoes…

Update: Max Nisen, How Nike Solved Its Sweatshop Problem. Business Insider, 9 May 2013. “It wasn’t that long ago that Nike was being shamed in public for its labor practices to the point where it badly tarnished the company’s image and hurt sales. The recent factory collapse in Bangladesh was a reminder that even though Nike managed to turn around its image, large parts of the industry still haven’t changed much at all. Nike was an early target for the very reason it’s been so successful. Its business model was based on outsourcing its manufacturing, using the money it saved on aggressive marketing campaigns. Nike has managed to turn its image around. Nike hasn’t been completely successful in bringing factories into line, but there’s no denying that the company has executed one of the greatest image turnarounds in recent decades.”

In the 1980s, Oregon-based Nike closed its last U.S. footwear factory, in Saco, Maine, while establishing most of its new factories in South Korea, where Sung Hwa Corp. is based. Sung Hwa is among many independent producers Nike has contracted with. Nike’s actions were part of the broader ‘globalization’ trend that saw the United States lose 65,300 footwear jobs between 1982 and 1989 as shoe companies sought non-unionized Third World workers who didn’t require the U.S. rubber-shoe industry average of $6.94 an hour. But in the late 1980s, South Korean laborers gained the right to form independent unions and to strike. Higher wages ate into Nike’s profits. The company shifted new factories to poorer countries such as Indonesia, where labor rights are generally ignored and wages are but one seventh of South Korea’s…. By shifting factories to cheaper labor pools, Nike has posted year after year of growth….

[Sadisah makes] just under 14 cents per hour,…less than the Indonesian government’s figure for ‘minimum physical need.’ A recent International Labor Organization survey found that 88 percent of Indonesian women working at Sadisah’s wage rates are malnourished. and most workers in this factory–over 80 percent–are women. With seldom more than elementary-school educations, they are generally in their teens or early twenties, and have come from outlying agricultural areas in search of city jobs and a better life. Sadisah’s wages allow her to rent a shanty without electricity or running water….

Sadisah and the other workers in this factory are compelled to put in extra hours, both by economic necessity and by employer fiat…. Sadisah worked 63 hours of overtime during [a particular] pay period, for which she received an extra 2 cents per hour…. The labor costs to manufacture a pair of Nikes that sells for $80 in the United States is approximately 12 cents….

Boosters of the global economy and ‘free markets’ claim that creating employment around the world promotes free trade between industrializing and developing countries. But how many Western products can people in Indonesia buy when they can’t earn enough to eat? The answer can’t be found in Nike’s TV ads showing Michael Jordan sailing above the earth for his reported multiyear endorsement fee of $20 million….