Nike's Global Impact: Ethical Concerns in Sportswear Production

As a self proclaimed Nike model, I have long been a deep seated Nike fan. Personally, I pride myself on my allegiance to the Nike Flyknit sneakers. Admittedly it was easy to take their claims of sustainable and ethical practices at face value. Upon researching its production process, I did not realize the operations and movement procedures required just to have a pair made and delivered to my doorstep. Nike indeed presents a convincing case for themselves, but it is worth asking how much their well intentioned efforts weigh against their damages they inflict globally.

What was once a $500 investment by the name of Blue Ribbon Sports, Nike is now one the leading brands in the design and distribution of athletic footwear. However, Nike’s success was a not an overnight endeavor. Their business model was carefully built upon concepts of globalization. Originally intending to be just a distributor for Japanese footwear, Phil Knight realized his company’s expansion potential could be maximized exponentially if he could outsource production to the much lower costing Japanese producers, unlike what other leading brands wear doing at the time (1960s).

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This was the first step in the small company’s transformation into a multibillion dollar giant.

Walking down the aisles of any Nike store, one will see what seems like an endless supply of shoes. How is it possible for such a globally in demand brand to consistently provide the good and services upon the consumers’ convenience. The secret is in the production process.

Because Nike is a transnational cooperation, it is able to source its labor and materials from around the world.

From its beginnings, Nike has always tried to find ways to cut production costs. Nike tactfully worked with its suppliers to open up manufacturing plants in Indonesia, China and Vietnam. Forward to today, Nike products are supplied by 124 factories located in 13 countries and also manufacture its products various independent contract manufacturers who also themselves operate multiple factories in different countries (Marketline, 2018 ). The company also maintains various manufacturing agreements with several independent contract manufacturers in Argentina, India, Brazil, Mexico and Italy to manufacture footwear products sold in these countries. Just to manufacture a sneaker, Nike has created an extensive production process that involves many different of players (workers, subcontractors, factories owners) from several countries.

A single Nike shoe, such as my Nike Flyknit sneakers that inspired this paper, requires fifty-two components that are manufactured by subcontractors in five different countries. One might think the high price tag on these shoes is reflective of this wide scale production process but, in actuality, the direct cost of labor cost is about $1.50 for the average $150 Nike sneaker (Walter, 2002).

So how is the cost of labor so low? Nike has been accused for decades of keeping costs low by sacrificing the working conditions and wages of its employees aboard in factories. During its peak of public criticism in the 1990s, Nike came under heavy pressure to confront its scandals involving underpaid factory workers in Indonesia, reports of child labor practices in Cambodia and Pakistan, and horrendous working conditions in China and Vietnam (Locke 2002). Fast forward to today and is Nike still defending itself against claims mistreat of its workers. For example, Nike claims that it follows its Code of Conduct, certified by the Fair Labor Association, and pays its employees minimum wage. However, what Nike also fails to mention is how the countries in which it employs its workers aboard have a definition of minimum wage that hardly meets the needs for survival. For example, in Vietnam, one of Nike’s major production sites, the minimum wage is on average $150 per month (Spellings, 2018). That is about as much I would pay for my Flyknit sneakers. Compare this to the $290 that The Global Living Wage Coalition has estimated the living wage for this region to be and one can not help but wonder how Nike can justify their policies.