At the moment, Indonesia is Nike's biggest production centre, with 17 footwear factories that employ 90,000 workers and produce about 7 million pairs of shoes each month. The phrase "at the moment" is appropriate considering Nike spokesperson Jim Small's comment in 1997 on increases in the legal minimum wage from $2.26 to $2.47 dollar per day "...There's concern what that does to the market - whether or not Indonesia could be reaching a point where it's pricing itself out of the market." But due to the currency crisis in Asia, Nike's dollar wages in Indonesia shrank drastically to as low as 50 cents per day, "pricing Indonesia back into Nike's market." China is Nike's second largest centre of production, but expansion plans in China are a priority for Nike.
Nike does not own the factories producing Nike goods. All production for Nike is contracted out to such locations as Southeast Asia. But Nike has close links with the factories that manufacture its products. To become a Nike subcontractor, an enterprise has to prove that it is capable of manufacturing an end product according to Nike's design and specifications. The enterprise pays a licensing fee to Nike and competes with other factories to obtain Nike orders. Each month, Nike assesses the factory’s performance. Licenses may be withdrawn if something goes wrong.
Nike has around 700 contract factories, within which around 20% of the workers are creating Nike products. Conditions for these workers has been a source of heated debate, with allegations made by campaigns of poor conditions, with commonplace harassment and abuse. Nike has sought to respond to these allegations by putting into place a code of conduct for all of its suppliers, and working with the Global Alliance to review around 21 of these factories, and to pick up and respond to issues.
In Indonesia, the following was reported: 30.2% of the workers had personally experienced, and 56.8% had observed, verbal abuse. An average of 7.8% of workers reported receiving unwelcome sexual comments, and 3.3% reported being physically abused. In addition, sexual trade practices in recruitment and promotion were reported by at least two workers in each of two different factories, although a subsequent investigation was unable to confirm this. 73.4% of workers are satisfied with their relationship with direct line supervisors, 67.8% are satisfied with management.
From the evidence it would seem that nuke has a poor corporate social responsibility when it come to its labour standards in the third world. Clearly Nike advocates the view “there is only one social responsibility for business. To increase its profits.” (Friedman 1962) Nike clearly has little interest in its social responsibility. Nike however should consider that if it raised its minimum wage from 10 cents/hour to 20 cents/hour it would give its workers a better standard of living. The cost of putting up the wages would be roughly $20million but that 3% of Nike’ marketing budget, the wages raise would mean less negative press so in theory will help market Nike and could increase sales.
The human resources employed by Nike is efficient, it allows production to be fast, efficient, high quality and a high yield. The human resources at Nike fit into the company’s view that profit is paramount over other business functions. However the one thing the human resource management at Nike is not is ethical. There is evidence to Show that many workers in Nike factories are being mistreated this is unethical of Nike human resource management because they are supposed to care about there employees as on there company website they quote them selves as part of a “global family” Clearly Nike are misleading consumers to further profits and to hide some of the truths behind the company.
