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Ethical Issues: The Sweatshop

 Ryan McLean

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Grand Canyon University: BUS-340

Dr. Mark Lee

December 17th, 2017




Ethical Issues: The Sweatshop

Nike has an extensive
company background. Nike started in 1964 as Blue Ribbon and they were a
distributor for a Japanese shoemaker which is now known as Asics. Seven years
later, Blue Ribbon officially became Nike Inc. in 197. Nike was founded by Bill
Bowerman and Philip Knight, who were both into track and field. In 1958, Philip
Knight was a track and field runner for the University of Oregon and Bill
Bowerman was his track and field coach at the University of Oregon. They both
hated the American running shoe because they thought it was very ‘clumsy’ and
were very dissatisfied with it. So, Bill and Philip decided to form an alliance
and make a shoe that was lighter and more comfortable than ever before. Six
years later, in 1964, they took their ideas to the market and as you know, they
started Blue Ribbon together. Bill Bowerman designed the shoe and before you
know it, they were off and running. Originally, Philip Knight wanted the
company name to be called ‘Dimension 6’, but Nike’s first employee, Jeff
Johnson had a different idea. He was the one who came up with Nike. They all
loved the name and in 1971, they changed their named to Nike. In Greek, Nike is
the Greek goddess of victory. The ‘Just Do It’ slogan was inspired by serial
killer Gary Gilmore, which came as a huge surprise to me. Gary Gilmore said,
‘let’s do it’ right before he was executed by a firing squad in 1977. Eleven
years later, the first ‘Just Do It’ campaign debuted with the 80-year-old man
running across the Golden Gate Bridge. Surprisingly, they started out just with
$1,200 in the bank and as we all know now, Nike is one of the most successful
athletic clothing lines out there today and personally my favorite, but Nike
has had some trouble in the past dealing with their inhumane sweatshop labor

Nike’s ethical crisis was their
sweatshop problem. It all started in 1991, when prices and labor wages were
increasing so they were urged to move to China, Indonesia, and Taiwan because
their employee wages were so incredibly low, almost 14 cents per hour (Nisen,
2013). This was a big influencing factor because they were going to make large
amounts of product for ridiculously low costs in labor. This is when they
received their first complaint for code of conduct. Nike responded to the
complaint, however they did not change what happened in the sweatshops. From
1992 to 1993, a publisher, Jeff Ballinger, exposed Nike for paying their
workers under minimum wage and reports of the workers being abused during work
(Nisen, 2013).  Nike’s stakeholders (consumers, employees,
and foreign country laws) were affected by this sweatshop crisis. When the
media caught fire with what was going on in the sweatshops, Nike’s consumers
and other people were starting to protest everywhere, so Nike decided to do
something about it and save their name. In 1996, Nike created a department
devoted to ‘improve the lives of factory laborers’, but there were still
reports of abuse in the sweatshops (Nisen, 2013). In 1997, Nike then sent a man
named Andrew Young along with other Nike officials, to examine what was going
on inside of the factories and write a report about it. Apparently, he was very
‘soft’ on his reports, meaning he didn’t include too much of what was actually
happening in the factories so, Nike dug themselves an even deeper hole for this
(Nisen, 2013). A year later they had to lay off workers because of all the
criticism and protests.

This is when they realized they
really needed to make a change and that their little efforts to turn things
around were not working. Thus, Philip Knight gave a great speech saying that, “The
Nike product has become synonymous with slave wages, forced overtime, and
arbitrary abuse…I truly believe the American consumer doesn’t want to buy
products made under abusive conditions” (Nisen, 2013, pg.1). During this same
speech, Philip Knight also announced that Nike will raise the minimum wage for
the workers and will implement OSHA’s clean air standards. In 1999, Nike created
the Fair Labor Association to implement ‘independent monitoring’ and a code of
conduct that included a minimum age to work and a maximum 60-hour work week for
an employee (Nisen, 2013). This pushed other brands to join the Fair Labor
Association. From 2002-2004, Nike performed around 500-600 audits at their
factories and made repeated visits to ‘problematic’ ones (Nisen, 2013). With
the increased monitoring, they found that workers were being locked in the
factories and were using unsafe chemicals that were very harmful. In 2005, Nike
became the first in its business to release a complete detailed list of the
factories it deals with and published a detailed 108-page report revealing pay
and conditions in factories (Nisen, 2013). From 2005 all the way until today,
Nike continues to audit the factories to make sure everything is up to par and
that the workers are not being abused. The actions they took helped put this
tragic event mostly behind them. This was also one of the biggest ‘name turn
arounds’ in recent history (Nisen, 2013).

            Nike used to produce their products
right here in the USA until 1984. Two of their shops that were in the states
were doing great because they had opened during a recession, but when that
ended, Nike’s factories were ‘uneconomical’ so they had to close them down
(Wilsey & Lichtig, n.d.). This urged them to produce their products
overseas in China, Indonesia, and Taiwan (Nisen, 2013). Everything was all good
and well and acting within the tenants of the law until 1992, when they were
reported paying their workers incredibly low wages well below their minimum
wage. The average female worker in Taiwan was making only 50 cents per hour and
according to a DailyMail reporter, “women make up 85 to 90% of sweatshop
workers, some employers force them to take birth control and routine pregnancy
tests to avoid supporting maternity leave or providing appropriate health
benefits” (Reporter, 2011, pg.1). Sweatshop by definition means violating 2 or
more labor laws. This is just one of the many examples of what the sweatshops
overseas in Southeast Asia force their workers to do. Nike was definitely not
acting in the tenants of the law here because they paid with “low wages, forced
overtimes, and arbitrary abuse” (Nisen, 2013, para.5).  The reason why Nike was influenced to have
their products made overseas, mainly in Southeast Asia, is because the costs
are absurdly low and the employees will work for more than half the day, plus
overtime, resulting in more products being produced for a lesser price. If the
products were to be made back in the states, the price of their products would
have doubled due to higher costs to produce their products (Wilsey &
Lichtig, n.d.).

Obviously, many other companies can
learn from Nike’s sweatshop crisis. They can learn that just because you can
produce your products overseas for a cheap price with employees working all day
doesn’t mean you should. Yes, it sounds great for your pocket, but it is not
ethical at all. The ethical thing to do would have been either to stay in the
states and just stick it out during the rough times or they could have moved
their factories overseas, which they did, but instead pay their workers the
right amount and comply with the countries labor laws, if they have one. This
would have eased their worry of breaking the law and they would have never been
a part of the sweatshop crisis if they just obeyed the law. However, no one is
perfect. If the situation was handled well, then other businesses could learn
from Nike and try to redevelop the actions the took if they ever ended up in a
similar crisis. For example, let’s say Reebok ended up in the same situation
with paying workers horrible wages and had reports of abuse. Reebok could then
follow the same steps Nike took to get out of their crisis and avoid further repercussions.
On the other hand, if the situation were handled poorly, then the other
companies could learn from Nike’s mistakes and take a different route so they
could avoid ending up in the same situation. Learning from both of these
situations is valuable because it could help them out drastically if they were ever
caught up in the same dilemma (Wilsey & Lichtig, n.d.).

was brutalized when the media caught wind with the reports of all the poor
working conditions, reported abuse, and the employees being payed incredibly low
wages. When Nike decided to make a change in how they operate their business,
they became a critical player in improving human rights all around the globe (Wilsey
& Lichtig, n.d.). Nike had trouble with fixing their sweatshop problem at
first because they were trying to act like they were fixing the working
conditions although they were not. However, Nike later handled the crisis
pretty well, right after Philip Knight gave his speech about raising wages and improving
working conditions in the factories. Bill Bowerman and Philip Knight could have
taken a few different paths to avoid the sweatshop crisis. Nike could have
avoided all of this in the first place by just following the labor laws
however, they ignored them and paid the price. Nike could have handled the
crisis differently so that it wouldn’t have gotten out of hand. First, since
all of the stakeholders were affected by the crisis, they could have pulled out
from the sweatshops temporarily until the wages, hours, and working conditions
were fixed. Also, they could have eliminated child labor and started providing
child care, social security benefits, hospital insurance and bereavement leave,
as required under Chinese Labor Law (Wilsey & Lichtig, n.d.). Nike could
have also eliminated forced overtime, the quota system, regulations that do not
allow workers to talk to one another, and ensure that the factories pay the
minimum wage to workers and ensure they receive compensation (Wilsey &
Lichtig, n.d.). Lastly, Nike could have investigated any accusations of
security guards beating employees and using other abusive behaviors. This would
have made a significant impact on the crisis and could have either avoided the
situation altogether or at least fixed the sweatshop crisis before it got out
of hand. These solutions could have also stopped the stakeholders from protesting
and reduced the amount of employees that were laid off during the crisis.

            Although what Nike did was unethical
and a terrible thing to do, Nike was not the only one and certainly not the
worst to use sweatshops however, Nike was the one that everybody knew about. Even
though Nike fixed its sweatshop problems, there are still many other companies who
use sweatshops till this day such as H&M, Urban Outfitters, GAP, Wal-Mart,
and many other stores and clothing brands. There are 7 things stakeholders can
do to help stop and protest the sweatshops. Stakeholders need to demand
sweatshop free products, buy union-made clothing and fair trade, ask questions
about the product, work with members of your community to develop a sweatshop
free policy, use shareholder clout, and most importantly educate others and
spread the awareness about the sweatshops. By following these 7 steps, this
would benefit other companies who produce products outside of sweatshops in
regulated factories and help them expand their business. These changes would be
in the best interest of people because they are helping reduce and boycott that
the sweatshops the big brands are using.




Green America. (n.d.). What
You Can Do About Sweatshops. Retrieved December 17, 2017, from

Lemelson-MIT Program. (n.d.).
Retrieved October 08, 2017, from

Nisen, M. (2013, May 09). How Nike Solved Its Sweatshop Problem. Retrieved
September 25, 2017, from

O’Reilly, L. (2014, November 04). 11 Things Hardly Anyone Knows About Nike. Retrieved
September 25, 2017, from

Reporter, D. M. (2011, July 13). Nike workers ‘kicked, slapped and verbally
abused’ at factories making Converse. Retrieved October 08, 2017, from

Wilsey, M., &
Lichtig, S. (n.d.). The Nike Controversy.
Retrieved September 25, 2017, from

11 Facts About Sweatshops. (n.d.).
Retrieved October 08, 2017, from



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