Thursday, July 26, 2007

Nike reaffirms commitment to Indonesia

Tuesday, July 17, 2007
The Jakarta Post, Jakarta

Nike Inc. restated its commitment Monday to doing business in Indonesia despite its recent decision to cease placing orders with two of its suppliers here, which has prompted massive protests from the companies' workers.

Erin Dobson, Nike's director for corporate responsibility and communications, said that Nike had been sourcing in Indonesia since 1989 and remained fully committed to growing its sourcing base over time.

"Since 2004, Nike has increased its footwear sourcing by 16 percent.

"Despite this decision, Nike will continue to source 20 percent of its footwear manufacturing in Indonesia and will continue to work with more than 30 footwear and apparel contract factories here," said Dobson in a statement.

The statement was made in response to continuing protests from unionized workers and the owners of PT Hardaya Aneka Shoes (Hasi) and PT Nagasakti Paramashoes Industry (Nasa), both of which have their factories in Tangerang.

On Monday, thousands of workers from the two companies, owned by Central Citra Murdaya (CCM), staged a rally at the Jakarta Stock Exchange building in Jl. Sudirman, South Jakarta, to protest Nike's decision to cease placing orders with the two companies as of the end of 2007.

The workers demanded that Nike keep placing orders at the present level, or provide severance pay for all the workers. This is despite the fact that they are not employed by Nike and severance pay, by law, is the responsibility of their employers.

Maretha Sambe from Nike Indonesia said that the decision to cease ordering was based on the two companies consistent failures to meet Nike's minimum product quality and delivery standards over the past two years.

"Following repeated failures, we reduced our orders by 50 percent in March to encourage them meet our minimum product quality and delivery standards.

"But because there has been no significant change in quality and delivery, Nike world headquarters served termination notices on July 6," Maretha told The Jakarta Post.

To make up for the supply shortfall, Maretha said that Nike had shifted its orders to the other 37 contract factories in Indonesia that also supplied it with sport footwear, apparel and equipment.

To allow enough time for Hasi and Nasa to fulfill their obligations to their workers, Nike would continue to work with the two firms over the next nine months until the last orders had been completed, said Maretha.

She said she expected CCM to fulfill its legal obligations to the employees of the two companies and their suppliers by March 2008.

Elizabeth Sutarti, a union spokesperson at Nasa, said that the workers had been shocked by Nike's decision as there had been no warnings or indications that the company had been failing to meet the required standards.

"We never heard that Nasa was failing to meet the requirements. We always held a quarterly evaluation and until the last quarter, our performance was still good and was even one of the best in the country," Elizabeth told the Post.

Hasi and Nasa, with more than 14,000 workers, have exclusively produced footwear for Nike since 1989.

Nike has been active in Indonesia since then and currently more than 115,000 Indonesian workers are employed by contract factories manufacturing Nike products.

In 2006, Nike's contract factories in Indonesia produced more than 50 million pairs of shoes and 17 million garments. (02)

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