Fueled perhaps by the unforgiving criticisms of Nike that continued after Phil Knight's May 1998 speech, beginning in 1998 and continuing into 2001, a wave of protests against Nike occurred on many university campuses. The moving force behind the protests was the United Students Against Sweatshops (USAS). The USAS argued that the Fair Labor Association (FLA), which grew out of the presidential task force on sweatshops, was an industry tool and not a truly independent auditor of foreign factories.

The USAS set up an alternative independent auditing organization, the Workers Rights Consortium (WRC), which they charged with auditing factories that produce products under collegiate licensing programs (Nike is a high-profile supplier of products under these programs). The WRC is backed, and partly funded, by labor unions and refuses to cooperate with companies, arguing that doing so would jeopardize its independence. By mid-2000, the WRC had persuaded some 48 universities to join the WRC, including all nine campuses of the University of California systems, the University of Michigan, and the University of Oregon, Phil Knights' alma mater.

When Knight heard that the University of Oregon would join the WRC, as opposed to the FLA, he withdrew a planned $30 million donation to the university. Despite this, in November 2000 another major northwestern university, the University of Washington, announced it too would join the WRC, although it would also retain its membership in the FLA.

Nike continued to push forward with its own initiatives, updating progress on its website. In April 2000, in response to accusations that it was still hiding conditions, it announced it would release the complete reports of all independent audits of its subcontractors' plants. Global Exchange continued to criticize the company, arguing in mid-2001 that the company was not living up to Phil Knight's 1998 promises, and that it was intimidating workers from speaking out about abuses.

Case Discussion Questions

1. Should Nike be held responsible for working conditions in foreign factories that it does not own, but where subcontractors make products for Nike?

2. What labor standards regarding safety, working conditions, overtime, and the like, should Nike hold foreign factories to: those prevailing in that country, or those prevailing in the United States?

3. An income of $2.28 a day, the base pay of Nike factory workers in Indonesia, is double the daily income of about half the working population. Half of all adults in Indonesia are farmers, who receive less than $1 a day. Given this, is it correct to criticize Nike for the low pay rates of its subcontractors in lndonesia?

4. Could Nike have handled the negative publicity over sweatshops better? What might it have done differently, not just from a public relations perspective, but also from a policy perspective?

5. Do you think Nike needs to make any changes to its current policy? If so, what? Should Nike make changes even if they hinder the ability of the company to compete in the marketplace?

6. Is the WRC right to argue that the FLA is a tool of industry?

7. If sweatshops are a global problem, what might be a global solution to this problem?