Wisconsin Drops Nike – Others to Follow?Posted by THager on April 15th, 2010
It appears that Nike’s controversial Duke advertisement is the least of their worries. In a move that was seen as a long time coming at the University of Wisconsin, the school recently dropped Nike from their apparel contract over a dispute with labor on severence pay. This is the first time that any American college has dropped an agreement with the multi-billion dollar company over what the school perceives as worker’s rights abuses, but the school has had a history of taking the initiative in contract agreements. Wisconsin recently ended contracts with both New Era and Russell Athletic over similar practices, and chancellor Biddy Martin had given Nike 120 days to pay $2.6 million to Honduran workers in severance pay and back wages that started the standoff. Wisconsin’s main apparel supplier, adidas, has had labor issues of their own but their are no plans yet to sever ties with the other shoe giant. Wisconsin’s take:
According to the university’s Labor Code of Conduct, local labor laws must be followed, the freedom of associated and collective bargaining must be respected, and responsibility must be taken for subcontractors. Since Nike acted outside these rules, its contract was terminated.
The amount of royalty fees that Wisconsin stands to lose is in the neighborhood of $50,000, relative chump change in the world of athletic apparel at a major school like Wisconsin. But perhaps most importantly for Nike, other schools may be getting in on the act as well. Georgetown and Washington are interested in learning more themselves. Oklahoma, which unlike Wisconsin has Nike as their primary sponsor, is getting pressure from their students to drop the company, even going so far as to write a column requesting that OU terminate their contract with Nike. Cornell may also be following Wisconsin’s lead as multiple workers’ rights organizations on campus have supported a termination of their contract. Although Nike does not own the factories where the wage abuses occurred, they do use the factories to manufacture their apparel, which activists say violates Cornell’s Code of Conduct. The ball is already rolling downhill on several campuses and if Nike isn’t careful, they’re going to find themselves underneath an avalanche of negative publicity on this matter.
According to Google Finance, the company is worth nearly $37 Billion. So why do they feel the need to take such a PR hit when $2.6 million should be pocket change to them? Probably the same reason that some of their overseas employees make less than $5 a day — unless you’re a potential Oregon head coach, CEO Phil Knight is not known as the most generous man in the world. But if he doesn’t calm the storm soon, he could be facing a much bigger hit than any money he owed his (subcontracted) employees.