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One would think workplace sexual harassment on a vast scale must be a nightmare for an image-conscious brand in the fiercely competitive sportswear sector. Why, then would Nike fund and direct a survey of thousands of Indonesian contract-workers which sought data on sexual harassment? (Unwanted touching 2.5%; verbal 8% – Nike’s Indonesian workforce at the time was 70,000 – the vast majority recently-arrived from rural Central or West Java villages.) Two interconnected answers: In the late 90s the company was desperate for publicity showing they were addressing the sweatshop issue and, the company was supremely confident about managing the press coverage.
The public relations architect of this unprecedented image transformation, Maria Eitel, had done stints at Microsoft and the White House before Phil Knight hired her and gave her carte blanche; she assembled a staff of 95 – even while established Nike departments were undergoing layoffs for the first time in the company’s 30 year history. The latter fact, of course, ties in to the desperation at company headquarters which had falling U.S. sales – starting in 1997 – after 30 years of explosive growth. Then, in 1998, a Nike executive told Timothy Egan of the New York Times that girls as young as 12 were speaking up in focus groups about worker abuse in factories making Nikes. Imagine, teens in N. America tuned-in to the exploitation of teens 10,000 miles away – long before social media!
We did it the old-fashioned way: Six years of newspaper and magazine reporting, a few network television stories, scores of “street heat” protests by activist groups at shoe-selling stores and a brand-new strategy – bringing those cheated and abused workers to speak to consumers at colleges, religious institutions and union halls. Cicih Sukaesih toured N. America twice –she told the BBC’s Witness program about it last August. By the middle of 2000, however, the door of “cross-border solidarity” had been slammed shut and nailed closed by a team led by Eitel. One of the myriad tactics used was a “pop-up NGO,” The Global Alliance for Workers and Communities – funded with millions from Nike, and supported by enablers such as the MacArthur Foundation and the Jesuit-run St. John’s University.
But let’s start our story in Indonesia, before digging into the dirty business of “Corporate Social Responsibility”. Soon after arriving in 1988, I was given an in-depth study by ten Indonesian doctors who tracked the health of 200 women workers for two years (weekly stool and blood samples), working under the direction of a U.S. physician (she is now at the Centers for Disease Control in Atlanta). Perhaps unsurprisingly, 88% of these women working for 86 cents/day were anemic. Our office immediately interviewed 2,000 workers at 80 factories and found that only half of bosses near Jakarta were paying even this paltry sum. Choosing a strategy to help them fight was a no-brainer: draw attention to the brand which was re-writing the rules of global sport by spending hundreds of millions of “sweat-stained” dollars in commercials, athlete and team sponsorships; university’s “logo-apparel” deals can run upwards of $10 million per year!
Beyond the mendacity of doing a study meant exclusively to deflect criticism of your brand – including a bogus, never-implemented “remediation” scheme – was the cynical shut-down of the bogus faux NGO as soon as Nike had vanquished the anti-sweatshop rabble and sat smugly atop the responsible-business community with “photo ops” in the White House rose garden (with key enabler, Bill Clinton) and at United Nations HQ, with Kofi Annan. Harvard Business Review published a laughably misleading account of the company’s rise to the top of the ethical-biz ranks. The premier business journal nowhere connected the author of the piece, Simon Zadek, to the Nike money which enabled him to launch the mercenary, responsibility-for-a-fee consultant shop, AccountAbility; the shoe giant’s investment paid huge dividends.
Proof of this stealthy public relations campaign’s efficacy can be found in the “responsibility” crew’s own archives: Taking the daily “CSRwire” compilation of press releases from Corporate Social Responsibility operatives. Over the period April 9, 2010 to November 13, 2010 – there were 1,391 press releases. Only 23 were dealing with workplace issues; half of these were reports on awards to businesses on how well they were treating direct-hire (rich country) employees or were concerned with Fair-Trade cocoa and child-labor chocolate. Not one press release dealt with the issue of substandard wages in the apparel sector even though huge wage-contestation issues arose in Bangladesh and Cambodia during this period (the highly-contentious Honduras/severance-pay issue was also ignored). Just to reiterate, CSR had an incredible growth spurt because of workers’ exploitation related to outsourcing but the “CSR industry” relied almost exclusively on environmental initiatives to demonstrate some kind of ethical progress. Here was the true genius of Eitel at work – she deftly swapped-in “sustainability” to the CSR matrix, thereby discarding the worker-rights theme she could never win – or even address convincingly, because of the basic outsource paradigm. That is, you put five or six huge, proven supplier companies in competition for the lowest bid on each order; the buyer cannot, then, return to the supplier and demand significant workplace changes to eliminate exploitation.
Geoffrey Heal, Donald C. Waite III Professor of Social Enterprise at Columbia Business School said, “I go back to 1997 to find the first clearly CSR-related event I can recall – the boycott of Nike…That had a real impact on the company. According to their 10K SEC filing, Nike’s profits dropped significantly as a result. The event shook up Nike along with so many other corporations who realized that if something like that could impact Nike so profoundly it could do the same to them.”
Rising to the top of the “susty” movement was a piece of cake; the leftish Guardian (UK) even allowed Nike to buy space – only recently taking down its Nike-sponsored Girl Effect partnerzone page “…because it was advertisement feature content that was published as part of a commercial deal and funded by an advertiser. It is Guardian News and Media policy to take down paid-for content at the end of these deals.” The newspaper recently announced it is doubling-down on this awful practice by recently announcing full-on corporate and foundation partnerships.
It certainly did not help anti-sweatshop campaigners that the major media was tilted toward neo-liberalism, if not outright corporate-conservatism. While we earned many damning hard-news stories about wage-cheating and other abuses, the elite “commentariat” was mostly, two-cheers-for-sweatshops. One columnist stood out, however. Bob Herbert of the NYTimes wrote half-a-dozen scathing pieces about American companies sourcing from some of the most brutal Korean- and Chinese-run sweatshops; he directly interviewed Cicih and wrote about these workers in a moving way. For that reason, Phil Knight requested a meeting with the Times’ editorial board; he complained bitterly and, though Herbert’s bosses there said he alone would decide what subjects to write about. But he never again wrote about U.S. brands’ connections to abusive working conditions in supplier-factories.
The media manipulation was epic – and damned effective. Even the Oregonian – Nike’s “hometown” newspaper – was shamed into making a “public editor” mea culpa after being bamboozled by an “exclusive” which Nike had granted them about an annual CSR report – a deal wherein the newspaper agreed not to interview certain Nike critics!
Some years back I came to terms with the fact that Nike’s CSR people would be treated like rock stars at “triple bottom line” and sustainability leadership conferences all over the globe. After all, Nike spends tens of millions of dollars per year on CSR and made hundreds of well-paying CSR jobs de rigueur throughout a wide swath of Europe- and U.S.-based contracting-out brands (“CSR has become a major global industry in its own right, and as of 2007 it has been valued [annually] at US$ 31.7 billion,” says the Asia Monitor Resource Center). Consequently, it has become nearly impossible to challenge the misery-wage reality outside the self-congratulatory CSR gatherings.
This is how a top U.S. business school’s website introduces a CSR discussion: “These speakers share a bleak perspective: A decade’s-worth of high-profile efforts to change sweatshop conditions in overseas apparel factories hasn’t worked.” This was on the website of a former MIT Sloan professor chosen by Nike to be granted access to all contract-factories world-wide. Indeed, Rickie Locke (now head of the Watson Institute at Brown University) sent business-student teams to Asia on several occasions, which resulted in at least five academic papers; safe to assume, then, that there was no one in a better position to say that CSR, “hasn’t worked.”
But the outsource paradigm still rules in most low-skill manufacturing, summed up nicely here by (at the time) Nike board member, Nobel Laureate and Dean of Stanford’s Business School, Philip H. Knight Professor Michael Spence told a group of students in Asia that businesses must be “ruthless about out-sourcing.”
Food for thought: Zara (part of Inditex) is a Spanish company that the Wall Street Journal reported last summer still produces nearly two-thirds of apparel in Spain and Portugal. (There are the usual issues with the “other” third, of course.) Inditex is the world’s biggest clothing retailer – very profitable and growing in a tough retail environment; Nike is struggling, despite $1.2 billion/year marketing outlays.
A shorter version of this story originally ran in Washington Babylon.