1. NO WHERE TO RUN, NO WHERE TO HIDE -- NEW RULES FOR BUSINESS FROM THE SWEATSHOP DEBATES
Professor Nicholas M. Didow
Kenan-Flagler Business School
University of North Carolina at Chapel Hill

2. FIVE MAJOR ERAS OF THE UNC EXPERIENCE
prelude
Spring Semester The Nike Class
Summer Summer Initial principles and direction using the CLC and FLA
Summer present -- The search for implementation and monitoring -- FLA vs WRC -- and “living wage” initiatives
Future directions

3. 1972-1997 PRELUDE: THE Nike STORY
How Phil Knight, with the help of his University of Oregon track coach Bill Bowerman, went from teaching accounting at Portland State University to be CEO of a $9 billion sports marketing empire.
Follow your heart.
Be lucky.
Buy low, sell high.

5. MAJOR NIKE BRANDS
Starter, Team Starter, The Jordan/ Jumpman 23, Asphalt, Tiger Woods, Shaq, Dunkman…

6. Nike ATHLETIC SHOE BUSINESS STRATEGY OR BUSINESS MODEL
Significant product innovation & design
“Trickle down” promotion and celebrity endorsements
Intensive distribution
Premium price point with good margins through channel
Manufacturing, or Supply Chain strategy of low cost contract manufacturing in Asia

7. Nike CONTRACT MANUFACTURING
“Contract manufacturing” aka outsourcing, virtual corporation
Set the specs, negotiate price and terms of delivery, let other person worry about “stuff” in the middle
Cap ex
Management and personnel
Gov’t regs
Migrated from Japan to Korea and Indonesia to China and Vietnam following cheaper labor costs in the supply chain

10. IT IS NEVER GOOD NEWS WHEN MIKE WALLACE FROM “60 MINUTES” CALLS
1996
BBC: “Branded Nike”
48 Hours: “Nike”
1997
60 Minutes: “There’s no business like shoe business”

11. “Nike shoes are made in sweatshops, often with child labor.”
“Sweatshop” = employment that violates more than one federal or state labor law governing minimum wage and overtime, child labor, industrial homework, occupational safety and health, workers’ compensation, or industry regulation.
(from US GAO)

13. UNC STUDENTS RESPOND Nike Awareness Campaign
Students for Economic Justice
Students Against Sweatshops (later USAS)

14. Workers Making UNC Apparel Are Protesting Against Working Conditions in their Factory
UNC:  JUST do SOMETHING!
                                                                                
Sweatshop Teach-In Led by the Students for Economic Justice Come learn about what you can do to support workers who make YOUR clothing!!

16. SPRING SEMESTER 1998 “THE NIKE CLASS”: Economics, Ethics, and Impacts of the Global Economy: The Nike Example
Nike overview
Production in textile/ sports apparel/ shoe industry
History of industry and labor
Working conditions history
US vs overseas labor standards
Sports marketing
Globalization of production
Gender and culture issues
Asia as context
Nike in Asia
Bringing it home: UNC and corporate partnerships
Recommendations

17. NATIONAL PRESS CLUB May 12, 1998
“Phil Knight has been described in print as a corporate crook, the perfect corporate villain for these times…Nike products have become synonymous with slave wages, forced overtime, and abuse… (Some say) Nike represents not only everything that’s wrong with sports, but everything that’s wrong with the world… I figured I’d just come out and let you journalists have a look at the great Satan up close and personal.” -- Phil Knight

18. NATIONAL PRESS CLUB May 12, 1998
Phil Knight commits Nike contract mfgrs to ---
Expanded monitoring with public disclosure
Footwear workers minimum age 18; others 16
OSHA indoor air quality standards
Conversion to water-based glues
Expanded education programs for workers
Increased micro-enterprise loan programs
Funding university research and open forums re: global manufacturing issues and responsible business practices

19. NATIONAL PRESS CLUB May 12, 1998

20. UNC’s INSTITUTIONAL OBJECTIVES
Maintain control over uses of UNC name and logo
Derive significant additional revenues from licensing to support general scholarships and athletics
Assure that good labor practices are followed in manufacturing of goods that bear the UNC mark, and to use our influence to improve labor practices more generally

21. UNC INSTITUTIONAL POLICY
Implement our Code of Conduct thru Collegiate Licensing Corporation (CLC)
Join FLA
Help establish and join WRC

22. FUTURE INSTITUTIONAL DIRECTIONS?
Lead by example, what about UNC campus labor practices?
Expand to UNC purchases
Extend up and down the supply chain
Help develop university interests in FLA and WRC
Progress in understanding “living wage” issues
Expand to towns of Chapel Hill and Carrboro