The University of Wisconsin-Madison and Purdue University are both reviewing alleged workers' rights abuses at two factories run by Nike subcontractors in Honduras. Both factories were reportedly shut down without notice in January and failed to pay workers a total of more than $2 million in severance and back wages. Both schools said they may end their contracts with Nike.


In its statement, Purdue said that besides reviewing the labor allegations, it also will consider whether the contractors should take over responsibility for the severance pay.


“We take these licensing matters seriously and work to ascertain all the facts before making any determinations, in fairness to all parties,” said James Almond, senior vice president for business services.


A watchdog group, the Worker Rights Consortium, contends that because there are no other potential sources of funds besides the plants' customers, Nike should make every effort to get the contractors to pay the workers, Almond said. Both contractors contend they do not have a legal liability nor financial ability to pay.


“The WRC acknowledges that while it is debatable whether university licensing codes of conduct obligate a licensee like Nike to pay workers through its own resources, they contend the licensee must do whatever it reasonably can to compel contractors to do so,” said Almond.


But there also is a dispute as to whether and how much collegiate-licensed product the two factories produced. Purdue said Nike states that these subcontractors did not manufacture collegiate-licensed apparel for Nike except for a one-time order in 2007.


“From Nike's point of view, the company worked in good faith with its primary contractors, giving them significant advance notice that it would terminate its relationship with them,” Almond said. “At the time of the closing, the factories were producing brands unrelated to Nike. Information provided by the Worker Rights Consortium contradicts some of Nike's findings, so we are seeking more information from Nike.”
Purdue expects to make a decision on whether to continue its relationship with Nike by the end of the year. The University of Wisconsin-Madison is similarly giving Nike four months to resolve the issue or make “satisfactory, demonstrable progress” or it will allow the its relationship with Nike to lapse. UW Chancellor Biddy Martin is also seeking to build a coalition of schools from the Big Ten and other peer institutions, as well as the Workers Rights Consortium and the Collegiate Licensing Co. around the issue.


Student activists played a key role in persuading Russell Athletic on Nov. 17 to rehire 1,200 workers in Honduras who had lost their jobs after Russell closed a factory late last year. Labor groups had claimed Russell closed the factory due to unionizing efforts while Russell said it was closed because of the global downturn. The factory was reopened as a unionized factory.


>>> Two big differences between the Russell situation and this one involving the Nike brand.  First, Russell/Fruit of the Loom owned the factories where the alleged labor violations occurred, while Nike, Inc. does not.  Second, Russell was simply selling collegiate licensed merchandise through the college bookstores, while Nike has multi-million dollar contracts with Purdue to outfit their teams.  Will the school really walk away from the big bucks?  Doubtful.