University of Wisconsin Voids Nike Licensing Deal

 

On November 3, Chancellor Biddy Martin became the first university chancellor to write Nike, Inc. asking for the company to resolve the dispute. Since then, UW-Madison asked the Worker Rights Consortium, a labor rights watchdog, to review the situation, followed by multiple letters and phone calls, and finally, a face-to-face meeting with Nike officials. In December, she gave Nike 120 days to resolve the complaints. Last month, the Worker Rights Consortium in a report indicated Nike’s response had been insufficient.  On Friday, Martin concluded that Nike hadnt done enough.

 

“Nike has not developed, and does not intend to develop, meaningful ways of addressing the plight of displaced workers and their families in Honduras,” Martin said in a statement. “It has not presented clear long-range plans to prevent or respond to similar problems in the future. For this combination of reasons, we have decided to end our relationship for now.”

 

Wisconsin’s code of conduct requires the 500 companies that make products bearing its name or logos to take responsibility for the subcontractors actions. Its contract with Nike generated $49,000 in royalty income for the university last year. Martin’s decision came after activists held several rallies on UW’s campus over the situation.

 

“We do not take this action lightly,” Martin wrote. “In general, it is preferable to remain engaged with our licensees, to be part of the conversation and to be involved in working toward solutions in what can be described historically as a troubled industry. In this case, however, we have reached an impasse and decided it was best, all things considered, to end this business relationship.” 

 

In a statement issued Friday evening, Nike said it regrets the university’s decision. It first noted that no University of Wisconsin product was made at the Vision Tex or Hugger factories that were involved in the closures. Apart from a one-time order for 800 units of college apparel at Vision Tex, no collegiate licensed product was made at either Vision Tex or Hugger.  But Nike also said it has no plans to cover severance as it sees the factory’s owners, Anvil and New Holland, as responsible for the compensation.

 

“It remains Nikes position that factories which directly employ workers are responsible for ensuring that their employees receive their correct entitlements and, as such, Nike will not be paying severance to workers that were employed by Hugger and Vision Tex,” said Nike in the statement. “Hugger and Vision Tex were subcontracted factories to two factories, Anvil and New Holland, that took orders from Nike. Nike paid in full for all products ordered from Anvil and New Holland and we understand that those factories, in turn, paid in full to Vision Tex and Hugger.”

 

Nonetheless, Nike said it is working with Anvil and New Holland, who are developing programs to assist the displaced workers at the two factories. The program, which is due to begin this month, will offer training to unemployed workers to upgrade their technical skills as well as training in micro-enterprise development for workers who are interested in starting their own businesses. Nike also said Anvil and New Holland are offering priority hiring to the displaced workers as jobs become available and some workers are finding work this way.  In conclusion, Nike, Inc. noted that it was the first company to publicly report the names and locations of all contract factories around the world. Nike said it “takes its commitment to transparency and disclosure seriously” and continually looks for further improvement.

 

Martin’s decision regarding Nike means the company has to stop selling UW apparel by June 30. Retailers can still sell any Nike-UW gear in inventory, and the university can reinstate Nike as a licensed apparel seller if the company makes improvements.

 

UW-Madison has been among the most active schools in confronting labor issues in licensed-apparel manufacturing. Nike becomes the third apparel contract that the university has ended in the past two years. The university cut ties with New Era in 2008 and Russell Athletic in 2009.

 

Adidas faced complaints in 2007 about severance pay for workers at one of their subcontracted factories that closed in 2005 although the contract was never cut. Adidas holds a contract that’s worth about $1.2 million a year to provide uniforms, athletic equipment and other resources to the school.

 

Anti-sweatshop activists are hoping Wisconsin’s decision leads to similar moves by other universities across the country where students are pressuring Nike to fix the Honduras situation. Under the Just Pay It slogan, Cornell University, Purdue University and the University of Maryland have also seen campus protests over the situation. Purdue has launched a review and said it may cut its contract.

 

Labor and student activists have been galvanized by a landmark victory in the Russell Athletic case. Last November, Russell rehired 1,200 Honduran workers who had lost their jobs in a factory closing after student protests led to nearly 100 universities to cancel their Russell contracts. Displaced Honduran workers and union leaders toured U.S. campuses in the year-long protest.

 

The difference between the situations is Russell had owned the closed factory while Nike only sub-contracted production. For many schools, ending any contract with Nike would prove more complicated since Nike is by far the largest provider uniforms and footwear – and therefore, dollars – to college athletic programs.