Monday, July 16, 2007

Nike's responsible image threatened in Indonesia

Several thousand Indonesian workers staged a noisy protest outside the Jakarta offices of Nike over a move by the US sportswear firm to phase out orders at two factories near the Indonesian capital. The demonstrators, who carried banners saying " Nike is a Blood-sucking Vampire" and "Go To Hell Nike", caused huge congestion in the central business district. The timing of the demonstrations during the AFC Asian Cup finals, which Indonesia is co-hosting, is likely to have been determined to embarrass the company which is a major supporter of the Indonesian national football team and players.

Active in Indonesia since 1989, Nike said that last year over 50 million pairs of Nike shoes, 17 million units of Nike apparel, and 12 million pieces of Nike equipment were made in local contract factories. The company said in a statement it remained committed to Indonesia, explaining its move to cut orders at the two sub-contractors that employ 14,000 workers was due to quality issues. Nike said it will cease orders at the factories owned by Central Cipta Murdaya -PT Hardaya Aneka Shoes Industry and Nagasakti Paramashoes Industry at the end of 2007. It said the move was "based on business performance issues related to their consistent inability to meet company's minimum product quality and delivery standard for two years".

However Siti Hartati Murdaya, President Director of Central Cipta Murdaya, told Adhityani Argathe of Reuters that the supplier had met Nike's standards. "Only two percent of our products are defective. Other companies can reach up to 18 percent. This unfair decision will put 14,000 people out of work which is simply unethical." Sutarti, a union leader, said Nike had halved the usual order of shoes at both factories this month and urged the firm to resume the orders or pay severance money. Nike said it would work with unions to help workers with their legal rights and other employment if needed but "It is clear under Indonesian law that the factories are responsible for severance ... so the Indonesian government reinforcing that is very important to us."

The protesters, who had demanded to speak to Nike's country representative, at one stage threatened to storm the offices. But several trucks of police and security guards prevented them from entering the building, which also houses the Jakarta Stock Exchange.

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