The shoes that Nguyen Thi Thu Phuong died making were designed at Nike’s headquarters in Beaverton, Oregon. The plans for the shoes were then relayed by satellite to a computer-aided manufacturing desk in Taiwan, where prototypes were developed and tested. Once the shoe’s blueprints were approved, they were sent by fax to the factory where Phuong worked, in Bien Hoa, northeast of Ho Chi Minh City. There the shoe’s three main parts—the outsole, the midsole, and the upper—were produced individually, then assembled in a labor-intensive process that was difficult to automate, and therefore relied on manual labor.
It was a summer day in 1997 and Phuong was making midsoles, carefully trimming away the excess synthetic material overflowing from molds that had just come out of an oven. Nearby, a coworker’s sewing machine suddenly broke down, spraying metal parts across the factory floor. A piece of shrapnel pierced Phuong’s heart, killing her instantly. She was 23.
Nike’s response to the young woman’s death was to boldly claim: “We don’t make shoes.”
Knight and his team of self-proclaimed “shoe dogs,” whose origin story was tied to making prototype soles in Bill Bowerman’s waffle iron, now claimed they were little more than the designers and marketers of shoes made by other companies.
The backlash against Nike amplified just as the company was expanding its retail operations by opening its upscale Niketown retail outlets around the country. Picketers and news cameras showed up at store openings, including one in San Francisco, where NFL wide receiver Jerry Rice was assailed with questions about sweatshops and child labor.
This was a major problem for Knight, who planned to open three more Niketown shops in 1998; they weren’t just retail outlets, but brand-awareness generators that helped increase Nike’s sales at other retailers, like Foot Locker. And key Niketown locations, like the one in London, would help give the company the foothold it needed as it sought to make inroads into the European soccer market.
Michael Jordan faced his own tough questions about Nike sweatshops during a press conference, but even worse things were in store for Knight, who learned that documentary filmmaker Michael Moore was set to release a new film, The Big One, focused on Nike’s misadventures in offshore manufacturing.For months, Nike had known exactly which measures needed to be taken to prevent others from dying like Phuong had.
Wall Street took notice, and throughout 1997 it was not uncommon to find stock analyst reports filled with summaries of the latest news reports on the condition of Nike’s factories throughout Asia, and the extent to which the company and its shareholders were exposed. For the first time in years, analysts began downgrading Nike’s stock and lowering its expectations for the company’s outlook.
When Knight at last looked outside his company for help, he turned to a firm called GoodWorks International, owned by Andrew Young, a former mayor of Atlanta who had also been the U.S. ambassador to the United Nations. He hired GoodWorks to evaluate Nike’s operations in 1997, and Young himself went to Asia to meet with some of Nike’s suppliers and contractors there.
When Young issued his report on Nike’s use of overseas labor, it was hard to imagine that Dusty Kidd and the rest of Nike’s public relations staff could have done more to polish what was clearly a rotten apple. Knight was so pleased with Young’s conclusions that he took out full-page newspaper advertisements highlighting them.
“It is my sincere belief that Nike is doing a good job,” one advertisement in the New York Times read. “But Nike can and should do better.”
Knight was also pleased with another aspect of Young’s evaluation: while third-party monitoring of Nike’s overseas factories was a good idea, it should be left to a company like his own firm, GoodWorks, Young felt, and not to global labor and human rights organizations. The benefits of this approach for Nike were evident from the amount of control the company was able to exert over the Young report, which completely ignored the key issue of wages for factory workers. Young had also relied entirely on Nike interpreters during his ten days of interviews with the workers making Nike shoes at factories in Asia.
The widely criticized Andrew Young report was further undermined in November 1997, when a disgruntled Nike employee leaked some highlights from a series of formal audits Nike had commissioned Ernst & Young to prepare. The accounting firm had, in fact, been auditing Nike factories in Indonesia since 1994, but Knight had managed to keep these less-forgiving assessments quiet up until the November 1997 leak of an Ernst & Young report recommending improvements to a factory just northeast of Ho Chi Minh City in Vietnam.
The factory where Nguyen Thi Thu Phuong died making Nike shoes, Ernst & Young found, did not have safety equipment or training for its workers, who were forced to work more hours than allowed by law, making them more likely to become injured or killed on the job.
For months, Nike had known exactly which measures needed to be taken to prevent others from dying like Phuong had; but instead of focusing on solutions for the problems Ernst & Young had found at its factories in Asia, Nike instead promoted the much rosier portrait that Andrew Young had painted in his report, which was conducted the same summer that Phuong died—a picture of a company doing its best and coming up a little short, as even the best athletes sometimes do. A story rather than a solution, or, as Jordan might say, a “dream” to be sold, rather than a problem to be fixed.
On the afternoon of April 4th, 2000, six University of Oregon students locked arms and blocked the entrance to Johnson Hall, a stately 100-year-old building that housed the offices of the school’s top administrators. A heaving mass of protesters came with them, swarming the six stone columns framing the entrance to the redbrick façade, which sits on 295 immaculately kept acres of campus, bordered by the Willamette River and stippled with some 3,000 trees.
From the window of his third-floor office, Dave Frohnmayer could see the message his students had written to him, spelled out on the sidewalk in bright pink chalk: “TAKE A HIKE NIKE,” with the company’s signature swoosh logo standing in for its name.
It was the University of Oregon’s first major student sit-in since the anti-war demonstrations that began in 1969 and carried on into the following year, when four members of a self-described student women’s militia hurled buckets of fresh animal blood on army recruiters while chanting slogans of protest against the My Lai massacre in Vietnam.
Oregon’s campus protests against the war in Vietnam intensified just as Frohnmayer arrived at the university as a law professor and legal counsel to then-president Robert D. Clark. In many ways, Clark had had it easier than Frohnmayer. Had he sided with protesters and kicked recruiters off his campus, he’d only have angered the U.S. Army. Frohnmayer, on the other hand, had to worry about angering Phil Knight.
In the three decades since Frohnmayer had moved to Eugene, the college by the river had grown to become Eugene’s largest employer, with 10,000 Oregonians depending on the school for their livelihood. And in the handful of years since Knight had begun paying for new buildings on campus, he’d become more than just an important booster for Oregon athletics; he was the school’s most important benefactor, which made him, in a sense, the town’s most important benefactor. On campus, not everyone was comfortable with the influence Knight seemed to have, or the school’s renewed focus on athletics over academics.
These developments coincided with a moment in which student activism was regaining its voice, particularly when it came to labor and human rights issues. And Nike—which was facing intensifying calls for independent monitoring at its overseas factories—had a target on its back. It was a major problem for Knight’s company, which was losing ground to Adidas and couldn’t afford to give up its position as the shoe and apparel supplier to America’s top universities.
Nike’s war to maintain its grip on America’s college campuses began in earnest late in 1997, when students at the University of North Carolina protested the company’s $7.2-million endorsement deal with the school. In early 1998, the movement gained a powerful voice in Jim Keady, an assistant soccer coach at St. John’s University, who decided to publicly quit his job rather than wear the Nike gear his school’s contract demanded.
“I don’t want to be a billboard for a company that would do these things,” Keady said of Nike’s overseas labor practices.Nike was facing significant backlash over the branded apparel it had so successfully marketed to ordinary university students.
In 1999, the pressure on Nike intensified after student activists took over buildings at Duke, Georgetown, the University of Michigan, and the University of Wisconsin, and staged sit-ins at many other schools. Just before Christmas in 2000, student carolers strode through the halls of Harvard University’s administrative buildings singing “Away in a Sweatshop.”
It was becoming more than just an image problem for Nike. When a factory worker was fired by one of Nike’s contractors in Honduras, student activists organized such effective protests that the company was forced to rehire the woman.
Nike’s university shoe and apparel contracts became the common battleground shared by activists concerned over issues ranging from sweatshop labor and China trade policy to college athletics, which increasingly took precedence over academic excellence at schools around the country. And it wasn’t just contracts with athletic departments that were under fire.
Nike was facing significant backlash over the branded apparel it had so successfully marketed to ordinary university students through its College Colors program. “It really is quite sick,” said Tom Wheatley, a student and organizer at the University of Wisconsin. “Fourteen-year-old girls are working one-hundred-hour weeks and earning poverty-level wages to make my college T-shirts. That’s unconscionable.”
At a growing number of campuses around the country, organizations like United Students Against Sweatshops (USAS) and the Movement for Democracy and Education collaborated with the National Labor Committee and the Worker Rights Consortium (WRC). The student-led WRC proved to be especially effective at recruiting universities to the cause, first by protesting and then by lobbying students, faculty, and university presidents to sign its pledge censuring corporations using sweatshop labor to produce athletic apparel and shoes.
By April 2000, the months-old organization had already gained the backing of 45 different universities around the country, which frustrated and angered Knight because joining the WRC meant publicly criticizing Nike for failing to allow, among other things, surprise inspections at the overseas factories where its shoes were made. Knight, meanwhile, was trying to pressure Nike’s partner schools into ignoring the WRC, steering them toward the relatively toothless Fair Labor Association (FLA), which had executives from various apparel companies sitting on its board.
The campus wars came to a head in April of 2000, when Knight abruptly ended negotiations to renew his company’s sports equipment contract with the University of Michigan—a deal that would have been worth as much as $26 million, making it the largest of its kind up until that point. Michigan’s administrators and athletics department stood firm, issuing an unusually pointed statement aimed at Nike’s retaliatory tactics.
“Nike has chosen to strike out at universities committed to finding appropriate ways to safeguard and respect human rights,” the school said.
Excerpted from The Nike Effect. Excerpt courtesy of Melville House. Copyright 2018 Joshua Hunt.