Taking A Look Inside Nike's Factories

By Bill Saporito

Last week an activist group called the National Labor Committee accused Nike and other companies of running virtual slave factories in China, alleging that workers are habitually overworked and underpaid. It's the kind of charge Nike has faced, and denied, repeatedly regarding its operations in Asia. Nike subcontractors employ nearly 500,000 workers in plants in Indonesia, China and Vietnam.

TIME visited Nike plants in China and Vietnam recently and found them to be modern, clean, well lighted and ventilated, and paying decent wages by local standards--although by no means are they trouble free. Make no mistake: these are factories, not amusement parks, and even in developing Asia, where jobs are scarce and getting scarcer, this is not the employment of choice. It's low-tech assembly work that hasn't changed much since Nike chairman Phil Knight first started sourcing sneakers in Japan 35 years ago. Since then, the work has migrated in search of ever cheaper labor.

At the Yueyuan Factory No. 3 in Dongguan, in the Guangdong province of China, Zhang Jinming, 21, who comes from the poor inland province of Jiangxi, runs a stamping machine. "I work here because I have to earn a living, but it's boring work. When I have money, I'll go back," he says. [TIME used its own interpreters.] The average monthly wage is 600 renminbi, or $73. The company provides meals and living quarters in spartan although adequate dorm rooms that sleep 12 and offer individual storage closets and ceiling fans for the summer. In Vietnam, by comparison, the minimum wage is $40 a month, and workers must pay for such accommodations.

Indisputably, there have been cases where supervisors abused workers, including a well-known incident at Pou Chen's Bien Hoa plant in Vietnam when several women fainted while being forced to run laps around the perimeter of three warehouses as a punishment. Workers there have no confidence in the grievance system, and some still fear reprisal from bosses. "The manager wants us to meet the regulated number," says a 27-year-old woman. "When we don't and there's a gap, they force us to work extra to meet the quota." Workers have also complained that they were paid as temporaries for longer than the law allowed, and not given automatic raises after one year, as required. Nike says it has fixed those problems.

Another huge issue is the question of a fair wage. "Americans pay $100 for a pair of shoes that a worker gets $3 a day to make," says Kimberly Miyoshi of San Francisco's Global Exchange. "They pay Michael Jordan $40 million to endorse them. Can't they find more money to pay the workers?" The short answer is no. Corporations pay the going rate for labor wherever they are. And Nike maintains that the rate is good. Research conducted by Dartmouth College, for instance, found that Nike subcontractors in Indonesia and Vietnam paid above subsistence levels, allowing workers to save a portion of their earnings. TIME found this to be true at Yueyuan.

Nike says it has a staff of 1,000 labor-practices managers enforcing a program the company calls shape--an acronym for Safety, Health, Attitude of Management, People, Environment. "We are the only company that has people dedicated exclusively to labor-practice enforcement," says Brad Figel, Nike's Washington lobbyist. Outside auditors as well as nongovernmental organizations have also had a look.

But Nike's critics have argued that the company cannot monitor work standards credibly with its own staff or with hired guns such as former United Nations ambassador Andrew Young, whom Nike paid to visit plants in China, Vietnam and Indonesia. He concluded that "Nike is doing a good job...but Nike can and should do better." Activists dismissed his report as propaganda. Of course, if Nike can't reverse its recent sales trends, job conditions won't be a problem for many of these workers. They won't have jobs.

--By Bill Saporito. With reporting by Tim Larimer/Bien Hoa and Terry McCarthy/Dongguan

With reporting by Tim Larimer/Bien Hoa and Terry McCarthy/Dongguan