Nike strategy, part 1 (fwd)

[Sid Shniad <shniad@xxxxxx>]

> Date: Thu, 15 Jan 1998 00:12:46 -0800 (PST)
> From: Campaign for Labor Rights <clr@xxxxxxxxxxx>
> Subject: Nike strategy, part 1
>
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> NIKE CAMPAIGN STRATEGY, PART 1: Overview of developments
> January 14, 1998
>
> NOTE: The second international Nike mobilization will take place on
> Saturday, April 18. This is the first of a series of strategy papers to help
> local activists prepare for that mobilization. The other strategy papers
> will be posted, one at a time, during the next few weeks. At the completion
> of the series, Campaign for Labor Rights will prepare a new Nike action
> packet, including a new leaflet master. We will make these materials
> available both in hard copy and electronically.
>
> OVERVIEW: Developments in recent months give us reason to expect a
> significant breakthrough with Nike. Although Nike management still continue
> to hope that adjustments in their advertising and public relations practices
> will rescue the company's failing fortunes, in fact Nike's problems run much
> deeper than image. The following are among the more significant developments
> which have given Nike cause for major worry:
>
> *   The first international Nike mobilization, which took place on October
> 18, demonstrated that there is a growing global consensus that Nike is
> guilty of serious, systematic sweatshop abuses. The scope of this protest
> most certainly got the attention of Nike management, who sent public
> relations teams racing back and forth across the United States, trying to
> put out the fires. There were protest events in more than 85 cities in some
> 13 countries around the world. In the United States, human rights advocates
> in more than 50 cities in at least 29 states participated in events.
>
> *   Campus activism proliferated in response to the October mobilization and
> it has not gone away since then. The strongest activity has taken place on
> campuses where the athletic department has multi-million dollar contracts
> with Nike. These contracts, which are a centerpiece of Nike marketing, have
> now turned into a public relations nightmare for the company. Nike's
> aggressive campus marketing has now been forced into a defensive posture.
>
> *   Nike sales and stock value are plummeting. At the Nike annual
> stockholders' meeting in September, CEO Phil Knight announced that the
> company was severing relations with four of its Indonesian clothing
> contractors. In the absence of independent monitoring, there was no way to
> verify the company's claims that these contractors were being dropped
> because of their failure to comply with the Nike code of conduct. However,
> subsequent events seem to confirm what most of us suspected at the time:
> Nike was letting go of contractors due to a downturn in orders. Since
> September, declining sales (including a 20% drop in the second quarter as
> compared with last year) have led to several other downsizings. Nike stock
> value has dropped as much as 48% from its high. Although we are in no
> position to quantify the reasons behind this freefall, anecdotal reports
> from retailers strongly suggest that awareness of sweatshop abuses is
> turning consumers away from Nike.
>
> *   The entire brand-name sneaker industry appears to be taking a hit.
> Certainly, some of this is attributable to the vagaries of fashion. Another
> variable in the equation is that Nike's in-your-face attitude in dealing
> with the sweatshop issue has poisoned the entire athletic shoe market.
> Images of spoiled athletes, dissembling shoe executives and exploited
> workers have caused overpriced shoes to lose their luster.
>
> *   The "Asian miracle" becomes the "Asian contagion." For years, Nike made
> outrageous claims that its sweatshops had prepared the way for development
> in Taiwan and South Korea and were poised to do the same for Indonesia,
> Vietnam and China. As the International Monetary Fund frantically tries to
> prop up the falling currencies of the region, Nike no longer has anything to
> gain from linking itself to economic events in Asia. The company has lost an
> important rationale for its sweatshop practices. Although currency
> devaluations in Asia will save Nike a bundle in labor costs, the weakness of
> Asian currencies means that Nike can no longer count on increased Asian
> markets to offset the slippage in domestic sales.
>
> *   Public awareness sharpens. The much-touted Dartmouth report, which Nike
> hoped would serve as a major vindication, proved to be a non-event. Most
> people simply ignored it. Others quickly understood that the report was
> nothing more than a student project emanating from what is arguably the most
> politically conservative campus in the country. As job anxiety grows in the
> developed world and as the Asian crisis spreads, the public is increasingly
> aware that something is rotten in many more places than Denmark. In the
> United States a year or two ago, only a small activist core thought or
> talked much about the International Monetary Fund. Now, mainstream media
> stories raise doubts about this phenomenally important international
> financial institution. Sweatshop activists have a tremendous opening to
> educate our base about the issues underlying the sweatshop practices of Nike
> and other companies.
>
> REASONS FOR HOPE: As indicated above, Nike management continue to apply PR
> bandaids to labor practice hemorrhages. However, the several developments
> outlined in this strategy paper give us reason for hope. Phil Knight did not
> become a multi-billionaire through stupidity. Nike management are looking at
> the same developments that we have outlined. If we can convince them that
> this movement is not going to go away - that it is growing - they will
> understand what they need to do.
>
> NEXT STRATEGY PAPER: In the next strategy paper, we will talk about Nike's
> principle outlet, the Foot Locker chain, and a strikingly new approach to
> pressuring Nike. Be prepared for some surprises!
>