Forwarded message:
>From @VM.ITS.RPI.EDU:[EMAIL PROTECTED] Thu Feb 24 11:26 PST 1994
Date: 24 Feb 1994 14:26:57 -0500 (EST)
From: "Salem Ajluni, Economics" <[EMAIL PROTECTED]>
Subject: Undoing It
To: [EMAIL PROTECTED]
The introduction to:
"Thinking Globally and Acting Locally at the Dawn of the NAFTA Era"
a presentation by Salem Ajluni, Assistant Professor of Economics, Siena
College, Loudonville, NY 12211
at
"It's Our Economy, Isn't It?" A conference sponsored by the Coalition for
Social Action, Schenectady, NY November 6, 1993
"Just Doing It" the Nike Way
The implications of the emerging global economy can best be understood by
examining the behavior of its main protagonists: corporations. The Nike
Corporation, producer of athletic footwear, is a good example. Nike is as much
about running away as it is about running. During the 1980s, the Beaverton,
Oregon-based firm closed its last U.S. production facilities and established
contracting arrangements with a number of mainly South Korean firms to produce
its shoes. In the international division of labor engineered by Nike managers
in the early 1980s, design and marketing of shoes remained in Beaverton.
Computer-generated designs were sent via satellite to a computer-aided
production facility in Taiwan where engineers produced prototype shoes. The
prototypes were then sent to manufacturing plants in Pusan, the South Korean
port city where the final product would be produced. Financing for the
purchase of materials and the finished products, as well as payrolls was
arranged through a Japanese trading house in Tokyo.(1) Thus from Beaverton to
Taipei to Pusan to Tokyo, Nike's operations had an immediate and direct impact
on peoples' lives all around the Pacific Rim.
As the 1980s progressed, Nike managers, in relentless efforts to boost profit
rates, sought further cost-cutting measures. This was achieved by encouraging
their Pusan and Taipei-based contractors to develop their own subsidiaries in
Thailand, Indonesia and China. Thousands of footwear workers in Pusan and
Taipei were left jobless while thousands of others in communities like
Tangerang (outside of Jakarta) and Fujian Province (in China) became their
replacements at one-seventh to one-tenth the wage rates paid the Korean and
Taiwanese workers. Ironically enough, it was new laws giving Korean workers
the rights to form independent unions and to strike which led Nike's South
Korean contractors to run away to lower-wage Asian countries. Nike currently
contracts and sub-contracts work with about forty factories in several
countries. In the past five years, 20 of these have closed while another 35
have opened as contractors have pursued a shell game, moving plants to
communities where workers will accept ever lower wages without too many
complaints. As of 1992, Nike was looking to further increase its menu of sub-
contractors in such places as Vietnam, India and Mexico.(2)
A unionized footwear worker at Nike's last U.S. plant in Saco, Maine had an
average hourly wage of about $7.00 and worked about 40 hours per week when the
plant closed down during the 1980s. In the early 1990s workers at the Starmon
plant in Tangerang (owned by the South Korean Sung Hwa Corporation, one of
Nike's main contractors) earned about $0.15 per hour, worked a 63 hour six-day
week, including the 63 hours of mandatory overtime per month at remunerated at
$0.02 per hour. Tangerang workers were thus paid about $0.12 to assemble a
pair of Nike shoes which sold in the U.S. for about $80.00. At such wage
rates, these diligent workers--over 80% of whom were women--earned incomes
which put them below Indonesia's official poverty line and some even suffered
from malnourishment.(3) Thus Nike's Indonesian work force was literally
working itself to death. For Nike's stockholders, the Tangerang workers'
efforts--and those of tens of thousands of others in similar circumstances in
communities spread out all over Asia--have contributed to some of the highest
and most consistent dividends on shares of any major corporation. Nike
managers have "Just Done It" and their stockholders sure like it. For workers
in communities like Saco, Pusan and Taipei, for whom Nike's management
decisions made life more uncertain and fraught with hardships, there is nothing
glamorous or promising about a global economy based on this type of free trade.
(1) Mark Clifford "Spring in their Step," "Pain in Pusan," and "The China
Connection" Far Eastern Economic Review November 5, 1992.
(2) Clifford "Spring in their Step."
(3) Jeffrey Ballinger "The New Free-Trade Heel; Nike's profits jump on the
backs of Asian workers" American Educator Fall 1992.
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 916-898-5321
916-898-6141 messages
E-Mail [EMAIL PROTECTED]
