Louis P. pointed out that shoe production in SE Asia for western companies is often done through subcontractors. Bata Shoes has production and retail worldwide and it tries to sell shoes locally based on the income of the avg. worker so as to keep the shoes affordable. Everytime I go to Malaysia I pick up a pair of Bata sandals for use back in Japan (where no one sells Bata). Interestingly Bata is consistently rated a better company than Nike or Reebok or Adidas, but it becomes most exploitative when it is producing for such companies as those.
--------------- http://www.nikeworkers.org/reebok/compare.html How does Reebok add up? 1. How does Reebok compare with other MNCs or footwear companies? Since Reebok "contracts out" all shoe-making operations, the treatment of the workers by the contractors is pretty much the same, whether it is Nike, Reebok, adidas or Fila. It is a model based on the "lowest wage/least rights" formula that concentrated almost all shoe production in Indonesia, China and (later) Vietnam. Another model -- NOT contracting out -- offers a different result. Bata (based in Toronto) runs its own factories which produce cheap sneakers for local markets. Ten years ago, the Bata factory in Jakarta had already had a union contract for eighteen years and was paying triple the minimum wage. Ironically, when Bata started to produce expensive shoes for export (for Reebok and others) around 1993, a two-tier system developed and workers making expensive shoes for export were treated as "contract" (temporary) workers with far inferior conditions and lower wages. Still, a 1999 survey done with the Urban Community Mission showed that there was less abusive treatment in the 2 Bata factories, compared to the factories producing exclusively for export. See full report of interviews with 4,000 Indonesian workers: Click here to find out more There is another "mixed" model, represented by companies such as U.S.-based New Balance and Saucony (Hyde Athletic). While both companies produce mostly in China, a significant amount of production takes place in the U.S. This means that some sports shoe workers earn more in two hours than Indonesians can earn in a forty-hour week! (Converse also continued to make some sport shoes in the U.S., until mid-2001.) 2. How does the cost/profit of a pair of Reeboks break down? Relation labour costs/publicity? Though the sports shoe business is highly competitive, profits are quite good. It must be remembered that profits are taken by the contractor that makes the shoes, by Reebok and by the retailer. The contractors that produce for Reebok (mostly Taiwanese and Korean companies) have been very successful for the past twenty to twenty-five years -- especially since the production moved to China and Indonesia around 1987. Several years ago, the investment giant Goldman Sachs bought a huge stake in Yue Yuen (one of these contractors), giving an indication of profitability. These profits are derived from a selling cost of around eight dollars (the labor cost being just about one dollar). Last year, a Wall Street Journal article quoted a Yue Yuen manager asking NOT to be quoted saying that Yue Yuen's profits were better than the buyers' (Reebok or Nike) profits. Next, profits are taken by Reebok. Gross margin before taxes is pretty standard at 9%. The spending aimed at increasing sales -- the marketing costs of shoe companies -- has been estimated at about ten percent of final sales price, by Professor Robert J. Ross at Clark University. This is more than TEN times what companies such as Wal-Mart spend on marketing and promotion, Prof. Ross says. In addition, Reebok was severely criticized by the pension fund managers for California's public employees ("Calpers") for the ridiculously high salary paid to CEO, Paul Fireman during most of the 90s. The standard practice of retailers such as FootLocker is to mark up the shoes 100% over what it pays to Reebok. That is, a $50 pair of shoes will sell for $100. If it does not sell for "full retail", it is discounted, of course. During the sneaker industry's "boom" years (1992- 97), FootLocker expanded rapidly, going from 2,000 shops to something like 7,000. 3. Who buys Reeboks, where and why? What alternatives are there to buying Reeboks? Currently, Reebok sells about 15% of the sports shoes sold in the world ・ about the same as adidas. Nike has well over 40% of the world-wide market. Reebok had its greatest success with an "aerobics shoe" for women in the late 1980s ・for a short time, the company was ahead of Nike. Since that time, performance has been pretty dismal. Last year, a Boston Globe columnist called Fireman "the worst CEO in America", in a column which reviewed the company's performance over the past decade. Reebok sales are strong in the U.S. and W. Europe; the demographic skews slightly older than Nike痴. Alternatives for running shoes: the U.S. magazine, "Consumer Reports" rated some New Balance and Saucony shoes above Reebok and Nike. NB and Saucony shoes are usually cheaper, even though overall labor costs are significantly higher. 4. To what extent is Reebok dependent on cheap labour countries? What is its history in Indonesia? Reebok, like Nike, based most production in N. Asia in the late-1970s, using several contractor factories. Relations with Asian suppliers were often fractious; this predatory model pitted contractors against one another and price-cutting was fierce. In the late 1980s, when democratic reforms in Taiwan and S. Korea signalled the end to the military-led suppression of workers rights, Reebok's contractors headed to China and Indonesia. Reebok has tried for years to convince observers that the company痴 operations in Indonesia differed in a meaningful way from the well-known Nike example. In fact, conditions for workers making Nike and Reebok shoes in Indonesia have been almost indistinguishable. For almost fifteen years, the production of Nike and Reebok shoes there has gone on (sometimes side-by-side) in some of the same factories. Several years ago, I asked the two Reebok managers in charge of the company's "Human Rights Production Practices" if they had ever talked with the Reebok manager in charge of negotiating with contractors. My question had to do with whether or not they had ever tried to figure the extra cost to Reebok for the improvements we knew were most urgent. They had not. What Reebok has been rather good at is hiring people from the human rights "community" and putting the best possible image forward, even as the company's contractors continued brutal cost-cutting practices. One example of this 菟ublic relations・strategy is the 1999 Peduli Hak report, based on interviews with over a thousand workers in one factory in Indonesia. Highly qualified and respected researchers ・Indonesians and an Australian national ・wrote up the findings that gave a mostly-accurate portrayal of workers・ complaints. One very interesting flaw (others are noted in a critique that I would be happy to share) was the report痴 assessment of workers・view of trade union representatives. The previously mentioned UCM study found that only about 5 per cent of workers believed that union leaders fought for their interests in the factory; the Peduli Hak report put the positive responses at over two-thirds of those surveyed. I am rather confident about our (UCM) survey methodology. This unrealistically high union-support figure casts doubt on the rest of the report ・in addition to misreporting the most despicable part of the contracting-out system. Research done by the Hong Kong Christian Industrial Cmte. on Reebok's China operations Click here to find out more 5. What kind of inter/national/ist labour, consumer and other protest is there around Reebok? How does it relate to other internationalist campaigns? Reebok has been spared the harsh scrutiny visited upon Nike. This is due to two main reasons: 1) In the late-1980s, when the research on shoe production began in earnest, Nike was the industry leader and, 2) When confronted with evidence of worker abuse, Nike痴 CEO and spokespeople reacted in a very hostile manner. Several groups have included Reebok production facilities in 殿nti-sweat・ research. Notable among these are: Hong Kong Christian Cmte., Asia Monitor Resource Center, National Labor Cmte., Workers Rights Consortium and Christian Aid (U.K.). In addition, Junya Yimprasert of the Thai Labour Campaign wrote a scathing account of her experience as a Reebok 杜onitor・ and the false promise of corporate 田odes of conduct.・ 6. What is the nature and implications of Reebok's human rights activity? How should labour and democratic movements respond? There is but one criterion on which we should judge the integrity of corporations that promise that workers are dealt with in dignity: are contractors required to sit down and bargain with workers? In the Bata collective labor agreement, for example, it was clear that there was a completely different 田orporate culture・at work, because workers were given 都eniority increases・in different job classifications and length of service was used to calculate holiday bonuses (up to eight or nine times monthly wage). The seniority issue has been a longstanding grievance of Nike/Reebok contract employees since we first started talking to them, thirteen years ago. With 田odes of conduct・corporations shifted the media痴 attention from: workers fighting abusive contractors, to: what does this or that NGO think of this company痴 adherence to 田ode・promises. The Clinton White House helped to engineer this shift because the Nike example was such an embarrassment. Compiled by Jeff Ballinger -------------------- C. Jannuzi
