Pressure seems to be building up on Nike as a result of Russell Athletic's decision to open a new Honduras factory.
Russell – whose parent, Berkshire Hathaway's Fruit of the Loom, is the largest private-sector employer in Honduras - closed Jerzees de Honduras, the only one of its eight Honduras factories with a union, in late 2008. The case was taken up by US student activists (Russell is a major supplier to the college licensed merchandise market in the US, and many of those garments are made in Honduras), who waged war on Russell for the following year. The activist argument was that the closure was not economically necessary: it was simple union-busting.
In mid-November, Russell agreed to open a new Honduras factory, re-employ those fired and pay compensation – a decision widely cheered by activists, but also taken as a concession by Russell that the Jerzees closure had been motivated by an intention to bust unions. The other effect of the students' campaign was to re-energise student activism. It's been commonly agreed for some time that students just aren't the activists they once were: the Russell case has both given the United Students Against Sweatshops (USAS) movement greater self-confidence and heightened its credibility among fellow-students.
Just in time for Nike to reap what it might not quite see as a reward.
At the beginning of 2009, two Nike suppliers in Honduras, Vision Tex and Hugger, went bust. The factories were unable to give the jobless workers any severance pay – and are now claimed to owe the factories' 1,800 former workers $2mn in redundancy pay and wage arrears. USAS is looking to Nike to sort the problem out – and students throughout the US are gearing up to give Nike the treatment Russell got.
The two situations aren't strictly parallel. Nike doesn't operate the failed factories, and there's no hint of anything like union-busting in the reasons for the two factories' closure. Nike was just one customer – and there's no reason to look for any sinister motive in a clothing factory going bust in early 2009. At the other end of the supply chain, practically nothing Nike had made in Hugger or Vision Tex went into the US college market, and Nike is far less dependent on college sports than Russell is.
Nonetheless, Nike needs the goodwill of students, is involved in one way or another with many university sports teams and is an easy target for student activists to aim at. USAS, with a new head of steam, seems to be behind anti-Nike leafleting, letter-writing and planted local newspaper articles in college towns from Florida to Washington State. And worse in some ways than direct commercial threats from students, Nike's in danger of losing the moral high ground on sourcing it's painstakingly been getting itself for the past 15 years.
It's understandable why Nike doesn't feel it's responsible for management problems at Hugger or Visiontex. But many key Nike customers think it is.
Nike's got a tough decision to make. But there's a real risk Nike's going to find itself in a war it can't win with customers it doesn't want to lose.
Right now, our money's on USAS. Even if their argument's far from watertight.