Saffren: Student activists apply pressure to multinational corporations where United Nations can’t
Global corporations like Adidas and Nike are in a perennial “race to the bottom,” where companies outsource production to the most underdeveloped countries with the lowest wages. Consumers can’t fault this practice. It’s good business.
But consumers can fault corporations when they treat their third-world employees poorly. If consumers don’t, no one will. Domestic sovereignty prevents the United Nations from checking and balancing the often unscrupulous practices of multinational corporations.
Amid pressure from student activists, Syracuse University officials are threatening to cut ties with Adidas for unfair labor practices. Eight schools, including Cornell University and Georgetown University, have already severed ties with the multibillion-dollar apparel company. Many more are considering cutting their contracts, according to the “Badidas” campaign website.
By threatening corporate power where the UN can’t, students are exposing a systematic flaw of global supply chains that leads to labor strife and turmoil: a lack of integration among corporations, independent factory owners and subcontracted employees. The exposition may push multinational corporations to adopt a more integrated model.
Before its 2011 demise, the PT Kizone factory in Indonesia was a subcontractor for Adidas and Nike. The factory had roughly 2,800 Adidas employees making 60 cents per hour, according to the “Badidas” campaign.
In January 2011, the factory’s South Korean owner fled Indonesia, pre-empting its closure and defaulting on contractually obligated severance payouts, according to the campaign. The workers were owed about $3.4 million in severance after closure in April. Nike paid $1.5 million. Adidas still owes $1.8 million.
The German corporation is violating the labor code of conduct between universities and apparel brands that mandates certain benefits to all employees, according to the Workers Rights Consortium.
Adidas has a pernicious history of ignoring fair standards. In 2005, 33 workers were fired at another Indonesian factory after striking for higher pay, according to Oxfam.org. This occurred in spite of Adidas’ doctrinal promise of the right of workers to “bargain collectively,” according to the Adidas group’s Guidelines on Employment Standards.
In 2012, a Chinese nongovernmental organization revealed that 69 workers from a Guangzhou golf club factory for TaylorMade, Adidas’ golf brand, are suffering from hand-arm vibration condition, a result of operating vibration units for long periods to meet outrageous production quotas, according to “Badidas.” HAV immobilizes fingers and hands permanently.
Even with negative publicity, Adidas’ practices have not affected its bottom line. As of April 2012, Adidas’ market cap totaled $16.29 billion, according to Forbes.com.
Large-scale resistance from consumers will convince Adidas, and possibly fellow multinational corporations, to stop circumventing the democratic process. In the fragmented system of domestic and world courts, corporations avoid liabilities by ducking unilateral jurisdictions.
Adidas, like most global businesses, subcontracts its global employees to independently owned factories. Adidas is not likely to be tried in Germany — its base country — because the crimes were not committed there. It may be difficult to try the company in Indonesia, as well, since Adidas does not own the factory.
On a world stage, the International Court of Justice only prosecutes states, and the International Criminal Court only prosecutes genocide, war crimes and crimes against humanity.
If the student movement decreases Adidas’ profitability, it may compel corporations to take the unprecedented step of buying their supply chains.
Corporations can’t enforce labor standards at factories they don’t own. They also can’t prevent independent owners from acting unilaterally. If the owner of PT Kizone had not abruptly fled, Adidas would not have been burdened with an exorbitant payment it was not prepared to make.
Eliminating the middleman is an easy business decision with enough resources. But very few corporations are capable of pulling off such a voluminous feat. With roughly $100 billion in reserves, Apple is the most likely trendsetter, according to Forbes.com.
If Adidas loses footing and Apple sets the market, global supply chain integration could lead to a cleaner corporate future. In that case, businesses would have their consumers to thank.
Jarrad Saffren is a junior television, radio and film and political science major. His column appears weekly. He can be contacted via email at firstname.lastname@example.org and on Twitter at @JarradSaff.
Published on April 3, 2013 at 1:00 am