NIKIND~1.txt a Nike Inc. web file in nikeworkers.com series; created Friday, June 19, 1998 5:38:15 PM; Modified Saturday, February 14, 1998 2:10:36 PM; saved by D. Boje as NIKindepmonitor (File Origins).

How it works

Every NIKE subcontractor knows that the enforcement of our Code of Conduct will include systematic, unannounced evaluations by independent auditors. Beginning in 1994, we reinforced our internal monitoring program with a new level of independent oversight. Working with the globally recognized independent Certified Public Accounting firms, Price Waterhouse and Ernst & Young, we developed a comprehensive, ongoing monitoring system for our subcontract factories.

Independent auditors like Ernst and Young are trusted to judge company performance for shareholders, securities brokers and financial regulators in governments all over the world. Their most important asset is a reputation for independent and accurate assessment of corporate performance, which is precisely what NIKE demands and receives in every audit done. The auditing teams are comprised of local, host-country nationals who speak and live in the culture of the worker.

The accounting firm’s monitoring covers a range of issues where their expertise is particularly effective: checking pay records and pay stubs against wage standards and overtime compensation requirements; checking documents to assure there are no under-age workers, checking overtime periods to assure none were in violation of local law; surveying health & safety and habitability provisions; as well as a random, confidential and secure interview program to gauge worker attitudes toward the job and the workplace.

Reflecting the complexity of a manufacturing base as diverse as ours (NIKE products are manufactured in over 30 countries in approximately 350 factories), we add additional monitoring mechanisms on a regional basis. In the Los Angeles area, for instance, where NIKE produces apparel, NIKE has contracted with an outside inspector (Cal Safety) to perform site visits and evaluations of factories. In Pakistan, in addition to industry wide monitoring, NIKE uses an independent monitor (the Pakistani affiliate of Grant Thorton) to review soccer ball manufacturing facilities.

NIKE has also begun pilot-projects with NGOs in Thailand and Vietnam.

Beginning in mid-1996 and continuing today, Thailand Business Investment in Rural Development (TBIRD) started interviewing workers in footwear factories of Pan Asia Manufacturing, Bangkok, to ascertain worker views of their jobs and work experience. The reports of these interviews are shared with management, who use the information to make adjustments to the work place.

In exchange for this service, the factories agreed to place orders for shoe uppers at TBIRD's rural satellite factories, which were opened to encourage young mothers and other workers to stay with their families and not leave the village for Thailand's over-crowded cities. The satellite factories entail some risk, because quality control is more difficult to achieve. But the exchange has benefited NIKE, Pan Asia and

TBIRD's rural development efforts.

In the summer of 1997, NIKE initiated an independent, confidential, professional monitoring pilot project with the University of Economics in Ho Chi Minh City, specifically the University's CESAIS division, a consulting arm specializing in research. The project involves focus group interviews of 15 workers selected at random from each of two factories.

Workers are transported to the interview facility, and their remarks are abstracted for NIKE's review. After a three-month test, the project will be extended to two more factories, and methodology adjusted, for another three-month test. The results will be shared with factory management on an anonymous basis, and used to design change plans for each factory.

nikeworkers.com Ask Us

THE NIKE MONITORING SYSTEM

AND THE SHAPE INSPECTION:

What they are; How they work

NIKE has an inter-locking system of oversight for our contract manufacturing base to assure on-going compliance with our Code of Conduct.

Daily inspections by NIKE production managers provide day-to-day, common sense oversight and an early warning system for any violations that might merit immediate action.

Periodic inspections by an outside and independent auditor to assure procedures are in place to provide: proper pay and benefits; limits on overtime; prevention of child labor; proper holidays and leaves; and performance against other specific requirement of the law and NIKE Code. These audits also evaluate health, safety and environmental controls, and worker attitudes.

NIKE gathers information from third parties, including NGOs; universities; unions; and environmental, medical, industrial hygiene and management consultants.

There is also a middle ground where oversight, managed effectively, can raise work place standards on a continuous and focused basis. This is a periodic inspection of the factory, conducted jointly with the NIKE-contractor. It is called SHAPE.

SHAPE is in most cases a monthly inspection of the factory and its ancillary spaces, including, where applicable, clinics, dormitories, food service areas and toilets. SHAPE inspections are conducted by the NIKE production manager and his or her factory counterpart, with an inspection form designed by the NIKE labor practices department. The inspection covers 80-100 items, depending on factory type, that are grouped into five broad categories: Safety, Health, Attitude of management, People investment, and the Environment. Hence, SHAPE.

As they inspect, the NIKE and factory managers take detailed notes, paying particular attention to: Safety issues like fire fighting systems, exits, lighting, ventilation, temperature and air quality; Health issues such as cleanliness, food quality, clinic staff, and the availability of potable water, toilets and hand-washing facilities; Attitude of management evaluations that include professional and management training and the record of work stoppages; People investment programs such as sports and recreation programs, on-site postal and banking services and educational programs; and Environmental programs such as waste stream management.

Each item is weighted and graded. The factory is evaluated on its overall score; its progress against previous inspections; and against other similar factories. The true focus of SHAPE is to assure that key deficiencies, from a worker's perspective, are identified and corrected. To manage the process, NIKE and the factory focus on

three items each month. Once those items are brought up to standard, we move on to three more.

SHAPE has attracted the attention of other companies and industries, as well as some government ministries. NIKE is making the concept available to any organization.

nikeworkers.com Ask Us