Nike Resumes Soccer Ball Production in Pakistan

Nike Resumes Soccer Ball Production in Pakistan

May 24, 2007

Goal is to set new standards for workers' rights

    BEAVERTON, Ore., May 24 /Xinhua-PRNewswire/ -- NIKE,
Inc. (NYSE: NKE) announced today that the company is
resuming Nike brand soccer ball production in Pakistan with
a vendor committed to setting new standards for workers'
rights in the industry. Nike's agreement with its new
contract factory, Silver Star Group, requires all workers
to be registered as full-time employees who are paid hourly
wages and are eligible for social benefits. The agreement
prohibits the use of part-time workers paid piece wage
rates per ball produced without access to health care and
other social benefits, a standard industry practice.

    The agreement also requires that workers have full
rights to freedom of association and collective bargaining,
as mandated by International Labour Organization (ILO)
conventions. The contract factory also must comply with
Nike's labor compliance standards and with all requirements
of the 1997 Atlanta Agreement and any identified successor
agreements that establish labor and compliance standards in
Pakistan's soccer ball industry.

    "Our decision to resume soccer ball production in
Pakistan is the result of extensive work with stakeholders,
based on a collective desire to help move the industry in a
more competitive direction that strongly supports workers'
rights," said Mark Parker, Nike, Inc.'s President and
CEO. "Silver Star has committed itself to realizing
this vision. We hope this is the beginning of broader,
positive systemic change for workers, and that the example
Silver Star sets will help Pakistan's soccer ball industry
create a new model of responsible, globally competitive
manufacturing."

    Nike expects to place its first order with Silver Star
this summer, with production to begin in the fall. Initial
and ongoing production with Silver Star will be contingent
upon the factory's ability to comply with Nike's product
and compliance standards and follow-through on its
commitments to support workers' rights.

    The decision to work with Silver Star comes about six
months after Nike announced in November 2006 that it would
cease placing orders with its primary hand-stitched soccer
ball contract manufacturer. That decision was due to the
factory's inaction on correcting significant labor
compliance violations and a fundamental breach of trust
with factory management. Among the violations was
widespread, unauthorized outsourcing of Nike production
inside homes in the surrounding area. Although home-based
production is common in the Sialkot-based soccer ball
industry, Nike has a long-standing policy against such
practices because of the potential for using under-age
workers and the inability to verify safe working conditions
in home-based settings.

    Following its decision, Nike engaged with a diverse
group of governmental, non-governmental and industry
stakeholders to secure support for affected workers and to
jointly explore fresh approaches to soccer ball
manufacturing that could lead to improved working
conditions and greater protection of workers' rights. The
company is working with the ILO, the World Federation of
the Sporting Goods Industry, and other stakeholders,
including Pakistan government officials. 

    As part of that process, in February Nike requested
proposals from 20 vendors for manufacturing hand-stitched
soccer balls in Pakistan. The company received 13 proposals
from Sialkot-based manufacturers and narrowed the list to
four finalists. Those finalists were reviewed in-depth by
Nike and by third-party organizations in Pakistan. Silver
Star Group was selected as Nike's new contract manufacturer
through that process and the successful completion of Nike's
standard evaluation procedures for new vendors. 

    Nike's request for proposal outlined nine workplace
conditions that must be met, including hourly wages for
workers, full benefits and rights to freedom of
association. All production must occur within Nike-approved
facilities, and technology must be installed to
electronically track all Nike production and inventory. 

    More broadly, Nike's request for proposal also outlined
the company's five key objectives for soliciting a new
manufacturer in Pakistan: to remain in Pakistan despite the
company's cessation of orders from its prior contract
manufacturer; to build a better manufacturing process which
empowers workers, supports the community and enhances the
local manufacturing process; to bring systemic change for
workers in the soccer ball industry; to see a transformed
business model develop for soccer ball manufacturing that
accesses Nike's global supply chain and enhances the
company's brand offering; and to further stimulate a
broader and deeper stakeholder dialogue about supply chain
models.

    Nike will continue to participate in industry forums
and other discussions to help transform local soccer
manufacturing models in Pakistan and help create
sustainable development.

    NIKE, Inc. based near Beaverton, Oregon, is the world's
leading designer, marketer and distributor of authentic
athletic footwear, apparel, equipment and accessories for a
wide variety of sports and fitness activities. Wholly owned
Nike subsidiaries include Converse Inc., which designs,
markets and distributes athletic footwear, apparel and
accessories; NIKE Bauer Hockey Inc., a leading designer and
distributor of hockey equipment; Cole Haan, a leading
designer and marketer of luxury shoes, handbags,
accessories and coats; Hurley International LLC, which
designs, markets and distributes action sports and youth
lifestyle footwear, apparel and accessories and Exeter
Brands Group LLC, which designs and markets athletic
footwear and apparel for the value retail channel.






    For more information, please contact: 

     Nike World Headquarters
     Alan Marks
     Tel: [phone]

     Nike EMEA (Europe, Middle East and Africa),
     Massimo Giunco
     Tel: [phone]