Assessing Nike’s Comments on Hansae Vietnam

letterhead

April 17, 2017

Dear Colleagues,

I write with some thoughts on the communication Nike sent on Friday evening to university presidents and chancellors. We understand why Nike felt the need to respond to our update on Hansae Vietnam. The facts we reported do not reflect well on Nike’s approach to remediation of the labor rights violations at the factory and we appreciate that Nike would want to try to put a more positive face on the overall situation at Hansae. What concerns us, however, is the misleading nature of Nike’s communication.

First, it is important to note that Nike does not question any of the factual information in the WRC’s update. We presume that if Nike believed the WRC had made any errors of fact, it would have pointed them out. Instead, Nike responded to our update by trying to make a silk purse out of a sow’s ear.

For example, Nike states that Hansae is installing cooling systems in some of its buildings. The WRC reported the same thing. The problem, as we explained, is that the particular type of cooling systems Hansae is installing (evaporative cooling units) won’t solve the problem of excessive heat. We know this because some of the buildings at Hansae have had these systems in place for years – they were there when the WRC visited the factory last October – and they have failed to keep temperatures below the legal limit.

This is why the WRC asked, and Nike agreed, to require Hansae to provide an engineering plan for addressing the issue of excessive heat – for prior approval by the WRC, the FLA and Nike – before installing new systems. Hansae never produced a plan and has instead gone ahead to install systems that simply will not be able to cool the workplace to below the legal temperature requirements. Nike, when it reports this as a positive step, is praising the factory for an action that won’t correct the violation it is intended to correct.

The issue is a crucial one, because excessive heat in the factory buildings (the WRC measured temperatures in excess of 95 degrees) is one of the primary drivers of the most serious safety problem we found at Hansae: workers collapsing unconscious at their machines with shocking frequency. To keep temperatures below the legal limit, and to protect worker safety, Hansae is ultimately going to have to install air conditioning. The sooner Hansae acknowledges this, the better.

On the issue of adequate seating for sewing machine operators – who now spend their working hours seated on backless benches – we have been asking Nike for months to provide technical specifications, and photographs, of the chairs Hansae is planning to purchase, so we can ensure that they meet minimum ergonomic standards for worker health and safety. The specs and photos have not been provided. As we reported last week, Hansae is nonetheless proceeding to procure seating. We are concerned that the chairs that are purchased will fail to fix the problem, leaving workers exposed to a growing risk of musculoskeletal disease. As with the cooling issue, it is counterproductive for Nike to report Hansae’s actions on seating as an example of progress in solving the problem, when the factory has yet to show proof that it actually will.

On back pay for uncompensated off-the-clock work, as on the other issues, Nike does not question the accuracy of the WRC’s update. Indeed, Nike states agreement with the WRC’s finding. While we are glad that Nike now acknowledges that paying a worker 40 cents for hundreds of hours of uncompensated labor is not an adequate solution, the question is whether Nike will now apply the firm and consistent pressure on Hansase necessary to convince the company to provide meaningful back pay.

And Nike’s letter does not respond at all to other serious concerns that we raised in our update, including the lack of adequate plans to reinstate workers fired for being pregnant, and to reimburse workers who were compelled to pay illegal recruitment fees, and Nike’s surprising defense of Hansae’s decision to continue to have senior factory managers run the labor union. We continue to convey our concerns to Nike on these issues.

Finally, Nike defends the situation at Hansae by claiming that 78% of remedial actions at Hansae, and 85% of health and safety-related actions, are complete. Unfortunately, these figures tell us very little about what is happening at the factory. Just counting up the number of completed items is a poor method for assessing labor rights progress. The violations at Hansae vary drastically in scope and severity and many of the items that have been successfully addressed are relatively minor in nature. Citing these statistics to defend the situation at Hansae is like someone who owes $100 on each of three credit cards, and $10,000 on a fourth, deciding to pay off the first three cards for $300 and then telling his spouse he has reduced the family’s debt by 75%.

The primary concern at Hansae is not the number of individual violations that have been addressed or not addressed. As the WRC reported in December, when we issued our second investigative report on Hansae, and as we noted again in our update last week, a substantial number of violations at Hansae have been corrected. Indeed, many of them were corrected before the December report was issued. For example, of all safety and health violations we reported in December, we identified 45% as having already been corrected at that time and another 31% where Hansae had made adequate remedial commitments. Considering that the WRC first reported violations nearly a year ago, considering the scrutiny that Nike has been under, and considering the financial resources at Hansae’s disposal, it is hard to envision any scenario in which Hansae would have failed to address many of the smaller problems, and at least some of the larger ones, by now.

The primary concern at Hansae is the array of major labor rights abuses that had not been fixed by December and that the factory still has failed to make adequate commitments to address. These violations – including hundreds of thousands of hours of uncompensated labor, discriminatory terminations of pregnant workers, extortion of illegal recruitment fees, excessive heat leading to workers collapsing at their machines – are very serious in terms of the harm they have created and broad in impact, affecting thousands of workers. Meaningful remediation at Hansase requires that these violations be remedied.

Just how far Hansae still has to go is obvious from a closer look at specific categories of violations. There are, for example, seven different types of violations involving non-payment of legally mandated wages and benefits, where retroactive compensation is required – from off-the-clock work, to illegal bonus deductions, to non-payment of mandatory child care allowances. To date, none of the seven have been adequately remedied. There are multiple categories of violations involving illegal termination of workers where reinstatement is required, including non-renewal of the employment contracts of pregnant workers and coerced resignations. These also have not been adequately remedied. Of course, as explained above, remediation is also incomplete, and off track, on excessive heat and improper seating, violations that affect workers across the entire 8,500-worker complex.

Arguing, as Nike seems to be doing, that overall progress is good, even though many of the most important and harmful violations remain unaddressed, is counterproductive, since it makes it harder to secure further commitments from Hansae. We hope Nike will reconsider its approach and hold Hansae accountable.

We will continue to work with Nike, other buyers, and the FLA toward the goal of fully remediating the labor rights violations at Hansae Vietnam.  And we will continue to report candidly to you on the state of progress.

Best,

Scott

Scott Nova
Executive Director
Worker Rights Consortium
nova@workersrights.org