11/07/97 - for IMMEDIATE RELEASE contact: Thuyen Nguyen

On Thursday, Nov. 6, Dar O'Rourke, a TRAC research associate, was preparing to release his report, Smoke from a Hired Gun, an analysis and critique of labor practices and Ernst Young's monitoring of a Nike factory in Vietnam. This report includes an internal document from Ernst & Young (E&Y) to Nike detailing many problems in this factory, Tae-Kwang Vina. The report came out of a three-month consulting assignment done by Mr. O'Rourke for the United Nation in which he surveyed 50 factories in Vietnam's Dong Nai province and from interviews with Nike factory workers. On November 7, Nike found out about TRAC's report and decided to release the E&Y's document to the public. This is the first time Nike has ever released this document despite many repeated requests from labor rights organizations. Nike is only releasing this report today to pre-empt the impact of the TRAC's report on Nike labor practices in Vietnam.

Nike was forced to take such drastic measure because the TRAC's report is damaging to Nike's public image. The report points out problems with Nike's recent public relation campaign about its labor practices.

1. Nike does not have an independent monitor for its overseas factories. Nike has described Ernst & Young as an independent monitor or an "auditor" for good labor practices in its overseas factories. The E&Y document clearly showed that such relationship do not exist. E&Y is just another contractor in Vietnam and E&Y is contracted to do whatever Nike requested them to do. E&Y is not an auditor and not even an independent monitor of Nike labor practices.

The E&Y document clearly establishes this fact, as E&Y wrote "The procedures we have performed were those that you specifically instructed us to perform. Accordingly, we have no comment as to the sufficiency of these procedures for your purposes." Auditor and independent monitor would not simply perform a set of procedures as the company requested. They have their own set of procedures and methodology to achieve a specific purpose. During an audit, the company would not know beforehand about the auditor's procedure.

2. Nike factories violated labor laws in Vietnam in terms of minimum wage and overtime. Vietnam Labor Watch released a report in March 1997 detailing how Nike factories were not paying workers the minimum wage during the first three months of employment, forced workers to work more than the country's overtime limit, and cheated workers out of overtime pay. Vietnam Labor Watch has also provided paystubs obtained from workers to prove these problems. The E&Y report showed that Nike was aware of these problems in January 1997 and did not take any corrective measures to get rid of these violations.
3. Nike shoe factory is a dangerous and unhealthy place to work. The E&Y reports that poisonous chemicals such as toluene can reach 177 times the legal limit and acetone is 18 times the legal limit. Such disregard for health and safety has resulted in 77% of workers tested by the Health Department to have respiratory problem and that an increasing number of workers have developed diseases involving skin, allergies and throats. These are young women who do not smoke and who have just came from rural areas of Vietnam. Respiratory problems that these women suffered came from working at the Nike factories.

Even recommendations by the Health department to move these young women with respiratory problem to a different section where chemical exposure is less were ignored by the Nike factory.

4. Nike factories do not pay a living wage. Nike factory, Tae Kwang Vina, has the lowest pay of all 50 factories in Vietnam that Mr. O' Rourke surveyed. The E&Y document also provide facts directly contradicting the findings of the Dartmouth's report. For example, the minimum wage in Vietnam where Nike factories are located is $45 per month and not $35 per month as per the Dartmouth report. A majority of factory workers do not save any money or send any money home having spend 100% of their wages on food - a clear contradiction to the Dartmouth's study. Therefore, we can now understand the contradiction of Nike's recent statements that its factories are paying "more than a living wage". Yet the company still refuses to put a living wage provision on its own code of conduct and the company still refuses to support a living wage provision on President Clinton's Apparel Industry Partnership's Code of Conducts.
5. We need independent monitoring for Nike overseas factories. The Nike's Code of Conduct is not being enforced. From the E&Y report, a Nike factory can violate many labor laws in Vietnam yet still be in compliance with the Nike Code of Conducts. The E&Y report documented that Tae Kwang Vina violated many labor laws in Vietnam i.e. overtime limit, minimum wage, health and safety standards yet concluded that the same factory was complying to the Nike Code of Conducts. This factory, Tae Kwang Vina, has also obtained the highest rating from a Nike's internal assessment despite all of the above problems.
6. Problems found by E&Y are not fixed. Nike tried to tell us that the company has taken care of all problems. But Dara O'Rourke of TRAC told the press that he was inspecting the Nike factory in September '97 and found that problems described in the Ernst & Young's report remained.
7. Nike tried to mislead the public once again. In Nike's press release it mentioned that there are 48 cases where workers were required to work above the legal overtime limit. The company, however, failed to mention that E & Y only intereviewed 50 workers and found 48 of them have worked more than the legal limit. It is typical of Nike to try to mislead the public even when the document clearly showed the company had violated labor laws in Vietnam. We need to remember how vigorously Nike denied similiar reports from CBS News, from Vietnam Labor Watch and from the Hong Kong Chrisitan Industrial Coaliation. At least with this internal report, Nike can no longer hide behind its multi-million dollar public relation campaign.