Nike Resumes Soccer Ball Production in Pakistan

Goal is to set new standards for workers' rightsBEAVERTON, Ore., May 24 /CNW/ -- 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 further information: Nike World Headquarters, Alan Marks, 
[phone], or Nike EMEA (Europe, Middle East and Africa), Massimo
Giunco,  [phone], both of NIKE, Inc. Web Site:
http://www.nikebiz.com