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In May 2015, President Barack Obama Great a great speech on the fall of commercial barriers With other nations. Hey He delivered it on a sunny day At the headquarters of the Nike world in Oregon.
“Sometimes, when we talk about commerce, we think of Nike,” said Obama, before making his presentation for a commercial agreement with Asian countries that described as the “highest and most scheduled commercial agreement in history.”
President Donald Trump canceled that agreement, known as the Transpacific Association, less than two years later.
Now, as Trump erects more commercial barriers in his second administration, Nike is once again in the center of the stage in conversations about globalization, a family place for a company that has its roots that import Japanese shoes and Shoes sneakers made in letters in the United States.
Last month, Trump Broad tariffs announced That would hit the imports of the country Where most Nike and a team sneakers are made. A close look at Nike’s mass supply chain offers a case study on the possible wave effects of the growing global commercial war and shows how Vulnerable factory workers It could be squeezed.
A certain degree of imports on imports has long been a characteristic of the international trade of clothing, and Nike has decades of experience sailing through thesis rates. The company has not talked about how it manages the current round with Trump, but it is among the 76 companies that signed a letter To the president, last week he warns about the consequences of footwear companies unless there is a tariff relief.
In response to questions about how tariffs could affect factory workers, Nike said in a statement that he is “committed to ethical and response manufacturing.”
“We build lung
Where does Nike do sports and clothing?
Nike does not have or operate the factories abroad that manufacture their products. Instead, it works with 532 contract manufacturers that employ almost 1.2 million workers, according to a Nike Map Online.
No country is more important for the manufacture of Nike than Vietnam, where the brand works with 131 factories that use almost 460,000 workers. Half or Nike Sneakers were made in Vietnam last year, according to the company annual report.
The second largest production base in Nike is Indonesia, where its 45 contract factories used more than 280,000 workers.
The company has been taking the production of China in the last decade. It works with 120 Chinese contract factories that employ more than 100,000 workers, below 350,000 workers in 2012. Some of the footwear and equipment that Nike manufactures in China is sold to Chinese consumers and, therefore, is not subject to tariffs.
Are Nike tariffs affecting?
YEAH. On April 2, Trump announced “reciprocal” tariffs that included 46% in Vietnam, 32% in Indonesia and 34% in China. The next negotiation day, Nike’s shares fell 14%Eliminating the value of shareholders of $ 14 billion.
A week later, the president arrested most rates for 90 days, but a 145% tariff on China imports and a 10% surcharge in most imports from other countries remain in place.
Tom Nikic, an industry veteran analyst in Needham & Co., calculated that tariffs, implemented, would almost eliminate Nike’s profits if the company did not make changes in its current prices or production.
“According to my mathematics, your profits would decrease by approximately 95%,” he said in an email.
Nike will squeeze the factories for better offers?
“Almost sure,” said Jason Judd, executive director of the Global Institute of the University of Cornell. “The predetermined value for a brand or retail that faces a rate or some other shock is to press suppliers to obtain discounts.”
“The Covid shock is a good example,” Judd added. “We know about talking to the suppliers that the Covid shock meant canceled orders and reneglations about the price.”
The workers’ rights consortium, a labor monitoring group, the estimated brands CANCELED $ 40 billion in orders Duration Pandemia.
When Trump announced the duration of the rates his first administration, Nike’s senior executives said they would find savings in their supply chain.
“We have a lot of liver with which we can work, from the supply to other levers,” said Andy Campion, then Nike financial director, in 2019.
How will tariffs affect the workers of the Nike factory?
Factory workers will probably feel the impact directly.
Dara o
“You are likely to see this son of pressure from managers to say to workers,” for a period of time, we will have to work more and more time, “he said.” Keep the line or lose your job. “
That could mean that workers are asked to make more sneakers and t -shirts in each shift and work more hours, according to Thulsi Narayanasamy, director of International Lawyer of the Workers’ Rights Consortium.
You are likely to see a child’s pressure son to tell workers: “For a period of time, we will have to work more and more time.”
—Dara O’Rourke, associated professor at the University of California, Berkeley
“When suppliers are squeezed and workers have unreasonable production objectives, do not drink water, do not take food breaks,” he said in an email. He added that in the circumstances of thesis, the organization constantly listens that “women who have urinary tract infections, fight with repetitive tension injuries, kidney stones and who have the probles give 12 house a mobile mobile movement Fordoso Movement Movement Movedive.”
Narayanasamy said that brands like to have an option: “Push the costs that their suppliers could reasonably absorb, full of making it immediately damaging millions of factor workers, or not.”
In his statement, Nike said that he establishes clear job expectations for supplier factories in his Code of conduct and code leadership standards.
Foreign clothing workers could also face permits or work without pay, said Judd de Cornell. That happened throughout the industry the pandemic.
In 2021, the workers’ rights consortium identified 31 clothing factories, three of which worked for Nike, which the consortium said Did not pay $ 39.8 million for compensation benefits Oed to 37,637 workers who lost the duration of the jobs the pandemic.
Nike has previously played to leave workers in the three factories appointed in the Labor Group report. In his statement, Nike also said that factories are responsible for compensation benefits.
“Manufacturing suppliers have the financial obligation to pay compensation for workers, social security and other separation benefits to affected employees in accordance with local law and Nike’s and Nike’s code of Conduct“The company said.” And in the case of any closure or divestment, Nike works in close collaboration with the supplier to hold a responsible output. “
Do tariffs force Nike to move the manufacture of return to the United States?
“To think that this will bring work to the United States is poorly thought, it would be the best thing I could say,” said Berkeley’s O’Rourke.
The manufacture of footwear and clothing remains intensive in labor. Sneakers require glue and sewing. T -shirts require seam. Efforts for automatic shoes production They have mostly failed.
That is part of the reason why Nike makes must of his products in countries with low salaries. Propublic reported this month In an old Nike factory in Cambodia, where most employees made the minimum wage – Around $ 1 per hour.
Credit:
Sarahbeth Maney/Propublic
Nike also uses huge factories that are full of equipment that are difficult to transfer to a new location. They are often located near material companies that make gums, nylons and polyesters need to make sneakers.
“The complete production system is not easily mobile,” O’Rourke said.
Instead of moving the work to the US, industry observers expect clothing companies to continue manufacturing products in countries with low wages, but manufacturing will change those subjects to less onerous rates.
That could further damage workers in Vietnam, Indonesia, China and other countries with relatively high tariff rates and many Nike manufacturing works. In Indonesia, for example, a union awaits up to 50,000 workers I could lose your jobs If complete Trump tariffs enter into force.
As the number of people looking for work increases, wages will decrease in those countries.
“The line at the door to find the job becomes longer,” said Judd. “And that means that any child’s employers can start paying less workers because Inemployent has jumped.”
What could mean tariffs for Nike prices?
Estimates vary and defend how much of the cost Nike passes to consumers.
If the 46% rate on Vietnam enters into force, the price of a $ 155 shoe made in Vietnam would increase to $ 220, according to footwear and retail distributors in America, a commercial group that has Nike as a member.
The example, which is specific to Nike, assumes that the importing company passes almost the entire tariff cost for the client. No sports footwear brand has given details, Althehegh Adidas CEO, Bjørn Gulden, said last week “Higher rates will possibly cause price incentrats.”
But Nike’s leg in a depression and has a discount of his shoes to increase sales.
Nike may absorb more than the cost of the rate to avoid raising prices too abruptly.
“It is probably difficult for Nike to increase prices,” the investment bank that UBS in a research note was recently wrote.
