Feb 6, 2003

When we caught up with athletic director Dick Baddour in late January, he had just returned from a 7-day trip to Vietnam and China that enabled him to tour several of the manufacturing facilities in those countries. He shared some of his impressions from the trip with Tar Heel Monthly.

Tar Heel Monthly: What was the purpose of your trip?
Dick Baddour: Nike invited the athletic directors from the University of North Carolina, Michigan, Washington, Florida and Colorado to travel with Kit Morris, Nike_s Director of collegiate sports marketing; Amanda Tucker, the director of their compliance program; and Joanne Scott, liaison with the NCAA, on a trip to Vietnam and China. We visited six manufacturing plants to see how Nike operates in foreign countries. Nike contracts out for all of its manufactured goods; Nike itself does not own manufacturing plants. Nike wanted us to better understand how they operate overseas and to have a first-hand look at their compliance programs relating to labor issues. I am not a trained auditor and I was not there to investigate, but to develop a better understanding of all the issues involved. Economic globalization is a very complex issue.

THM: What were your general impressions?
DB: The people of South Vietnam are most gracious and friendly. I was overwhelmed. There are very few cars, but thousands of scooters and bicycles that had no particular direction or focus as to how they should travel. Crossing the street was quite a mission. In fact, we were given instructions on how to cross the street.

The standard of living is very low in Vietnam but it is better in China. Vietnam remains a rural country, and most of the workers working in the factories come from a rural background. China is much more urban and populated. The province we visited in China has over 10 million people and more than 100,000 manufacturing plants.

THM: Is there any resistance in a communist country to this intrusion of the free market?
DB: I was surprised to learn of the willingness of both countries to embrace the free market system. It was clear both countries decided it is in their best economic interests and the interests of their citizens to have as much free enterprise as possible. Both countries have factories operated by the government as opposed to private enterprise. From what we could see and what we were told, the workers prefer to work in a factory that is corporate-based as opposed to government-based. There are more benefits and the working conditions seem to be better. On one occasion we heard a presentation by a group of Fulbright Scholars. They told us that the average monthly wage in a government-based factory is $18 per month. In a private plant, it_s $54 per month, with a minimum of $35 per month. You can see why the private sector jobs would be more attractive. When the private plants open for business every day, they typically have 100-200 people outside trying to get a job there.

THM: What was a typical day like on the trip?
DB: We started with a presentation in the morning. For example, one day we had a presentation from the American embassy, and one day we had a presentation from the Nike representative on how many plants they have in that country and what items are being manufactured in which locations. We visited one or two factories each day. We saw factories in the middle of a rural area and factories in industrial parks.

In three cases we saw outreach programs that were either sponsored by Nike or by the manufacturing company. We visited a Nike-sponsored school for employees who did not have their high school diplomas. Depending on their shift, they could come in during the morning or the afternoon and take classes. We also visited the homes of two people who were part of Nike's "micro-loan" program, which is a way for citizens of the country to start businesses. One woman received a loan of 80 dollars from Nike to set up a process to make incense. In another case we visited a woman who borrowed 80 dollars to set up a rice paper process. Their homes were both in very rural areas and the home itself may have been 10 feet by 15 feet. It was divided into two rooms with people sleeping on pallets. There was no indoor plumbing whatsoever.

THM: What surprised you about the trip?
DB: I thought the process of manufacturing apparel, shoes, and golf clubs and golf balls would have been more automated. I was surprised to learn how labor-intensive the processes are. Someone told us by the time a pair of shoes is made, it has taken 12 days and 100 different pairs of hands touching them to produce the end product. In China, in one month they make and export 6.5 million pairs of Nike shoes. It's very hands-on.

THM: What is life like for that labor force?
DB: The typical employee there was an 18-24 year-old female. The pattern is come to work, save money and send that money home. They work five or six years with the hope of going back to their own communities and starting a business or a family. Most of the plants in China offer dormitories for employees. The rent is usually limited to the cost of water and electricity, but it varies. They have major dining facilities with one meal a day for no charge and the other two meals provided at a low cost.

THM: What plants did you actually see?
DB: Nike contracts with 900 factories in over 50 countries. We saw six plants in two countries. In Vietnam, we saw a shoe factory and a hat factory. Both factories made product for other brands as well. The shoe factory had over 7,700 employees and it was Korean owned. It produced over 500,000 shoes per month. The hat factory was a Taiwanese company with 650 employees. It also made hats for multiple brands. In China we saw a golf clubs factory, a golf ball factory, a protective equipment factory (soccer guards) and a footwear factory. Two were owned by Japanese companies and the other by a firm in Taiwan. The shoe factory produced over 7 million shoes per year. The golf club factory produced 3,000 units per month.

THM: Are there any issues with the plants often being foreign-owned and overseeing a native workforce?
DB: All of the factories we saw were owned and operated by companies from other countries (i.e., Korea or Taiwan based). Sometimes this created problems with different cultures in supervisory roles. I was pleased to know the owners of the plants were emphasizing the development of in-country workers to serve in supervisory roles. It is their goal to have more influence from the community in running the factory.

THM: Compliance with certain standards is always a hot-button issue when Nike is involved. What did you learn about that during your trip?
DB: The University of North Carolina is committed to two groups that are involved with the labor issues - the Fair Labor Association and the Workers Rights Consortium. My belief is Nike understands its responsibility on labor issues and is committed to a first class program. Nike has 86 people committed to compliance standards in addition to other personnel stationed in foreign countries. It has a strong compliance program and takes its Code of Conduct very seriously. One thing to keep in mind is the standard of living is very different in those countries. Nike recognizes compliance is an on-going process and they have done a good job in committing and enforcing standards in these plants. However, given the size of the operations, issues will arise. When they do, quick and deliberate action needs to be taken.

THM: Why was it important for you to go on this trip?
DB: We're in a partnership with a major corporation. It was important to Nike and to our University that we have a better sense of how they're operating and their commitment to fair labor practices in those countries. I came away with a much better understanding of operating procedures than I had before. Previously I have said to our licensing committee that this globalization of manufacturing is probably the most complex issue I've dealt with. This trip confirmed that. It didn't simplify things, but it did help me understand them more clearly.