Nike World Headquarters - Oxfam Australia

Nike World Headquarters One Bowerman Drive Beaverton, OR 97005 Phone: 1-800-344-6453

17th January 2005

Dear Mr/Ms Harsh Saini and W. Krittika,

I am writing to you to request that Nike intervenes with the management of MSP Sportswear, Thailand to bring about a fair and acceptable resolution to mistreatment of workers at the factory who decided to organise and form a union due to the poor working conditions at the factory.

Oxfam Australia understands that as a result of attempts to organise, the union executive has been harassed and threatened. In October 2004 three executives of the union were unfairly dismissed, along with the mother of one of the union executive who also worked at the factory. Another member of the union Executive was arbitrarily transferred from the sewing to the cutting line without being given adequate training for his new duties. He was therefore unable to meet quotas and received a warning letter.

Oxfam Australia understands Harsh Saini, as a representative of Nike, met with the MSP Sportswear workers and CLIST - the labour organisation supporting them in Thailand. At this meeting you indicated Nike had decided to wait for the outcome of legal proceedings on this matter. We find this unacceptable as it is Nikes code of conduct that is being violated. It is Nikes' responsibility to intervene and discuss positive resolutions with management to reach a resolution, rather than waiting for lengthy legal proceedings to run their course. We hope that you will follow this course of action as it is similar action you have taken in other cases where your code of conduct has been violated.

In particular, Oxfam Australia requests Nike to intervene and use your influence with the management of MSP Sportswear

to fully implement your code of conduct, specifically that the rights to Freedom of Association and Organising are respected; to reinstate the three dismissed workers with back wages from the first day of their dismissal until their reinstatement; to reinstate the mother of the union committee member, who was working at the factory and who the union believes was unfairly dismissed because of her family connection; to rescind warning letters issued to Mr. Pragun Boonluom, a union activist who was arbitrarily transferred from the sewing line to the cutting line without being given adequate training for his new duties. He was therefore unable to meet quotas and received a warning letter; to stop all actions against the union and ceases to distribute misleading information about the union; to allow the union to distribute leaflets and union membership application forms freely in the work place without intimidation or any form of interference to prevent workers from joining the union.

We also request Nike to call together all parties concerned, as requested in the December 15 letter of CLIST, to share the outcomes of your investigation and to discuss what steps should be taken after workers are reinstated.

We urge you to do everything you can to ensure that the concerns and welfare of the workers are addressed and that they will be able to form and join a union of their choosing free from intimidation and harassment in accordance with Nikes code of conduct.

I look forward to hearing from you soon about any action you have been able to take in relation to this serious matter.

Yours sincerely,

Kelly Dent Advocacy Officer, Labour Rights

Thank you for your letter regarding the situation at MSP Sportswear factory in Huatalea Moung Nakornrachaseama in Thailand.

Nike's goal is to do business with contract factories that consistently demonstrate compliance with our Code of Conduct and that operate in an ethical and lawful manner. We take violations of our Code of Conduct, including freedom of association, very seriously. But we have also learned that alleged violations of freedom of association are some of the most complicated issues that both Nike and its contract factories face.

While your letter presents some disconcerting facts, they are representative of only one viewpoint: that of the union. The demands of the union do not necessarily reflect the views of all, or even a majority, of the workers currently employed at MSP. In fact, a number of MSP workers made an independent request to the provincial labor office to deny reinstatement to the workers in question.

Unraveling and resolving the underlying issues in these types of cases requires the involvement of neutral, third-party organizations. As a buyer in the MSP factory, Nike is not an appropriate mediator in the dispute. Furthermore, where freedom of association is supported by law, as is the case in Thailand, we believe it is in the best interest of all workers to have local governments build capacity in addressing these issues.

With respect to the three workers dismissed from MSP Sportswear, on December 14, 2004, Nike representatives observed an informal mediation session in which representatives from the Thailand Ministry of Labor, MSP Sportswear, and the 3 dismissed workers met. Following that informal mediation session, the union elected to file a formal grievance with the Ministry of Labor. We are pleased to note that both the union and management view the Thai government as an appropriately neutral body. The Labour Relations Committee has already commenced their investigation, indicating their commitment to expedite this process as much as they are able.

Regardless of the Government's ruling, MSP management has also committed to working with the Ministry of Labour in the implementation of workers' training - - specifically focused on their rights with respect to Freedom of Association. Nike commends MSP in this decision; we believe this type of capacity building is one of the best investments a factory can make in promoting positive management-worker communication, and creating an environment free from intimidation and harassment for all parties.

Our goal in Thailand is that workers' rights are respected, and we will collaborate with all relevant parties toward that end. Please write to continuous.improvement@ for response to future inquiries. We also invite you to visit for the latest information regarding Nike's corporate responsibility initiatives. We appreciate your interest and support in the matter.

Sincerely,

Dusty Kidd Vice-President, Compliance Nike, Inc.

Monday 21st February

Dusty Kidd Vice-President, Compliance Nike, Inc.

Dear Dusty Kidd,

Thank you for taking the time to respond to Oxfam Australia's letter of 17th January, 2005 which requested Nike's intervention in the dispute at MSP Sportswear factory in Huatalea Moung Nakornrachaseama, Thailand.

Your response contains a number of concerning comments about freedom of association and the implementation of Nike's code of conduct. For this reason we have responded in detail to each of the points you have raised. Oxfam Australia's response appears as an attachment to this letter.

In our letter of 17.01.05, Oxfam Australia requested Nike's intervention to bring about a fair and acceptable resolution to the mistreatment of workers at the factory who decided to organise and form a union due to the poor working conditions at the factory.

A government official from the Ministry of Labour in Thailand has clearly concluded that these employees were dismissed because of their union activities and has recommended that they be reinstated.

Our requests to you remain the same. Specifically, we ask that Nike intervenes and uses their influence with the management of MSP Sportswear:

to fully implement your code of conduct, in particular to ensure that the rights to Freedom of Association and Organising are respected; to reinstate the three dismissed workers with back wages from the first day of their dismissal until their reinstatement. This settlement must include Ms. Mala Phosit even though she was forced to resign and accept the severance pay offered by the company because she was in an extremely difficult financial situation due to her dismissal; to reinstate the mother of the union committee member, who was working at the factory and who the union believes was unfairly dismissed because of her family connection; to stop all actions against the union and ceases to distribute misleading information about the union; to allow the union to distribute leaflets and union membership application forms freely in the work place without intimidation or any form of interference to prevent workers from joining the union.

We look forward to hearing that Nike has taken prompt and positive action towards assisting with the resolution of this serious matter.

Yours sincerely,

Kelly Dent Advocacy officer, Labour Rights Oxfam Australia

Thank you for taking the time to respond to Oxfam Australia's letter of 17th January which requested Nike's intervention in the dispute at MSP Sportswear factory in Huatalea Moung Nakornrachaseama in Thailand.

Your response contains a number of concerning comments with regard to both freedom of association and the implementation of Nike's code of conduct. For this reason we would like to respond in some detail to each of the points you have raised. In doing this we hope, through dialogue, we can convince you of the urgent need for Nike to become constructively involved in the resolution of this urgent matter.

1. [from Nike's letter] Nike's goal is to do business with contract factories that consistently demonstrate compliance with our Code of Conduct and that operate in an ethical and lawful manner. We take violations of our Code of Conduct, including freedom of association, very seriously. But we have also learned that alleged violations of freedom of association are some of the most complicated issues that both Nike and its contract factories face.

[Oxfam Australia's Response] In general, we would agree that violations involving freedom of association and the right to organise can be complex. They are also a core ILO convention and a critical pillar for the advancement and protection of workers' rights. As such no matter how complex they are, resolving them should be the highest priority of any company concerned about human rights.

In the case of MSP Sportswear the violation of freedom of association seems relatively straightforward. Oxfam Australia understands that three union organisers (and only union organisers) were dismissed. Your letter refers to the conciliation meeting of December 14 2004 which was organised by the Thai Labour and Welfare Protection Department of the Ministry of Labour (MOL). In that meeting the Ministry official clearly concluded that the employees were dismissed because of their union activities and recommended their reinstatement. Five representatives from Nike attended this meeting, and made no comments to the contrary. As Nike knows, MSP Sportswear has a history of union repression. Two of the workers concerned were fired previously and re-instated following intervention of the Thai Human Rights Commission, who expressly stated that MSP in future had to respect the right to freedom of association and collective bargaining.

MSP management claims misconduct, however Oxfam Australia has seen no evidence to substantiate these claims. Management appears to counter its own statements by offering compensation equivalent to ten months salary, while by law, no compensation is required if workers are guilty of misconduct.

2. [from Nike's letter] While your letter presents some disconcerting facts, they are representative of only one viewpoint: that of the union. The demands of the union do not necessarily reflect the views of all, or even a majority, of the workers currently employed at MSP. In fact, a number of MSP workers made an independent request to the provincial labor office to deny reinstatement to the workers in question.

[Oxfam Australia's Response] As indicated above, these facts are not only the viewpoint of the union, they also reflect the opinion of the Thai Labour and Welfare Protection Department of the Ministry of Labour. The issue is not about how many workers support the union. Instead, it is about the right to freedom of association which is an individual right. It appears that the workers in question exercised this right and as a result were dismissed by factory management. Whether or not the majority of other workers support the union is irrelevant. This is still a violation of core international labour standards, Thai labor laws and Nike's own code of conduct.

Concerning the 'independent' request of other MSP workers to the provincial labor office: Oxfam Australia understands evidence has been provided to Nike that this was a management-orchestrated event. The five buses in which the workers went from the factory to the provincial labor office were hired by management. The demonstration took place during working hours, and workers were paid to participate. Workers carried placards in English, a language they are not accustomed to writing or reading.

3. [from Nike's letter] Unraveling and resolving the underlying issues in these types of cases requires the involvement of neutral, third-party organizations. As a buyer in the MSP factory, Nike is not an

appropriate mediator in the dispute. Furthermore, where freedom of association is supported by law, as is the case in Thailand, we believe it is in the best interest of all workers to have local governments build capacity in addressing these issues.

[Oxfam Australia's Response] Oxfam Australia understands and agrees with your position that Nike itself is not an appropriate mediator. We do not, however, understand why Nike has not taken up the advice of the conciliator who presided over two formal conciliation meetings late last year, nor why Nike has failed to respond to proposals for further independent mediation.

During November and December 2004 there were two conciliation sessions organised by the Thai Labor and Welfare Protection Department of the Ministry of Labour. The recommendation of the MOL official was very clear. Yet Nike has not followed it and has not explained its position to the Union and their supporters.

The union has agreed to independent third party mediation. This is clear from the complaints filed by the union to the Thai Human Rights Commission and the Fair Labor Association, of which Nike is a member, in early January. Also in January it was suggested to Nike that your company should cooperate in establishing an independent mediation committee made up of human rights lawyers, academics and other experts. Nike has given no response. If Nike is serious about resolving the issues, why have you not actively pursued mediation so that a fair settlement could be reached? Nike's passive approach has resulted in delays that cause extreme difficulties for the dismissed workers and for the union activists still working in the factory.

It is in the interests of all to build Thai government capacity to resolve these types of disputes. It is also clear that the current regulatory gaps are among the main reasons for having a code of conduct in the first place. By not upholding its own code of conduct, Nike hides behind a legal system that it knows to have insufficient capacity to effectively protect workers rights.

4. [from Nike's letter] With respect to the three workers dismissed from MSP Sportswear, on December 14, 2004, Nike representatives observed an informal mediation session in which representatives from the Thailand Ministry of Labor, MSP Sportswear, and the 3 dismissed workers met. Following that informal mediation session, the union elected to file a formal grievance with the Ministry of Labor. We are pleased to note that both the union and management view the Thai government as an appropriately neutral body. The Labor Relations Committee has already commenced their investigation, indicating their commitment to expedite this process as much as they are able.

[Oxfam Australia's Response] Firstly, this was not an 'informal' session, but the second of two formal conciliation meetings (the first one was held on December 2) organised by the Ministry following a petition filed by the dismissed workers on October 25. As stated above, the recommendation of the government officials was to reinstate the workers, since they were fired, in their opinion, for organising. Since MSP Sportswear refused to do so, instead offering higher compensation money, the MOL officials also explained that the workers have the right to file a complaint to the Labor Relations Committee. At the 14 December meeting, the MOL official also stated that in his opinion, a legal process usually is very lengthy, and rarely ends with the reinstatement of the dismissed workers. The most likely outcome would be a severance payment, effectively breaking the union.

Nike states that the union 'elected' to file a formal grievance with the Ministry of Labour. Oxfam Australia understands that the union waited until the very last possible day to do so, hoping Nike would intervene with factory management instead. The union has consistently communicated their lack of faith in the legal process to Nike, including by letter on December 15. It is therefore inappropriate for Nike to conclude that the union sees the Thai government as an appropriately neutral body.

5. [from Nike's letter] Regardless of the Government's ruling, MSP management has also committed to working with the Ministry of Labor in the implementation of workers' training - specifically focused on their rights with respect to Freedom of Association. Nike commends MSP in this decision; we believe this type of capacity building is one of the best investments a factory can make in promoting positive

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