We Have a Robber Baron on the Board!

[Sam_Stone]

@Larry Mudd

Look, Sam, your “cites” aren’t getting a lot of respect because they’re damned silly. There are so many flaws in your starting data that any conclusion you make is utterly meaningless. First, you’re often starting with vague data supplied by suspect sources. Do you really trust that some guy on the internet who hates Nike has accurate data about Nike’s operations in Vietnam? Every number on that page that can be compared with figures from Nike is way off.

All I’m trying to do is to determine if 650,000 is a ‘reasonable’ number - YOUR claim that it is on its face unreasonable would suggest that that it’s much lower. But tell you what - maybe we’re talking around each other because you think I’m shooting for more precision. If you’re willing to concede that Nike products are the result of hundreds of thousands of workers’ efforts, then we’re done. Because that’s all I’m trying to do. I don’t give a rat’s ass if it’s 450,000 or 650,000. What it ISN’T is something on the order of 50,000. For the purposes of trying to land the number in the appropriate ballpark, my numbers and cites are FINE.

Do “A million pairs of shoes a month” and “25,000 workers” sound like an accurate numbers to you? They are fucking meaningless when it comes to trying to calculate anything concrete.

Uh huh. If we’re shooting for accuracy ± a couple of percentage points, I’d agree. If we were arguing over whether Nike employs 650,000 or 500,000, I’d agree with you. But we’re not. My understanding is that we’re arguing over orders of magnitude here, with me claiming hundreds of thousands of workers, and others claiming, well, I have no idea because they won’t put up numbers of their own, but something so much smaller that my numbers are ‘obviously’ wrong, and that ‘common sense’ shows it. That’s an order-of-magnitude difference, not a difference measured in decimal places.

Here ya go:Hey, look at that, we’ve nearly doubled production, and reduced the number of projected worldwide employees by half!

I already used those numbers. And if you want to use them again, fine. If Nike needs 150 million shoes, that Vietnam factory would need 187,000 employees.

Can we do better? Sure!God-damn, now those are some numbers! Clearly, good management is undervalued. Those same workers can easily be made to produce anywhere between twelve and seventy million pairs of shoes each year, depending on how you handle them.

Or depending on how much investment has been made in automation.

Like, say, a list of Nike-contracted factories which can easily be shown to produce other goods?

No, because we have no way of knowing if Nike’s number takes that into account. As I said, we ALL know that many factories make goods for many companies. What we are trying to determine is how many people are necessary to make Nike’s products.

I’m seeing estimates from seventy million to a top end of one-hundred and thirty million.

The numbers I have, straight from Nike, was 70 million shoes sold in the U.S. in 2002. U.S. shoe sales makes up approximately half of Nike’s overall shoe market. That gives us a bottom end of 140 million shoes, although since 2002 Nike’s market has grown dramatically. It could be as high as 200 million now worldwide. And shoe sales make up roughly half of Nike’s total revenue.

They’re all over the map. You can not begin to pretend to be able to extrapolate how many full time employees they have, based on data of that quality.

You can extrapolate within the margin of error of the estimates. Again, we’re shooting for accurate on the order-of-magnitude range, not within a few thousand people.

Ultimately, the question we are trying to answer is, "If Nike took all of its profit and gave it back to the people who make their products, could it provide a ‘living wage’? If Nike made 1.2 billion dollars in profit, or 900 million after dividends were paid out (which it did in FY2004), then if it has 650,000 employees it could give them each 1384 dollars. If it only has 400,000 employees, it could give them each $2250. Neither of those numbers represents a living wage, so I don’t really care if the number is 400,000 or 650,000. On the other hand, if they only employ 50,000, then they could give them each 18,000. Or they could keep half the profits and give them 9,000 each.

THAT is the range we are tryng to determine. Is the actual number of people who make products for Nike on the order of 50,000, or 500,000? An order of magnitude. If you’ll agree with me that it’s likely more like 500,000, then we’re done. If you think it’s 50,000, then you haven’t proved a damned thing, because while any one of my numbers may be in error, I took account of that by working the problem with numerous different sources of data, and they all come out in the high range of that 50-500 spread. If we do it by using published figures for the cost of labor, we wind up in the hundreds of thousands of employees. If we take Nike’s own number, we have 650,000. If we compare it to other companies who do publish the labor force required to make shoes, we come out with hundreds of thousands again.

Then we have other data points which I also provided. For example, one factory employs 4,000 people who make nothing but athletic bags for Nike. Extrapolate that out by considering how small a part of Nike’s revenue athletic bags must be, and we’ve got to be back in the hundreds of thousands. Certainly athletic bags don’t make up 10% of Nike’s work force, wouldn’t you agree?

Let’s simplify, by taking a look at their main contractor:Here, looking at more coherant data, we can see that one of Nike’s contractors is able to produce the same total number of shoes annually with about a third of the labour of that that the calculations you value so much would suggest.

That number proves my point. If Nike sells more than 130 million shoes, then they probably employ at least 250,000 people just making shoes, correct? This is Nike’s main supplier, and those are their numbers. And if Nike actually makes 200 million, then we’re talking about more like 375,000 people.

And if Nike employs a quarter of a million people just making shoes, suddenly that 650,000 number is starting to look pretty good again, wouldn’t you say?

What, are you my Uncle Ron now, trying to convince me I have eleven fingers? How do you figure that the 650,000 number refers only to labourers who are working on *shoes?

I never said that. I said if they employed 325,000 making shoes, AND their other products were roughly as labor intensive, AND shoes only make up half of their revenue, then double the 325,000 to come up with the number of total employees. And we’re right back in the 650,000 range.

I’m fully aware that these are ballpark estimates. I’ve been saying so right from the beginning. However, we are starting this by having Nike’s own number of 650,000, which they are claiming. If our numbers keep coming up in this ballpark, what reason do we have to assume that they are being misleading? If our estimates are ± 200,000 workers, but the error bars land with nike’s own number within range, then isn’t it reasonable to assume that when Nike says they employ 650,000 people, they actually, you know, employ 650,000 people?

Before we go any further with this, I think you need to tell me what it is you’re trying to prove. If all this is your way of showing that my estimates are not exact, I have no quarrel with you. But as long as you won’t tell me what YOUR estimate is, and what you think think the error bars are on mine, we’re going to just continue to talk past each other.

*My brother-in-law used to work in a Nike contracted factory in Toronto. They make printed shirts for Nike there. And plenty of stuff for other clients.

Great. So maybe Nike’s 650,000 figure only counts those workers who make Nike stuff. Why are you assuming they would count every worker in the factory? My guess as to how they would come up with the number of employees working on their stuff is to do what I did - look at their labor costs, divide by the salaries of the workers, and come up with the number of man-hours of labor spent making their stuff. Divide by the hours in a work year, and you have a good estimate of how many people are actually employed in full-time equivalent positions making your stuff.

If that’s the way they do it, then once again IT IS TOTALLY IRRELEVANT whether or not their stuff is made in 10 factories with a 10% duty cycle applied to their products, or one factory with 100% applied to their products. The argument is a straw man.

[bdgr]

So why does nike go overseas if its so ineficient? New Balance makes most of their shoes in the US and still turns a profit.

[Maeglin]

But tell you what - maybe we’re talking around each other because you think I’m shooting for more precision.

More precision is certainly available. Your claim that shoemaking is very manual and minimally automated does not imply that the task should take a substantial length of time. In fact, I bet that Nike knows exactly how long it takes to turn out a shoe, a pair of socks, or a sweater.

As it turns out, Nike does.

“These documents” are Nike’s SAM requirements - Standard Allotted Minutes. For every step of every item, Nike has calculated how much time it will allow, to the 1,000th of a second. The grand total from start to finish - raw cloth to stitched, labeled and bagged kiddie sweatshirt? It’s 6.6 minutes. Given that Dominican sweatshop wages are about 70 cents an hour, the labor on that shirt cost about 11 cents. The cost of it to you, at a department store, is $22.99.

6.6 minutes to produce a sweatshirt.

So how would doubling the wage of the laborer affect the price at market? According to one calculation:

Cost increases are, however, likely to be substantially less than this. Nike’s figure for labor costs includes all people employed at a factory, including often-substantial wages paid to supervisors and expatriate managers. As noted above in Nike’s own documentation on the “Standard Allotted Minutes,” the amount of time workers are expected to spend on the production of each item of clothing reveals the production line labor cost for each item. Using this documentation, Charles Kernaghan of the National Labor Committee has calculated that for a sweatshirt that sells for $23 the cost of production line labor is only 11 cents (Skenazy 2001). Doubling those labor costs to 22 cents could increase the price of the shirt to $23.22, hardly enough to drive consumers away, particularly when it has the added attraction of being made by a worker paid a living wage.

I have no interest in defending this particular calculation. I think this is informative insofar as it sheds light on how long it really takes to stitch together a pair of shoes. This ought to put some bounds around your calculation. I have no objections that have not already been voiced by others.

[Sam_Stone]

@bdgr

So why does nike go overseas if its so ineficient? New Balance makes most of their shoes in the US and still turns a profit.

Nike goes overseas because it has products that are very labor intensive and don’t sell for much money. So far, cheap overseas labor has turned out to be cost-effective in the overall scheme. If you drive up the costs of that labor enough, though, it won’t be. And then all those garment companies will simply go away, and the people will be left with no jobs and no infrastructure investment. That’s ultimately the consequence of imposing 1st world worker obligations onto a country that doesn’t have the productivity to support it.

South Korea was once the sweat shop of Asia. “Made in Korea” was a sign that you were getting shoddy Japanese knock-off electronics. The people made 3rd world wages. But because those sweatshops were allowed to exist, investment flowed into the country. That investment raised productivity, and as productivity went up worker’s salaries went up. Now South Korea is a first world nation. Singapore followed, for the same reasons.

Countries have to start somewhere. Many of them have unstable governments, problems with violence, the risk of state expropriation of property (think Venezuela), etc. So for them to take on those risks, there have to be good profits available. But these companies bring the infrastructure investment that allows the country to grow economically.

Yes, it’s sad to think that some people have to work in these conditions. But that’s just reality. It’s also sad that they kill each other in endless tribal wars and endless strings of strongmen and thugs who drain these countries of their resources. The first companies moving into these countries are not the problem. They are the solution. But it only works because these companies can pay these people far less than they would have to pay someone in the first world. Screw with that, and you condemn these countries to endless cycles of poverty.

[Sam_Stone]

@Maeglin

More precision is certainly available. Your claim that shoemaking is very manual and minimally automated does not imply that the task should take a substantial length of time. In fact, I bet that Nike knows exactly how long it takes to turn out a shoe, a pair of socks, or a sweater.

As it turns out, Nike does.

6.6 minutes to produce a sweatshirt.

So how would doubling the wage of the laborer affect the price at market? According to one calculation:

I have no interest in defending this particular calculation. I think this is informative insofar as it sheds light on how long it really takes to stitch together a pair of shoes. This ought to put some bounds around your calculation. I have no objections that have not already been voiced by others.

Now that’s interesting. I wonder why that seems so much different than the numbers coming from the shoe manufacturers themselves? One major difference is that the SAM document appears to be the production line timing - i.e how long it takes for a shoe to go from start to finish on the line. Whereas an actual accounting of man-hours that goes into making a shoe is more like the total number of employees in the factory divided by the number of shoes that comes out. In other words, if a line requires 20 hours of maintenance by a crew of 10 people, then 800 hours of labor would be added to the production budget. I have no idea if that would get us back into the ballpark of the other estimates.

[bdgr]

@Sam Stone

Nike goes overseas because it has products that are very labor intensive and don’t sell for much money. So far, cheap overseas labor has turned out to be cost-effective in the overall scheme. .

New Balance sells very similar shoes, they are made in the US in American factories (by union labor, I would bet) and they make a profit. Why cant Nike do the same? You theory doesnt hold water. The only reason Nike uses sweatshop laber is greed.

[Maeglin]

@Sam Stone

Whereas an actual accounting of man-hours that goes into making a shoe is more like the total number of employees in the factory divided by the number of shoes that comes out. In other words, if a line requires 20 hours of maintenance by a crew of 10 people, then 800 hours of labor would be added to the production budget. I have no idea if that would get us back into the ballpark of the other estimates.

Right. I suppose this raises two questions. When one computes the required man-hours for producing one pair of shoes, how many employees are counted in the numerator? Is it just factory employees or do you go all the way up the supply chain? I have never done business with a manufacturer like this, but I am guessing that labor budgeting for one pair of shoes is charged out to a myriad of different business units. Getting a reliable metric could be an exercise in futility.

The second question is essentially raised already. Even if you have to add, say, 800 hours of labor into the production budget, the only people you really have to pay more are the jobbers breathing toxic fumes in Viet Nam. I am having trouble wrapping my mind around why this would be so difficult. It would certainly do wonders for the brand.

[Larry_Mudd]

Sam, let’s walk through this slowly, okay?

You did some math from which you determined that Nike simply doesn’t make enough profit to share it around with 650,000 labourers in such a way that it would make any difference in their lives. The central flaw in your reasoning is that Nike is not responsible for the entire income of 650,000 labourers, and has never claimed to be. “Nike contracted factories” also produce for other companies.

Attacks on outspoken workers at the PT Nikomas Gemilang factory, which supplies both Nike and Adidas, have made the 23,000 workers at that factory afraid that involvement in union activities could endanger their lives.

Do you really imagine that factories who do contract work for Nike hire dedicated employees which are the only ones that Nike counts? Or that Nike determines what percentage of their contract factories’ output they are responsible and divides the number of employees for that factory accordingly? If that were true, then the statement “650,000 workers are employed in Nike contracted factories around the globe,” would not be an accurate statement. It says what it says, nothing more and nothing less.

@Sam Stone

My understanding is that we’re arguing over orders of magnitude here, with me claiming hundreds of thousands of workers, and others claiming, well, I have no idea because they won’t put up numbers of their own, but something so much smaller that my numbers are ‘obviously’ wrong, and that ‘common sense’ shows it.

No. I have no doubt that somewhere around 650,000 workers have a hand in delivering Nike gear. It’s just that for a many of them, that’s not all they do, and for a some it’s a practically insignificant part of what they do.

The only reason we’re talking about this at all is because you were approaching the problem of whether or not it is possible for a company like Nike to use labour that receives a living wage and still survive – by comparing the number 650,000 to Nike’s net profit. See, many of these workers spend time producing products for other clients, and naturally Nike is not paying their employers to subsidize that.

@Sam Stone

Ultimately, the question we are trying to answer is, "If Nike took all of its profit and gave it back to the people who make their products, could it provide a ‘living wage’? If Nike made 1.2 billion dollars in profit, or 900 million after dividends were paid out (which it did in FY2004), then if it has 650,000 employees it could give them each 1384 dollars. If it only has 400,000 employees, it could give them each $2250. Neither of those numbers represents a living wage, so I don’t really care if the number is 400,000 or 650,000. On the other hand, if they only employ 50,000, then they could give them each 18,000. Or they could keep half the profits and give them 9,000 each.

See, but the problem you have is trying to fit these labourers into a box that says “Nike Employee.” They are not Nike Employees. We’re not talking about Nike giving them more money. We’re talking about how Nike (and other multinationals) contract with their suppliers. They need to get assurances from their contracted factories that labourers are being paid a living wage. This means they have to pay a bit more – and it also means that other clients of the factory will have to pay more. A few cents per piece.

Nike doesn’t have to shoulder the entire burden (such as it is.)

@Sam Stone

Ultimately, the question we are trying to answer is, "If Nike took all of its profit and gave it back to the people who make their products, could it provide a ‘living wage’? If Nike made 1.2 billion dollars in profit, or 900 million after dividends were paid out (which it did in FY2004), then if it has 650,000 employees it could give them each 1384 dollars. If it only has 400,000 employees, it could give them each $2250. Neither of those numbers represents a living wage, so I don’t really care if the number is 400,000 or 650,000.

Okay, totally leaving aside the “how many employees does Nike have” controversy, (which is really frustrating and irritating by now) I think I may just be able to blow your mind, here. The minimum “wage” in Indonesia is about $70/mo. It’s estimated that this is about 75% of a “living wage” in that country. So even if Nike did have 650,000 full-time, dedicated Nike-makers, and they were all in countries like Indonesia, instead of being partially distributed amongst countries where labour is valuated at a higher rate, coughing up an extra $280 per annum to all of them would likely turn the trick. $1384 may not be a living wage to you or I, but when if you’re working class in Indonesia it’s practically macking. The “living wage” we’re shooting for in Indonesia is actually less than that.

@Sam Stone

Then we have other data points which I also provided. For example, one factory employs 4,000 people who make nothing but athletic bags for Nike. Extrapolate that out by considering how small a part of Nike’s revenue athletic bags must be, and we’ve got to be back in the hundreds of thousands. Certainly athletic bags don’t make up 10% of Nike’s work force, wouldn’t you agree?

Did you read your own “cite” for that?

Nike accounts for between 55 percent and 65 percent of the plant’s production.

@Sam Stone

That number proves my point. If Nike sells more than 130 million shoes, then they probably employ at least 250,000 people just making shoes, correct?

130 million is the highest estimate I’ve seen anywhere – don’t go reaching for 200 million. But yes, 250,000 full time labourers is a reasonable amount for shoes.

@Sam Stone

I said if they employed 325,000 making shoes, AND their other products were roughly as labor intensive, AND shoes only make up half of their revenue, then double the 325,000 to come up with the number of total employees. And we’re right back in the 650,000 range.

That’s a lot of “ANDS” and “IFS,” Sam. Textiles aren’t a labour intensive as shoemaking, and shoes make up three quarters of their revenue, if US sales are anything to go by.

For the fiscal year that ended May 31, 2004, sales of apparel - for both men and women - increased 6 percent in the United States, to $1.4 billion, while footwear sales rose only 2 percent, to $3.07 billion, according to company reports.

@Sam Stone

Before we go any further with this, I think you need to tell me what it is you’re trying to prove. If all this is your way of showing that my estimates are not exact, I have no quarrel with you. But as long as you won’t tell me what YOUR estimate is, and what you think think the error bars are on mine, we’re going to just continue to talk past each other.

My estimate for what? To what end? So far, you’re the only one who’s made any assertions that depend on the knowing how many employees Nike has. Remember? The number 650,000 is important to you because you felt it helped make the case that Nike can’t afford to pay a living wage. It’s an unneccessarily baroque argument that depends heavily on unquantifiables (and the improperly quantified) and variables from unreliable sources. And yet, even still you can use the numbers you’ve selected and still find a way to allow for a living wage, although it is of course much more hurtful to the bottom line than it would be in reality.

Its central premise is extremely dubious, and even if it’s allowed to stand it doesn’t argue what you think it does. Its conclusion is easily disproved using a more straightforward and reliable dataset – or even common sense.

Oh noes, a multinational athletic shoe company couldn’t possibly allow for more than $3.50 to be spent on labour per pair of shoes! There’d just be no profit in it! A very generous fifty-percent increase in the amount payed for labour would cost Nike about $200,000,000. A tiny amount, relatively. If they passed that on to the retailer, (who would no doubt pass it on to the consumer,) nobody’d blink. “Oh my god! The cost of running shoes has gone up a percentile! I’m going to have to tape old Kleenex boxes to my feet and hope for the best.”

Really, multinationals can afford to do the fair trade thing, and they can even compete. We can afford it as consumers, too. It’s a choice.

Myself, I choose to buy Bata – because they aren’t, you know, casually evil about labour.

[Cemetery_Savior]

@bdgr

You altered my quote to change its meaning and then attacked the statement. THat is a viololation of board policy. I will report it to a moderator and if they decide its ok, then I wont lose sleep over it.

Feel free. While you’re writing out that report, wander over to an on-line dictionary and look up “paraphrase”.

@bdgr

Coherent thought? Work on your reading comprehension sparky, instead of trying to guess what I’m trying to say without reading it.

Takes two to tango, bdgr. If you can craft a coherent sentence, my reading comprehension will be made much easier. Thanks.

@bdgr

If ever dime you are making is going to feed yourself, put a roof over your head, and gas in your car to get to work (if your lucky enough to have one) you cannot move accross country. It costs a LOT of money to relocate, you put everything in a paper sack and strike out on foot and expect to be able to get that better job when you get there. You have to have a place to live when you get there, which takes a LOT of money. You are clueless.

To be fair, I feel like I’m stealing from Yeticus, but how would you account for the illegal alien crossings to get seasonal work? Yes, there are probably support networks waiting on our side, but I doubt they’re on the Four Seasons side of the equation. I think you underestimate the ability of the poor person to adapt and live in a crappy situation while searching for a job. If the person lives in a horrible situation, why wouldn’t they drop everything to move?

@bdgr

Barrista is skilled labor. To make a cappuccion right takes a LOT of practice, skill and training. There is a barrista guild, there are schools you can go to, and they have international barrista competitions and there are many who make it their career. It doesnt pay a lot, but better than convience store clerk. My barristas are the best in the area…one of them has been asked to compete in the statewide competion. The girl I talked about is in the process of trying to go to college, btw, and has a scholorship. I think she will do great and do great things. But she couldnt even think about doing that living on a park bench.

Barrista = skilled labor? I think we have a miscommunication. I was under the impression we were discussing skill sets which a Union might organize to attain a monopoly. I have to think that if all Barristas everwhere decided to walk off the job, we’d have new ones by noon. Not meant to be derogatory to Barristas, but it’s a stepping-stone job, not a destination/career (except for those glamorous Barrista Guild members who travel from international competition to internation competition).

I am curious about the New Balance question you rasied, though. I also recall a lot of “Made in the USA” labels. I think I may also remember the statement that NB uses USA-made shoes as a type of loss leader, and gets the majority of revenue from sportswear made overseas? No cite…I’m working off a vague memory here. Does anyone else remember this?

-Cem

[crazyjoe]

@Sam Stone

Nike goes overseas because it has products that are very labor intensive and **don’t sell for much money. **

Bolding is mine.
Holy shit dude. I mean, if you want to lose credibility, you flushed it down the toilet right here. Have you priced anything Nike-branded? Their shoes typically cost 60 dolalrs or more. Hats, shirts, or anything else with a Nike logo on it is typically more expensive than the same items without the logo or with a different logo.

Saying Nike products don’t sell for much money is like trying to convinve people that a BMW is an economical purchase.

[bdgr]

@Cemetery Savior

Feel free. While you’re writing out that report, wander over to an on-line dictionary and look up “paraphrase”.

You completely changed the meaning of what I posted by leaving out words. Thats not paraphrasing

Takes two to tango, bdgr. If you can craft a coherent sentence, my reading comprehension will be made much easier. Thanks.

I write coherent sentances, sparky, but I’ll remember who i’m dealing with and try to use smaller words next time.

To be fair, I feel like I’m stealing from Yeticus, but how would you account for the illegal alien crossings to get seasonal work? Yes, there are probably support networks waiting on our side, but I doubt they’re on the Four Seasons side of the equation. I think you underestimate the ability of the poor person to adapt and live in a crappy situation while searching for a job. If the person lives in a horrible situation, why wouldn’t they drop everything to move?

The ones I’ve talked to generally were brought over and had a place to stay of some sort when they got here…usually relatives.

Barrista = skilled labor? I think we have a miscommunication. I was under the impression we were discussing skill sets which a Union might organize to attain a monopoly. I have to think that if all Barristas everwhere decided to walk off the job, we’d have new ones by noon.

It takes a hell of a lot longer to train one than that. And yes, the do have unions in some places.

Not meant to be derogatory to Barristas, but it’s a stepping-stone job, not a destination/career (except for those glamorous Barrista Guild members who travel from international competition to internation competition).

Absolutely it is a stepping stone job for most people, it is still a skilled position. what is your point again?

I am curious about the New Balance question you rasied, though. I also recall a lot of “Made in the USA” labels. I think I may also remember the statement that NB uses USA-made shoes as a type of loss leader, and gets the majority of revenue from sportswear made overseas? No cite…I’m working off a vague memory here. Does anyone else remember this?

-Cem

Most of their profit is from shoes, and most of their sportswear is made in the US as well. They are a privately held company that has made a commitment to keeping manufacturing here. They do make a profit while doing so.

[tomndebb]

@bdgr

to face the reality that unbridled capitalism results in poverty.

@Cemetery Savior

I’d love to see a cite (or even a credible reference) for that chestnut “…capitalism results in poverty.”.

I’m posting as a member, not a Mod, Cemetery, but your defense of that post is bullshit. bdgr’s claim clearly rested on the use of the adjective that you snipped and a claim of “ellipsis” does not cut it. You did not remove an extraneous or parenthetical phrase to get to the meat of his statement, you removed a direct modifier that was necessary to his statement. Since bdger is a capitalist (even if some posters think he’s wrong-headed in his execution), attributing the claim that he believes that (all) capitalism results in poverty is just dishonest posturing on your part.

[John_Mace]

@Cemetery Savior

I am curious about the New Balance question you rasied, though. I also recall a lot of “Made in the USA” labels. I think I may also remember the statement that NB uses USA-made shoes as a type of loss leader, and gets the majority of revenue from sportswear made overseas? No cite…I’m working off a vague memory here. Does anyone else remember this?

From the Boston Globe:

…25 percent of New Balance shoes are made or assembled domestically.

[bdgr]

From the same article

The capacity to make and assemble shoes domestically allows for faster turnarounds on customer orders, said Davis, who plans to shift some production from overseas to the United States.

''We’re making a larger commitment to domestic manufacturing," he said.

So not only are they making shoes here, paying us wages (although not as much of them as I had read elsewhere) they are planning on making more. Yet poor nike cant afford to someone 4 bucks a day.

[Sam_Stone]

@Maeglin

Right. I suppose this raises two questions. When one computes the required man-hours for producing one pair of shoes, how many employees are counted in the numerator? Is it just factory employees or do you go all the way up the supply chain? I have never done business with a manufacturer like this, but I am guessing that labor budgeting for one pair of shoes is charged out to a myriad of different business units. Getting a reliable metric could be an exercise in futility.

The second question is essentially raised already. Even if you have to add, say, 800 hours of labor into the production budget, the only people you really have to pay more are the jobbers breathing toxic fumes in Viet Nam. I am having trouble wrapping my mind around why this would be so difficult. It would certainly do wonders for the brand.

So, out of curiousity, all hair-splitting aside, do you agree that the number of people employed making Nike products is in the hundreds of thousands, and not tens of thousands?

[John_Mace]

@bdgr

From the same article

So not only are they making shoes here, paying us wages (although not as much of them as I had read elsewhere) they are planning on making more. Yet poor nike cant afford to someone 4 bucks a day.

You’ll note that the article explains the different marketing strategy the two companies have, too. One might argue that that’s the reason Nike is 10x the size of NB (measured in sales). Still, if Nike left those overseas countries in order to manufacture in the US, how exaclty would that help the workers there?

[Sam_Stone]

@Larry Mudd

Sam, let’s walk through this slowly, okay?

You did some math from which you determined that Nike simply doesn’t make enough profit to share it around with 650,000 labourers in such a way that it would make any difference in their lives. The central flaw in your reasoning is that Nike is not responsible for the entire income of 650,000 labourers, and has never claimed to be.

The point I was making is that they cannot provide a ‘living wage’ for hundreds of thousands. Whether it’s 650,000 or 400,000, the point remains the same. Are you willing to concede that hundreds of thousands of ful-time equivalent jobs are required to make Nike’s products?

<strawman argument about workers making other things snipped>

Nike doesn’t have to shoulder the entire burden (such as it is.) Okay, totally leaving aside the “how many employees does Nike have” controversy, (which is really frustrating and irritating by now)

Because you are fixated on trying to figure out whether there are millions of employees who spend 10% of their time on Nike stuff, or hundreds of thousands that do it full time. I DON’T CARE. Let’s make it simpler: Add up the total number of man-hours required to make all of Nike’s products, divide it by the average number of hours a full-time worker makes in Asia, and call it a ‘full-time equivalent job’. That eliminates this entire annoying train of thought about exactly how those factories are structured. WE DON’T CARE.

I think I may just be able to blow your mind, here. The minimum “wage” in Indonesia is about $70/mo. It’s estimated that this is about 75% of a “living wage” in that country. So even if Nike did have 650,000 full-time, dedicated Nike-makers, and they were all in countries like Indonesia, instead of being partially distributed amongst countries where labour is valuated at a higher rate, coughing up an extra $280 per annum to all of them would likely turn the trick. $1384 may not be a living wage to you or I, but when if you’re working class in Indonesia it’s practically macking. The “living wage” we’re shooting for in Indonesia is actually less than that.

But not all of Nike’s workers are in Indonesia. But sure, let’s take your argument. Let’s say there are 650,000 employees, they are all in Indonesia, and Nike’s going to cough up another $280 each. That’s $182 million dollars. Is it your contention that Nike should just cough up $182 million extra per year, when its competitors aren’t? If this is so easy to do, ask yourself this: Why doesn’t Nike just raise the price of their shoes by $5, and double their profit? You seem to think there’s so much slack in the corporate world that they can just ‘take out of profits’ enough money to pay all these people, and suffer no ill effects.

Did you read your own “cite” for that?130 million is the highest estimate I’ve seen anywhere – don’t go reaching for 200 million. But yes, 250,000 full time labourers is a reasonable amount for shoes.

Yay! Three pages of bickering, and finally you admit this. May I remind you that this all started because a number of people said that the 650,000 number was ‘obviously wrong’, didn’t pass a ‘smell test’, and that the real number was so much lower than that that I was naive for thinking it could be even close to correct. That’s what kicked off this whole shindig.

That’s a lot of “ANDS” and “IFS,” Sam. Textiles aren’t a labour intensive as shoemaking, and shoes make up three quarters of their revenue, if US sales are anything to go by.

They’re not. Nike’s revenue in other countries is much more split 50/50. But don’t forget that Nike doesn’t just make ‘textiles’. They make everything from sports rackets to golf equipment to basketballs to swim goggles. I’m sure some of these products require more labor than a pair of shoes, and some less. I have no idea what the real number is. But for a ballpark estimate, we can say that if Nike employs 250,000 to make shoes, there’s probably at least another hundred thousand or two in there somewhere making everything else they sell. Suddenly we’re not that far off that 650,000 number - at least for the purposes of working the problem of whether Nike can afford to pay all these people a ‘living wage’.

The number 650,000 is important to you because you felt it helped make the case that Nike can’t afford to pay a living wage. It’s an unneccessarily baroque argument that depends heavily on unquantifiables (and the improperly quantified) and variables from unreliable sources.

No, ‘hundreds of thousands vs tens of thousands’ was the answer I was trying to come up with. It seems apparent that it’s hundreds of thousands, right?

And yet, even still you can use the numbers you’ve selected and still find a way to allow for a living wage, although it is of course much more hurtful to the bottom line than it would be in reality.

Well, you did nothing of the sort. You started by findign the cheapest labor source, working out a very small amount for a ‘living wage’, and assuming that’s what it would be. If you go back and look at the start of this thread, the demands people were making weren’t for the kind of ‘living wage’ you’re talking about anyway. They were talking about 1st world standards. Or let me ask you - if those Indonesian workers were making $1200 per year instead of $900, do you think the protests against their ‘sweat shop conditions’ would end? Do you think most of the people protesting even have a clue what they currently make and how that fits into the local economy? Clearly, the protesters are looking for much more than that. They want air conditioned factories, improved safety standards, and much higher salaries.

Oh noes, a multinational athletic shoe company couldn’t possibly allow for more than $3.50 to be spent on labour per pair of shoes! There’d just be no profit in it! A very generous fifty-percent increase in the amount payed for labour would cost Nike about $200,000,000. A tiny amount, relatively. If they passed that on to the retailer, (who would no doubt pass it on to the consumer,) nobody’d blink.

Then please explain why Nike hasn’t done that, and pocketed the money. Do you think they’re going to leave $200 million in profit if they could raise the price of their shoes by $2 and ‘no one would blink’?

Really, multinationals can afford to do the fair trade thing, and they can even compete. We can afford it as consumers, too. It’s a choice.

Really? Then vote with your feet (heh) and buy shoes from manufacturers who specialize in providing the kind of jobs you approve of.

And what happens if we force them to pay these workers 30% more - and that makes those workers non-competitive? Then all those jobs will just dry up and go away. And those people will back to subsistence farming or living in slums.

Myself, I choose to buy Bata – because they aren’t, you know, casually evil about labour.

And look at that massive market share Bata shoes has…

[Sam_Stone]

@crazyjoe

Bolding is mine.
Holy shit dude. I mean, if you want to lose credibility, you flushed it down the toilet right here. Have you priced anything Nike-branded? Their shoes typically cost 60 dolalrs or more. Hats, shirts, or anything else with a Nike logo on it is typically more expensive than the same items without the logo or with a different logo.

Saying Nike products don’t sell for much money is like trying to convinve people that a BMW is an economical purchase.

They don’t sell for much money for a product this labor intensive. If it takes 5.5 hours to make a pair of shoes, then clearly those people making the shoes can’t be paid anything close to a 1st world wage, correct? That’s the point.

A good question to ask yourself is why employees in the 1st world make so much more than those in the 3rd world. The answer is that we are the recipients of massive capital investment. The average factory in the U.S. has tens or hundreds of millions of dollars worth of automation equipment, overseen by a relatively small number of people. If you have one operator running a shoe assembly line that cranks out 1000 pairs of shoes a day, you can pay that operator a pretty good wage. If those same 1000 pairs of shoes are made by 500 people sitting on stools in front of sewing machines and riveters, then you can’t pay them very much.

What the poorest countries lack is capital investment. That’s what companies like Nike are currently providing. As profits come in to these factories, they re-invest to make their production more efficient. Eventually their output increases, and they can pay their workers more. In the meantime, the increased tax revenue goes into building better power grids, roads, shipping facilities, etc. That makes it cheaper to do business in these countries, which also makes their employees more valuable. That’s what happened in South Korea, and it’s what is happening in China and other countries in Asia. But you have to start from the ground up, and that means very low wages. Try to choke that off by demanding unreasonable compensation for the workers, and you kill the investment necessarily to REALLY help those people.

[Sam_Stone]

@bdgr

From the same article

So not only are they making shoes here, paying us wages (although not as much of them as I had read elsewhere) they are planning on making more. Yet poor nike cant afford to someone 4 bucks a day.

What that tells me is that the decision to invest capital in an automated factory in the U.S. vs using human labor in the 3rd world is a pretty close one. WHich makes it even more dangerous to demand by fiat that the wage structure in the 3rd world be changed. Increase it too much, and you’ll destroy millions of jobs.

[bdgr]

@John Mace

You’ll note that the article explains the different marketing strategy the two companies have, too. One might argue that that’s the reason Nike is 10x the size of NB (measured in sales). Still, if Nike left those overseas countries in order to manufacture in the US, how exaclty would that help the workers there?

I’m not saying they should…just that if they can afford to have shoes made here at American wages, then they can afford to givethe guys overseas an extra couple of bucks a day