UW-Madison to gather information on Indonesian factory issue

December 2, 2011 By John Lucas

The University of Wisconsin–Madison is responding to alleged worker rights abuses at a former adidas Group subcontractor in Curug, Indonesia.

The issue relates to the owner of an Indonesian factory, called PT Kizone, who fled without paying more than 2,800 workers an estimated $3.2 million in severance. The amount equals nearly one year’s salary per worker, at minimum wage – that the workers were legally owed according to Indonesian law.

Goods in the factory were allegedly produced on behalf of several major apparel brands, including Nike, adidas and the Dallas Cowboys.

On Friday, the university’s Labor Licensing Policy Committee (LLPC) recommended that UW–Madison put adidas on notice that it must make severance payments to the displaced workers or it would initiate termination of both sponsorship and licensing agreements.

Vince Sweeney, vice chancellor for university relations, says that Interim Chancellor David Ward will take the committee’s suggestion under advisement. The LLPC is made up of students, faculty and staff.

“We take these allegations very seriously and are continuing to gather additional information to gain a better understanding of the situation. This will enable us to make an informed decision about whether or not adidas has violated the terms of our licensing code of conduct,” he says.

“Over the years, UW–Madison has been a strong leader in working to end sweatshop abuses in licensed apparel,” he adds. UW–Madison has terminated two licensee agreements in recent years, with Nike and Russell Athletic, in response to perceived breaches of the code of conduct.

UW-Madison has an exclusive contract with adidas to provide uniforms and athletic equipment, and the company is a university licensee. In signing its agreements with UW–Madison, adidas agreed to a code of conduct that sets forth its responsibilities in dealing with workers, factories and suppliers.

The university’s current deal with adidas runs through June, 2016 and is worth approximately $2.5 million annually, in both royalties and equipment.

Additionally, licensing royalties paid by adidas to UW–Madison since 2004 have provided nearly $450,000 in need-based scholarship support to UW–Madison students outside of athletics.

For its part, adidas has argued that the owner of the factory is responsible for severance pay, not adidas. Meanwhile, the company has said it will continue to support activities that aim for sustainable solutions to the reemployment of the Kizone workers, and the elimination of illegal factory closures and the flight of foreign owners from their legal obligations.

Students and the LLPC have argued that the adidas Group’s response to the situation has been insufficient, thus leading to Friday’s vote.

“Failure to pay severance owed to workers is the single largest problem with the global apparel industry; over $500 million is owed to workers in just the past year,” says LLPC chair and consumer science Professor Lydia Zepeda.

Ward will consider the committee’s advice while attempting to gather more information from adidas and the Worker Rights Consortium, the university’s independent monitor.

UW-Madison has contracts allowing 487 companies to make products bearing the university’s name or logos in thousands of factories around the world.

As part of university standards, brands and suppliers are required to adhere to a code of conduct. The code addresses workers’ wages, working hours, overtime compensation, child labor, forced labor, health and safety, nondiscrimination, harassment or abuse, women’s rights, freedom of association and full public disclosure of factory locations.

If violations occur, a licensee has the opportunity to correct the problem or have its relationship with the university terminated.