Adidas
The university threatened Tuesday to cut future financial ties with Adidas to pressure the sports apparel giant in an effort to provide 2,800 former Indonesian factory workers with severance pay amounting to $1.8 million.
After a PT Kizone factory — which is predominantly owned by Adidas — suddenly shut down nearly two years ago, the workers were denied nearly half a year’s worth of wages. The university could join nine others in shuttering Adidas if it severs ties with the company. The university has requested that the company “remedy labor rights violations” within 90 days beginning on Tuesday, Joe Ebaugh, the university’s director of trademark licensing, wrote in a letter addressed to the company. The second anniversary of the factory’s shutdown is on Monday.
Student advocacy groups, including Community Roots and Justice at Maryland, are pushing the administration to follow through with the demands. The groups also met with Diane Krejsa, the legal affairs office deputy chief counsel and chief of staff, on Feb. 28, and 59 students and community members wrote to the administration demanding termination of the contract.
“A blemish on a company with which we do business is a blemish on us, because we benefit from [workers’] exploitation,” Justice at Maryland and Community Roots wrote in a Feb. 26 letter to the administration.
But instead of shelving Adidas items by terminating its contract, the university will monitor the case and suspend approval of new designs, a decision Justice at Maryland student activist Sam Williamson said was “a disappointment.”
“I am proud that we have stopped accepting new designs. The best decision would be to immediately terminate the contract with Adidas,” the senior history major said. “Adidas clearly violated not only a local law, but an international law, and the university’s contract.”
The financial losses of terminating the university’s contract are minimal: The company yielded 1 percent in royalties in the last year when compared to the university’s 499 other licensed companies, Ebaugh said.
Adidas has directly given $525,000 in humanitarian aid to the former workers and their families, the company wrote in a statement, and provided job placement services, noting that more than 1,000 workers found new jobs, many of which are with Adidas suppliers. The company also defended its refusal to pay workers, saying it had no obligation to contribute financially to cases where contract suppliers fail to pay workers what they are legally owed and noting that it cut ties with the factory more than five months before violations occurred.
PT Kizone has been riddled with international and domestic law violations since September 2010. It stopped paying mandatory compensation to 49 workers when they voluntarily left and it refused to pay all of its employees their monthly December wages. The factory owner, Jin Woo Kim of South Korea, fled the country, and the factory shut down a few months later with no money for severance pay, according to a 2012 workers’ rights report.
“We cannot be held responsible for someone else breaking the law,” Adidas wrote in reference to PT Kizone.
University officials have been aware of contract violations since 2011 through reports from the Workers Rights Consortium, Ebaugh said, but they felt compelled to act after the student campaign began earlier this year. Community Roots and Justice at Maryland hosted two PT Kizone workers, Heni Sutisna and Aslam Hidayat, last month as part of the workers’ national Badidas Worker Tour. The student groups invited university President Wallace Loh, University Relations Vice President Peter Weiler and Administrative Affairs Vice President Rob Specter to attend the talk; Ebaugh also attended.
Sutisna recounted the story of a friend, a woman who worked at the factory for nearly a decade, who was hit by financial hardship and committed suicide by throwing herself in front of a bus. The incident prompted Sutisna to pull her children out of vocational school; Hidayat, the factory’s union shop steward, said he received death threats in his efforts to secure compensation.
In a February 2012 statement, Adidas wrote it was “sympathetic to the plight of workers” and had instituted a job placement program. In a September statement, Adidas wrote it had created a $250,000 food aid program for former workers and committed $275,000 in humanitarian aid “in recognition of the continuing hardship faced by former workers and their families” — moves critics said were insufficient to rectify the company’s violations, according to the 2012 workers’ rights assessment.
PT Kizone is one of a “long chain” of similar incidents, Williamson said. Adidas closed an El Salvador factory in 2005, leaving employees with $825,000 in unpaid wages.
At this university, officials cut a contract with Russell Athletic Corp. in April 2009 when the company shuttered a Honduran factory in response to unionizing workers. Russell reopened the unionized factory and rehired 1,200 of its workers months after a national student campaign led by 96 colleges and universities, according to a previous Diamondback report.
This time around, the university has another chance to leave a mark on the international labor workers’ rights movement, Williamson said.
“We’re pleased to see that Maryland recognizes the seriousness of Adidas’ refusal to pay a single cent of the $1.8 million in severance owed to the former PT Kizone workers,” said Garrett Strain, international campaigns coordinator for United Students Against Sweatshops. “Across the country, students are committed to ensuring that schools like Maryland fully enforce their Code of Conduct by terminating their contracts with Adidas.”
