Nike has announced that the company is ceasing orders with its hand-stitched soccer ball supplier, Saga Sports, based in Sialkot, Pakistan, due to the contract factory's failure to correct significant labour compliance violations. As a result, the company is limiting its supply of hand-stitched soccer balls for the foreseeable future. It is engaging with a group of governmental, non-governmental and industry stakeholders to provide support for affected workers and to explore sustainable, fresh approaches to local manufacturing and social enterprise models in Sialkot.
CEO and president Mark Parker said, "This contract factory has persistently broken its commitments and irrevocably breached its trust with us; most importantly, the factory has failed its employees. Rather than continue with Saga, we have decided to limit our supply of hand-stitched soccer balls as we are developing new sources with factories committed to upholding our standards and treating workers fairly."
The company had discovered widespread unauthorised outsourcing of its products from Saga facilities, resulting in the production of Nike soccer balls inside homes in the Sialkot area. Nike has a long-standing policy against such practices because of the potential for using under-aged workers and the inability to ensure safe working conditions in home-based settings. The company also found numerous labour, environmental and health and safety compliance violations within Saga's facilities, including serious allegations by trade union representatives and other employees of worker harassment, wrongful termination and inaccurate payment of wages. The Fair Labour Association, in a recent unannounced audit of Saga unrelated to Nike's investigation, found similar violations.
While the company continues to source apparel in Pakistan, the company does not currently have other soccer ball vendors in Sialkot able to absorb production under conditions acceptable to the company. Soccer teams and leagues sponsored by the company will not be affected by the decision. For its retail partners, it is working to mitigate any shortfalls between supply and demand. Nike will continue to work with several existing contract factories in China and Thailand to supply premium hand-stitched and machine-stitched soccer balls.
