Indonesia serves as Nike manufacturing capital

We are part of The Trust Project.

Knight-Ridder Newspapers

TANGERANG, Indonesia -- The next time you see Bo Jackson on television selling Nike sneakers, think of Riyanti, 18, a junior high school graduate from the village of Klaten in central Java.

She makes your $75 Nikes for 15 cents an hour, a bit player on the frontier of Asian capitalism.

Her bosses are South Koreans who packed up and moved their factories to Indonesia three years ago due to the labor costs in Korea, continuing the same process that initially brought many of the jobs to Korea from the United States, where Nike is headquartered.

Where the process will end and whether Indonesia is getting much out of the shoe industry beyond thousands of extremely low-wage jobs is a matter of some debate.


One thing, though, is clear: With 2.5 million new workers entering the labor force every year in Indonesia, there is no shortage of supplicant employees willing to make sports shoes at a minimum wage equivalent to about $1.06 a day.

And while there is ample evidence of grossly unfair labor practices at some factories here in Tangerang, just outside Jakarta, the workers themselves typically have a hard time even understanding the concept of exploitation, let alone feeling it.

From a Western perspective, it would be easy to conclude that the workers are being exploited. But in Indonesia, where the per-capita gross national product is $555 a year, compared with $21,860 in the United States or $23,570 in Japan, people see things much differently. Thousands of people line up for these jobs and feel lucky to have them.

``Exploitation? I don't think so,'' said John Woodman, an American who is Nike's general manager in Indonesia. ``Yes, they are low wages. But we've come in here and given jobs to thousands of people who wouldn't be working otherwise.''

Nike's last U.S. shoe factories, in Maine and New Hampshire, closed in the mid-1980s, Woodman said.

``Really, what it came down to was cost,'' he said.

Here, Nike's responsibility, according to Woodman, is to make sure that the factories from which it is purchasing shoes on a contractual basis follow all Indonesian labor laws and act as ``law-abiding corporate citizens, just as Nike is a law-abiding corporate citizen.''

Others see it differently.


``It is most clear that Nike makes great profit from Indonesia, especially from those working in their licensed factories,'' according to a study financed by the Asian American Free Labor Institute, an affiliate of the AFL-CIO. ``But those people do not enjoy any benefit from Nike's presence.''

``The retail price of Nike shoes in the U.S. is between $50 and $175, on average $75,'' the study said. ``But the production cost in Indonesia is $5.60 a pair. The labor component of this is 418 rupiah (about 21 cents) . . . . We often hear that companies do not pay higher wages because they cannot afford to. But Nike is not a poor company.''

There is, indeed, a whole lot of money being made out there in the sportsshoe industry somewhere between Riyanti's hourly wage of 15 cents and Bo Jackson's multimillion-dollar endorsement fees.

This is Riyanti's part. Her day in the sewing section at Pratama Abadi Industry, a newly built South Koreanowned factory making shoes for American companies such as Nike and L.A. Gear, begins at 7:30 in the morning.

The minimum wage established by the Indonesian government for her next seven hours of the day is $1.06 -- a rate even the Labor Ministry concedes is insufficient to meet a worker's ``minimum physical needs'' of $1.22 a day.

But overtime is mandatory at Pratama Abadi, so Riyanti typically works two and sometimes four additional hours a day, returning home exhausted at 9:15 p.m., having earned a little more than $2.

The company provides meals, and her living expenses are low, sharing three tiny rooms in barracks-style housing with five other young women who also make your Nikes. So a lot of what she makes, she saves.

Through the middle of December, Riyanti had been working 11-hour shifts almost every day of the month, including Saturday and Sunday one week. Business was brisk; orders had to be filled.


Tired? Riyanti rolled her eyes and feigned collapse. Exploited? She smiled, demure and uncomprehending, when asked about her low wages and long hours.

``I'm happy working here,'' she said. ``I can make money and I can make friends.'' X X X

The portraits stare at each other from either side of the Hardaya Aneka Shoes Industry lobby: President Suharto and Vice President Sudharmono of Indonesia, wearing the traditional fezzes known as ``songkoks,'' looking tennis star Andre Agassi and hockey phenom Wayne Gretsky right in the eyes.

Agassi and Gretzky are members of Nike's all-star endorsement lineup, their slick advertising posters bearing the slogans -- ``Ace of hearts'' and ``I love L.A.'' -- that help sell the shoes they make right here.

This, in many ways, is a model factory in Tangerang, owned by an Indonesian conglomerate that intends to stay in the shoe business over the long haul and sees its workers as assets to be developed, not commodities to be exploited.


(Graphic available to KRTN Graphics Network subscribers. For information on the graphic, call (202) 383-6064; for questions on subscribing to the graphics network, call Walter Mahoney at Tribune Media Services, (800) 523-8923 or (312) 222-4695.)

AP-NY-12-27-91 0712EST

What to read next
The Red River Valley Water Supply Project will sue farmland owners for eminent domain if they don’t sign easements before July 8, 2022. Farmers say the project is paying one-tenth what others pay for far smaller oil, gas and water pipelines.
The Cowbot would be a way to mow down thistles as a way to control the spread of weeds, "like a Roomba for a pasture," says Eric Buchanan, a renewable energy scientist at the West Central Research and Outreach Center in Morris, Minnesota.