From: Molly McGrath (molly@usasnet.org)
Date: Mon Sep 23 2002 - 13:07:49 EDT
----- Original Message -----
From: "J. Ballinger" <jeffreyd@mindspring.com>
To: <nike-related@lists.caa.org.au>
Sent: Sunday, September 22, 2002 4:34 PM
Subject: [nike-related] Nike's PT Doson to close next week
> The Age [Melbourne]
> September 23, 2002
>
>
> Sole searching: an industry in strife
>
> By Matthew Moore
>
> For more than a decade Australians have been used to buying sports shoes
> with
> a "Made in Indonesia" label. But there are signs now that "Made in China",
> "Made in Vietnam" and even "Made in Myanmar" stickers will steadily
replace
> them.
>
> Indonesia's huge and lowly paid workforce, and its stable if dictatorial
> government, were the perfect ingredients for a booming manufacturing
> industry, which looked certain to follow Taiwan and Korea.
>
> But as shoe workers such as Juli, of Sumatra, are about to find out,
> Indonesia's manufacturing base is now looking precarious - and so is
Juli's
> future.
>
> "It's a good job," she said of the only work she has had since she left
her
> village eight years ago to come to West Jakarta's dusty industrial belt.
> There she found work sticking soles on Nike sports shoes with a
> Korean-Indonesian sub-contracting company called PT Doson Indonesia.
>
> Some time in the next week, when the last Nike order is filled, Doson will
> close, and Juli's job will disappear along with those of almost 7000 of
her
> colleagues.
>
> Indonesia's share of Nike worldwide shoe production has fallen in the past
> five years, from 38 per cent to about 26 per cent.
>
> Nike is so anxious to avoid adverse criticism that its spokesman was not
> allowed to talk to the media to confirm these figures or discuss the
reasons
> for shifting their orders.
>
> In press releases they have insisted they remain committed to producing
> shoes
> in Indonesia, cryptically pointing to "Nike's ongoing evaluation to
develop
> a
> more versatile Indonesian manufacturing base that is compatible with its
> global footwear strategy". That means fewer factories.
>
> For Juli that means no job for her or for her husband. It also means they
> are
> likely to join the country's 40 million people without real work. With no
> social security system in Indonesia, no health care, no education, it also
> means little hope for the future.
>
> At 33 and with a four-year-old son, she is pessimistic. "I think I am too
> old
> to get a new job now. It's the preference of most factories to employ 18
to
> 25-year-olds. They are the most productive. I am scared. If I don't have
> money I cannot eat." But age is not the only problem. It is also the lack
of
> new jobs being created in all manufacturing.
>
> Some of the problems arrived with democracy after the fall of President
> Suharto. Workers have greater freedom and better wages, but there are also
> questions over the country's long-term stability.
>
> An expert on the Indonesian economy, the Australian National University's
> Professor Hal Hill, says the trend in the shoe industry is particularly
> worrying because shoe and clothing manufacturing are normally crucial
> industry steps for emerging economies.
>
> Making shoes is simple technology, and with Indonesia's low wage rates and
> weak currency it should be in a great position to attract orders.
>
> "If you can't do it in shoes, you probably can't do it anywhere,"
Professor
> Hill said.
>
> The president of the Association of Indonesian Shoe Manufacturers, Anton
> Supit, rejected predictions that Indonesia's shoe industry could be gone
in
> five years, but agreed it was facing a huge challenge.
>
> In addition to the normal commercial yardsticks of price, quality and
> delivery, which buyers used to assess a product, "human rights, labour
> relations, security issues and the environment" were all issues companies
> looked at in deciding where to do business.
>
> While Indonesia could compete on the conventional measures, the country
was
> in transition and was still struggling to overcome an image problem, he
> said.
> And issues such as law reform were important because investors were
> unsettled
> by reports that suggested that if you went to court you could bribe a
judge.
>
> Professor Hill agreed that the vagaries of a nascent democracy inevitably
> affected the investment climate. Unions were competing for members, and
> sometimes strikes or demonstrations turned ugly.
>
> "Under Suharto it really was predictable," he said. "That has now
completely
> gone. There have been some nasty incidents, especially in Korean
factories,
> and there have been some violent protests and sabotage, so Indonesia, in a
> sense, is on the nose."
>
> President Megawati Sukarnoputri has many critics, but she has delivered
> Indonesia's most stable government since Suharto's fall. The macro economy
> is
> under control, the government has established a new team to help business,
> and some influential voices, including the former head of the World Bank
in
> Indonesia, Mark Baird, reckon the country has a chance to make real
headway.
>
> But that has not been enough to stop some Japanese and Korean companies,
in
> particular, from closing some factories and threatening to move others.
>
> Wage rises are another issue that has alarmed investors, even though half
of
> Indonesia's more that 210 million people live on less than $A4 a day.
>
> Indonesia's economy is growing modestly at between 3 and 5 per cent, with
> inflation under control, but such a benign performance is not enough to
stop
> the steady growth in unemployment, which many believe poses the greatest
> long-term threat to Indonesian stability.
>
>
>
>
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