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Purdue: Nike did not violate licensing agreement; asks for report on improving data reporting

WEST LAFAYETTE, Ind. — Purdue has determined that Nike did not breach its licensing agreement with the university when Honduran workers failed to receive full severance pay after their factory closed last January. However, the university has raised concerns about Nike’s data reporting.

The issue was brought to the university’s attention by its watchdog group, the Worker Rights Consortium, and by students who are members of the Purdue Organization for Labor Equality. Nike has said that the factories, run by subcontractors, had not been producing Nike collegiate apparel at the time the plants closed, despite its own data that appeared to indicate otherwise. Nike said its reports had been in error.

“We do not see a code of conduct violation by Nike. However, we are concerned about the accuracy of Nike’s reporting …” James Almond, senior vice president for business services, wrote in a letter to POLE that was released Monday (Jan. 11).

Because of those concerns, he has asked Nike to update the university by March 1 concerning specific steps being taken “to improve the management of factory data and data from licensed partners.”

In a letter to Nike, Almond noted that “failure to effectively remediate (the data reporting system) could lead to code of conduct violation.” The letter also noted that the company’s “continued involvement in attempting to find a solution (to the severance pay issue) creates the best chance for a meaningful resolution.”

The Worker Rights Consortium has acknowledged that it is debatable whether Nike is obligated to pay workers.

“The primary responsibility for payment resides with the factory,” Almond said. “Since the bankrupt factory can’t pay, the factory’s customers were asked to pay. The customers, New Holland/H.B. Sports and Liberty, have paid their bills to the factory, but they have not been able to assume the factory’s responsibility for the severance pay. Because Nike has ordered product through Liberty and New Holland, Nike then was asked to help.”

WRC asked Nike leaders “to do whatever they reasonably can to compel the contractors and suppliers to correct code of conduct violations … (and press) its direct suppliers to remediate the violations that have been committed.”

Nike reports that it has made numerous attempts to bring about resolution.

In addition to the WRC, Purdue also belongs to the Fair Labor Association, another watchdog group. The FLA has taken no position in the matter.

Purdue grants licenses to manufacturers of logo-bearing merchandise under a standard licensing agreement that requires licensees to pay royalties based on the wholesale price of the goods. Purdue’s projected total revenue from all vendors is just under $1 million this fiscal year. All revenue beyond administrative costs is divided between Purdue athletic scholarships and the general scholarship fund.

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