Nike Signs New Contract with Pakistani Company

New York: Nike, the official supplier of footballs to the English Premier League, is to resume production of hand-stitched leather balls in Pakistan six months after stopping amid concerns over child labor.
The company has signed a contract with Silver Star, a leather processor in Sialkot. The move follows a tendering process that Nike says was designed to promote a broader modernization of the sector, which is centered on the city.
The case has highlighted the challenges facing brands in the clothing and footwear industry over how to respond to frequent breaches of codes on working conditions in supply chains.
Nike's decision in November to end production at Saga, its former supplier in Sialkot, followed what spokesman Alan Marks said was "a fundamental breach of trust" in its management over failures to remedy labor conditions.
Nike was the factory's main client and many of the estimated 3,000 workers there have lost their jobs. Saga was producing six million of the 40 million leather footballs produced in Pakistan annually.
Unlike the global clothing business, where contracts can be moved relatively rapidly between factories and companies, the quality and scale of the leather industry in Sialkot is unique, leaving Nike with shortfall in supply.
The contract with Silver Star requires the new supplier to use only registered full-time employees paid hourly wages to work on its premises, rather than piecework. It also stipulates that its workers must be able to form or join trade unions.
The terms of the tender also require Silver Star to pursue gradual mechanization of the football-making process. Nike says the use of hand-stitched balls is declining - creating future problems for Sialkot unless the industry modernizes.

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Editor: Akhtar M. Faruqui
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