With Obama on hand, Nike announces it might make shoes in the U.S. again
Obama, whose deputies are now negotiating the 12-nation Trans-Pacific Partnership, or TPP, promised to deliver a "different kind of trade deal" -- one, he said, that would raise labor standards around the globe and create American jobs.
"The truth is that companies that only care about low wages, they've already moved," he said. "What this trade agreement would do is open the door to the higher-skilled, higher-wage jobs of the future, jobs that we excel at."
Sharpening that point, Nike announced hours before Obama's visit that it is prepared to start making shoes in the United States for the first time in three decades — but only if the ambitious Pacific trade deal comes to fruition.
[Obama shifts his pitch for the Trans-Pacific Partnership]
In a release, Nike said reductions in footwear tariffs under the TPP would allow it to "accelerate development of new advanced manufacturing methods and a domestic supply chain to support U.S. based manufacturing," creating as many as 10,000 jobs.
That would boost Nike's current domestic employment of about 26,000. But it would still be only a small fraction of its global workforce, estimated at over 1 million, with most in manufacturing jobs in low-wage countries such as Vietnam and Indonesia. While Nike makes some shoe components in the United States, such as its trademark Air soles, it has not assembled shoes in the country since 1984.
Mark Parker, Nike's president and chief executive, while introducing Obama said his company is "proof that trade works."
"Free trade opens doors, it removes barriers, it creates jobs, it lets us invest more in the things that matter," he said. "That's innovation, that's creativity, that's people."
Many people, including fellow Democrats who are deeply skeptical of Obama's trade agenda, were mystified by the choice of location, at what they consider to be the starting line of globalization's economic race to the bottom.
"Nike isn’t the solution to the problem of stagnant wages in America," former labor secretary Robert Reich wrote Thursday, in a representative reaction. "Nike is the problem."
And news that the company was considering expanding its domestic manufacturing hardly quieted critics. Eric Hauser, the AFL-CIO's communications director, said the proposed expansion "a positive development" but should not be contingent on the Pacific trade deal: "We have heard similar promises from companies before, and very few have panned out. We hope this time is different. We are cautious, though."
Friday's announcement is calibrated to shift the focus of the trade debate, from the loss of existing American manufacturing jobs, such as those seen after the ratification of the North American Free Trade Agreement and subsequent deals in the 1990s, to the nurturing of new sectors of the economy. Core Democratic constituencies, including labor unions, oppose the TPP, arguing that the negotiations have been needlessly secretive and that its provisions could threaten employment, environmental and other regulatory standards.
Nike's announcement and Obama's visit comes as Congress takes up prerequisite legislation for the Trans-Pacific Partnership, known as Trade Promotion Authority or "fast track" authority. If passed, it would allow Obama and his successor to negotiate trade agreements with minimal input from lawmakers, who get only to take an up-or-down vote once an agreement is finalized. The Senate is expected to start debating the legislation Monday, with the House to follow.
"We're not going to be able to isolate ourselves from the world market, we've got to be in there and compete," Obama said. "When the rules are fair, we win every time, which is why I'm such a strong supporter of world trade agreements. … It's not a fair deal right now; I want to make it fair."
He also made a mention of the Asian superpower that is not current part of the TPP negotiations: "If we don't write the rules for trade around the world, guess what? China will."
To begin the final trade push, Obama chose a largely Democratic state, but one that has generally supported free trade agreements — thanks not only to large employers such as Nike, Intel and Boeing, but also thanks to its agricultural and timber exports. At the same time Nike announced its manufacturing pledge, the White House highlighted a boutique Portland printing company on its blog as an example of small-scale manufacturing that could grow under the TPP.
Most congressional Democrats oppose granting fast track authority and ratifying the TPP, but Oregon's mostly Democratic delegation has been mainly supportive. Sen. Ron Wyden played a key role in crafting the Trade Promotion Authority legislation with Republican leaders, while three of the state's four Democratic House members have also voiced support. Sen. Jeff Merkley and Rep. Peter DeFazio remain opposed. Rep. Greg Walden, the delegation's only Republican, is pro-trade, like most members of his party.
"There are some winners in these agreements, but overall, the U.S. is a loser," DeFazio said in a conference call Wednesday.
Obama addressed his Democratic critics Friday: "Some of my dearest friends are wrong," he said. "They're just wrong."
Rep. Suzanne Bonamici, in whose district Nike headquarters is located, announced earlier this week that she supports granting fast track authority, while remaining neutral for the time being on the TPP. In an interview Thursday, Bonamici said her decision came after considerable deliberation but cited the Oregon employers large and small who could benefit from trade deals.
"If a trade agreement helps them grow, their employees shop in our local stores and eat in our neighborhood restaurants and volunteer in our schools and communities and pay a heck of a lot of income tax that supports our state," she said. "If this helps them grow, this is good for this district."
[Obama vows to help pro-trade Democrats fight off the left wing]
Rep. Earl Blumenauer, who represent much of deeply liberal Portland, went further in remarks before Obama's speech, calling Nike "a great metaphor for the evolution of the international economy and trade agreements." He pointed to how Nike improved the working conditions at its overseas plants after sweatshop conditions were publicized in the 1990s.
But trade opponents say Nike's labor practices, dependent on hundreds of thousands of contract workers making substandard wages, continue to be problematic -- including continued reports of worker abuse in its suppliers' factories. And dissatisfaction with Obama's trade push was evident ahead of and during his visit.
Obama arrived in Oregon Thursday evening for a Democratic National Committee fundraiser at a downtown Portland hotel. As his motorcade pulled in, he was greeted with cheers on one side of the hotel, while on the other, several hundred activists shouted, "Hey hey, ho ho, fast track has got to go."
Inside, he briefly mentioned trade to donors, saying that "one of the things that we need to do to put people back to work is make sure that we are accessing the markets of the future."
"We’ve got the best workers in the world, the best universities in the world, the most innovative companies in the world, the best science and research in the world," he said. "So we are not afraid of competition. We are concerned if the playing field is not level. And that’s why we've got to have the kinds of enforceable, tough, fair trade deals that are going to make sure that American workers and American businesses aren't locked out of these markets."
Outside, Tom Chamberlain, president of the Oregon AFL-CIO, said in an interview among the protests that Obama's Nike appearance "epitomizes every fear we have about this trade agreement."
"If the cost of being No. 1 in the world is at the cost of workers' livelihoods and their standard of living, it's not worth it," he said.
In 1998, when criticism of Nike's labor practices was at its peak, Nike founder and Chairman Phil Knight said that returning shoe production to the U.S. would add $100 to the cost of a pair of Nike shoes, which then averaged about $75.
"There are only two ways of making shoe production come back to the United States," he said at a National Press Club speech. "Either new advances in automation, which from my viewpoint are a ways away, or establishing tariffs and quotas that dictate that shoes have to be made in the United States."
Nike's decision to pursue domestic manufacturing, even on a relative small scale and conditioned on the ratification of a complex trade deal, is a triumph for President Obama, who was reported to have pressed another American corporate titan to do the same with little success.
At a 2011 dinner in Silicon Valley, according to a New York Times report, Obama pressed the late Apple chief executive Steve Jobs why iPhones — tens of millions of which are made in China and elsewhere — couldn't be made in the United States.
Jobs was, as Knight had been more than a decade earlier, dismissive: “Those jobs aren’t coming back."