Adidas announced last Thursday that it had agreed to contribute additional aid of an unspecified amount to the 2,700 workers who lost their jobs two years ago through the “unethical” closure of the PT Kizone apparel factory in Indonesia. The company also said that the union representing the workers had decided to dismiss its lawsuit in a U.S. court against Adidas.
As previously reported, various labor rights unions had put pressure on Adidas to pay the workers some $1.8 million in severance fees. Early last week, three groups of activists threatened demonstrations against Adidas in front of Foot Locker stores in the U.K., other European countries and the U.S. to force the chain to cut its ties with Adidas unless it pays its share of severance payments due to the workers. Various American colleges and universities had cancelled their contracts with the Three Stripes over the issue.
The NGOs claimed that other companies that sourced clothing from the factory have paid their share. Nike, which has recently indicated its intention to outsource more products in Indonesia, was one of them.
Adidas maintained that it had already given the workers the equivalent of $525,000 in various forms of aid and that it did not owe them any more money because the factory had been closed by its South Korean owner, who had fled the country. It pointed out that the factory was no longer working for Adidas at the time of its shutdown.
Adidas insisted that it had dedicated more resources to the affected Indonesia workers than any other brand. It helped to relocate more than 1,000 workers to other factories although the Indonesian producer, PT Kizone, had unilaterally chosen to stop doing business with the German company six months before its shutdown to accept more orders from others.
Considering the matter now settled, Adidas encouraged all the parties to turn their focus to the Global Forum for Sustainable Supply Chains, which promotes finding solutions to the issues created by unethical factory closures and other lapses in corporate governance anywhere in the world. It pointed out that the Adidas Group was featured in the Dow Jones Sustainability Index last year for the 13th consecutive time.
