Penn State is the latest U.S. university to have suspended its apparel licensing contract with Adidas, over a dispute regarding severance pay for workers at PT Kizone, an Indonesian apparel factory that was abruptly closed down in 2011. The plant was not owned by Adidas, but several other top universities in the U.S. have already judged that the German group's failure to fully compensate the workers (directly or through its local subcontractor) was in breach of their ethical requirements. They estimate that 2,700 former PT Kizone workers are owed $1.8 million in severance payments. Adidas has steadily argued that it had already quit working with PT Kizone several months before the owner absconded, leaving the workers empty-handed. It has also been supporting the workers with food vouchers and job offers. The suspension of the deal with Penn State gives Adidas 60 days to fully compensate the workers, otherwise the license agreement will be terminated.

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