Business news :University of Washington severs contract with Adidas over labor issues

The University of Washington severed its contract with Adidas after the company allegedly failed to pay workers in Indonesia $1.8 million in severance.

Students at the university have long protested against Adidas and its contractors, which they allege failed to comply with Indonesian law when the P.T. Kizone company did not pay severance compensation to workers in a factory it closed.

Adidas has countered that the factory was unethically closed and abandoned by its owner, not Adidas, months after the factory ceased accepting orders from Adidas.

The UW Advisory Committee on Trademarks and Licensing, which includes students, faculty and staff, reviewed the university's apparel contract with Adidas over the past year and recommended that UW's president Michael K. Young discontinue the school's business relationship with the company, claiming that Adidas' actions in Indonesia violate the school's code of conduct.

In a letter earlier this month to the UW Advisory Committee on Trademarks and Licensing, Young wrote, "After further review of this matter, I fully agree with the committee's conclusion that, by taking the position that it had no responsibility for severance payments to its supplier's former workers, Adidas falls short of the University's expectations for its licensees. Although I applaud the charitable action  taken by Adidas to address some of the humanitarian needs of the unemployed workers, the company has not, in spite of our repeated efforts, fundamentally altered its position as to the unpaid severance due to the workers. Whatever technical or legal arguments Adidas may rely on to support its position in this case, the bottom line is that its handling of the situation does not meet our expectations for the humane and ethical treatment of workers who produce UW licensed products."

In a statement Nov. 27, Adidas expressed disappointment with the UW's decision to stop doing business with them.

"Since the closure of the P.T. Kizone factory, we have continued to provide clarifying information to the university and other business partners on the issue and our actions," the statement read.  "Importantly, we are confident we are adhering to and, in fact, exceeding both the spirit and the letter of the codes of conduct our university partners require."

Adidas will have 60 days to sell any remaining UW inventory.

Cornell University and Oberlin College had also previously decided to cut ties with Adidas.

( SportsOneSource Media )

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