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Adidas Reaches Settlement in Indonesia Factory Case

The brand settled with Indonesian garment industry workers to compensate for financial losses they sustained after the PT Kizone factory closed last year.

LONDON — Adidas has reached a settlement with Indonesian garment industry workers to compensate for financial losses they sustained after the PT Kizone factory, which manufactured goods for the German company, closed unexpectedly last year.

The terms of the settlement have not been disclosed.

“The Adidas Group has been supportive of the factory workers since we first learned about the PT Kizone’s closure, providing aid through job placement programs, food vouchers, and direct advocacy withgovernment officials,” an Adidas spokeswoman said Wednesday.

“We are committed to long-term solutions, and wanted to resolve this matter so we could ensure the focus moves to sustainable solutions for the future. This additional assistance will provide additional relief to workers and their families still impacted from the unethical factory closure,” she added.

In a separate statement issued on April 24, Adidas said “hundreds” of displaced PT Kizone workers failed to receive severance payments from the factory’s former owner, who fled the country in January 2011, causing the factory to close three months later.

Before reaching the settlement, Adidas said it had supplied $525,000 in humanitarian aid as well as job placement services, and had advocated issues related to workers’ rights.

As a result of the settlement, the Indonesian district labor union representing former PT Kizone employees — Dewan Pimpinan Cabang, Serikat Pekerja Textil, Sandang Kulit-SPSI Kabupatan Tangerang — said it would ask for a lawsuit filed in the U.S. against Adidas to be dismissed.

“The union and the workers are very pleased that Adidas has made this settlement, which will have a real impact on the workers’ lives,” said a representative of the Indonesian district labor union, who was quoted in the Adidas statement from last week. “Now we can put the lawsuit behind us.”

In a separate statement from the Clean Clothes Campaign, one of the advocacy groups that had campaigned on behalf of the workers, Aslam Hidayat, head of the PT Kizone workers coordinating committee, said: “We are proud to be part of such an agreement. But most of all, we are relieved that our families will be receiving the funds that they need so desperately.”

The campaign to secure compensation was spearheaded by Kizone workers in Indonesia and labor rights activists worldwide,  including the Clean Clothes Campaign in Europe, as well as People and Planet, SumOfUs.org and War on Want.

“The success of this campaign shows the power of worker solidarity and indicates what international consumer pressure can achieve,” said Mirjam van Heugten, a spokesperson for Clean Clothes Campaign.

“There is enormous power when unions, workers, and consumers unite, and it’s time that global brands take responsibility and respect the human rights of the workers throughout the entirety of their supply chain,” she added.

Adidas, meanwhile, said it is working to improve protection for its factory workers worldwide.

“We are continuously exposed to complications resulting from lapses in governance across the global market economy and supply chains. This poses risks to all stakeholders — buyers, workers, and consumers alike,” said Glenn Bennett, member of the Adidas Group Executive Board in the Adidas statement last week.

“The industry-wide initiative led by the Global Forum for Sustainable Supply Chains represents a meaningful step towards  long-term change in addressing what workers’ advocates, industry experts, universities and brands are all after — an end to the problem of unethical factory closures and better protection of workers’ unemployment and severance rights. This remains an ongoing priority for the Adidas Group and is critical to our business. It is also the right thing to do,” he added.