Adidas reaches agreement with factory workers; Penn State restores contract

UNIVERSITY PARK, Pa. – Penn State has restored its contract with Adidas, one of several companies that produce Penn State apparel and items, in light of an announcement that the company has reached an agreement over severance pay owed by a subcontractor to Indonesian workers. The University suspended its contract with Adidas on March 13, requesting a fair resolution to the dispute within 60 days.“This positive result has come, in part, thanks to the diligent and commendable effort of Penn State students, faculty and community members, who continue to demand fairness for workers in the garment industry around the world,” said Damon Sims, vice president for Student Affairs. “Through collaborative effort among students, faculty and administrators, we have been able to bring about a measure of positive change in this case, ensuring that workers' rights remain a top priority for our licensees."Penn State initially suspended its contract with the manufacturer in light of issues raised by the 2011 closure of an Indonesian clothing factory and the subsequent failure of an Adidas subcontractor to pay severance to more than 2,600 laid-off workers as required under Indonesian law. Both Adidas and the workers’ union have come to a mutual agreement over compensation. The agreement restores the rights of the workers to their legally mandated compensation, and satisfies the requirements of the letter sent to Adidas by Penn State President Rodney Erickson in March.“We are pleased that Adidas has recognized the former workers’ plight, heard our concerns, and the concerns of others,” Erickson said. “Adidas has resolved the issues associated with the factory closure and its impact on the affected workers. Though Penn State’s influence in the global garment industry is admittedly limited, we will continue to work together, as a University community, to help ensure that the workers who produce apparel in our name do so under fair conditions and with fair compensation.”Adidas is one of several companies licensed to produce apparel and other items carrying Penn State logos. For the 2011-2012 fiscal year, the University’s license with Adidas produced royalty revenues of $6,800.