Penn State Suspends Contract with Adidas

Effective immediately, Penn State has suspended its licensing contract with Adidas. The suspension is linked to the closing a clothing factory in Indonesia and a dispute over severance pay for workers who lost their jobs. Adidas is one of several companies that produce Penn State apparel and other university-themed items.

University administration made the decision after the factory was closed and an Adidas subcontractor failed to pay severance owed to laid-off workers, as mandated by Indonesian law, according to Penn State. 

“Members of the Penn State community, including students, faculty and administration, have engaged in collaborative discussion and decision-making for months regarding the very important issues raised by the closure of the PT Kizone factory in Indonesia in 2011,” said Penn State President Rodney Erickson in a letter issued to Adidas March 13. “It is obvious to us that there are profound limits to our University’s influence over the substantial and complex issues created by the current supply chain model for the global manufacture of apparel. Even so, we are determined to do our share to redress shortcomings where we find them and encourage our licensees to behave responsibly and justly vis-a-vis the workers who produce their products in our name.”

“Penn State students who are part of USAS (United Students Against Sweatshops) have been committed and diligent in their pursuit of fairness for workers in the garment industry around the world,” said Damon Sims, vice president for Student Affairs. “This action is the result of a collaborative effort among students, faculty and administrators, and will ensure that workers’ rights remain at the forefront of concerns for our licensees.”

USAS recently protested Adidas worker abuse. Onward State has the story. 

Penn State said the suspension gives Adidas 60 days to compensate the more than 2,600 individuals who worked at the affected factory. During that time, the company is forbidden to produce any item carrying Penn State logos. Should the period expires without resolution, Penn State will terminate Adidas’ license to produce Penn State merchandise.

“True change in the context of the manufacture of collegiate apparel requires the immediate attention of Adidas and other global corporations that benefit from this market. Penn State’s influence in this context is limited, but this action signals that our commitment is genuine and that we seek to apply our limited influence in the only effective way we can,” Sims said.

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.

Adidas Letter