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(J.Ballinger and C.Olsson, Behind the Swoosh, Global Publ. Foundation, 1997)
In the table below, the cost of a US$70 pair of Nike "Air Pegasus" shoes is broken down into its component parts. The data was compiled by researchers at the Washington Post newspaper using information from Nike, the US Customs Service, a large national retail chain, the Athletic Footwear Association, industry consultants and executives. All costs are in US dollars. (Washington Post 1995)
Other researchers have done similar breakdowns and come up with much the same result (see for example Brookes and Madden l995: 9). Note that the cost of production labour is only $2.75 or 4 percent of the price paid by the consumer. So wages for production workers could be significantly increased without adding much to the cost of the shoes.
Even if wages were doubled and the extra
cost passed straight on to the consumer, it would add no more
to the price of the shoes than the cost of a pair of shoelaces.
It would add 4 percent, or in Australian terms, A$4 onto the cost
of a A$100 pair of shoes. Consumers would hardly notice, but it
would make an enormous difference to hundreds of thousands of
production workers and their families.
Production labour $2.75
Materials 9.00
Rent, equipement 3.00
Supplier's operating profit 1.75
Duties 3.00
Shipping 0.50
Cost to Nike $20.00
Research and development 0.25
Promotion and adversiting 4.00
Sales, distribution, admin. 5.00
Nike's operating profit 6.25
Cost retailer $35.50
Retailer's rent 9.00
Personnel 9.50
Other 7.00
Retailer's operating profit 9.00
Cost to consumer $70.00
It should be noted that Nike spends nearly
twice as much on promotion and advertising as it does on production
workers' wages. In March 199S for example, tennis starAndre Agassi
was paid a reputed A$140 million to promote Nike shoes and clothing.
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