Update to the Bed & Bath Prestige (Thailand) Statement from January 2003

Herzogenaurach, 11 April 2003 - We are concerned about the workers who were left without jobs when the Bed & Bath Factory in Thailand closed in October. Following investigations by our local compliance staff in Bangkok, we now know that orders for adidas products were placed on behalf of an adidas licensee through a local Thai agent at Bed & Bath Factory prior to its sudden closure and the disappearance of management. According to contractual obligations all adidas-Salomon licensees are required to disclose the names of their agents as well subcontractors. This did not happen in the case of Bed & Bath, and the factory was not authorised to make our products. As a result, the factory was not visited by our local staff of the Social and Environmental Affairs Department - the team which normally audits compliance with our "Standards of Engagement" and approves the factories before production is authorised.
 
Regardless, we are deeply sorry for those workers who lost their jobs. We understand that, currently, approximately 600 of the former employees of Bed & Bath have pursued claims for financial assistance and have received up to 2 months' salary from the government. The remaining 200 workers are negotiating with the Labour authorities for full payment of all wages and termination compensation owed to them. The workers are also open to other alternatives, which would provide them with employment and steady incomes. We have visited the Bed & Bath workers at their demonstration site in the forecourt of the Labour Ministry offices. To date, the workers have received aid and support from local labour rights groups and union organizations.
 
In respect of our current efforts to assist the workers, we have written to both the Prime Minister and the Minster for Labour in February 2003. We have requested a meeting with the Labour Minister to discuss the case of the Bed & Bath workers, as well as the larger issue of protection of workers in situations where their employers abandon them. We continue to monitor this case closely.
 
Though we have not received any direct response to our letters to the Prime Minister and the Minster for Labour, we understand that the government negotiated an agreeable solution with the Bed & Bath workers. As a result, by early February, the workers had ended their demonstration in the forecourt of the Ministry of Labour.
 
According to workers interviewed and updates provided by local worker advocacy groups, since the end of January:

• Final settlement was reached - Following previous payments by the government, at the end of January around 170 workers remaining at the demonstration site received a further payment of 8,900 Baht (approximately USD212). According to the Thai Labour Campaign, this means that 30% of workers received 80% of the wages owed to them by the missing owner, half the workers received 30% of the full amount owed, and the remaining 20% received approximately 10% of wages owed to them. These back-payments are in addition to the emergency relief payments made by the government in response to worker claims.
• Working committee established - Bed & Bath workers have set up an official working committee to follow up on their case. The workers still intend to pursue the factory owner if he can be successfully extradited from the US and returned to Bangkok to face judgment.
• Establishment of apparel factory coop - The most important development is that workers have rented an area, which will be used as the centre for their operations in establishing an apparel factory cooperative. With financial support from the government, approximately 60 workers have agreed to participate in the cooperative, and will make goods under the logo "Made in Unity". The workers' intention is to market their brand within the international network established during their demonstration, as well as to unions and fair trade organisations.
• Individual financial support - In addition to start-up funding, the Ministry of Labour agreed to provide individual subsidies to the workers involved in the establishment of the cooperative.

adidas-Salomon is extremely pleased by the positive outcome for the Bed & Bath workers. We will continue to monitor the situation and meet with workers to learn about the development of the coop, and the manner in which the government is lending support as agreed with the workers.