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Update on adidas Group’s efforts to support workers affected by PT Kizone closure

July 23, 2012

Herzogenaurach, 23 July 2012 – As a responsible business, the adidas Group continues to provide humanitarian aid and job placement services to hundreds of former PT Kizone workers impacted by the unethical closure of the Indonesian factory in 2011.
This month, we launched a food aid programme timed with Idul Fitri, the most important religious holiday in Indonesia. Food vouchers were distributed to nearly 2,500 workers and their families during the first week of the programme, which will continue to make available up to $250,000 USD in aid.
In the nearly 16 months since the owner fled the factory and it was forced to shut down amid bankruptcy proceedings in March 2011, 1,200 former PT Kizone workers have found new jobs, with 200 filling positions with adidas Group suppliers. Many of these workers have taken advantage of our job placement programme, which we set up in November 2011 in conjunction with PT Lidi (an HR consultancy). The status of workers who returned to their home villages is not currently known, while others, especially those who are residents in the Tangerang area, remain hopeful of finding work in the former PT Kizone plant which has recently re-opened under new ownership.
Due to bankruptcy, the assets of the former PT Kizone factory were sold at auction in December 2011. Proceeds from the sale will go towards settlement of debts – and part will be paid out to workers to fulfil severance obligations. We understand that the Court-appointed receiver has proposed to settle 20% of the severance owed to workers, but this has been challenged by the main creditor bank. Workers therefore continue to wait, uncertain as to when and what amount of severance will be paid by Indonesia’s Commercial Court.
Because it has fully honoured its contractual obligations at the plant, the adidas Group will not accept nor assume the financial duties of the former PT Kizone owner and pay severance to the workers, as some labour groups and business partners have asked us to do. We do care deeply about the workers’ welfare, however, and have taken actions that are guided by our humanitarian aid policies and the remedial approaches we have developed in managing factory closures, which continue to prove troublesome in many regions of the world.
The adidas Group remains focused on collaborating with labour groups and the industry to pursue sustainable business practices that address the systemic root cause of illegal factory closures and protect workers’ benefits and severance due from their employers.

For more information about the adidas Group‘s continuing efforts, visit the sustainability section of this website.