Penn State suspends its contract with Adidas

A controversy over a plant in Indonesia and its workers has prompted Penn State to temporarily suspend its licensing contract with German sports apparel giant Adidas (ADDYY).

In a letter to the company issued on Wednesday, the university said its decision came following the closure of the Indonesian factory -- and the subsequent failure of an Adidas subcontractor to pay severance to laid-off workers as required by local law.

"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," Penn State President Rodney Erickson wrote in his letter to Adidas.

"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 is giving Adidas 60 days to compensate the more than 2.600 workers affected by the factory closure. According to the university, the company is banned during this period from producing any items with Penn State logos. "If the period expires without resolution," says a Penn State press release, "the University will terminate Adidas’ license to produce Penn State merchandise."

This isn't the first time Adidas has been tripped up by U.S. schools upset over its labor practices.

Late last year, Cornell University and Oberlin College said they wouldn't renew their four-year contracts with the company -- the first time Adidas had lost a college contract -- due to the Indonesian factory closure.

At the time, Cornell's president wrote that the collegiate apparel industry needs to develop guidelines, "whereby brands can be assured that the factories with which they do business have on hand sufficient and secured funds to pay workers what they are owed should a factory close."

And since then at least five other universities, including the University of Washington, Rutgers University, Georgetown University, the University of Wisconsin-Madison and the College of William and Mary, have reportedly followed suit by ending or threatening to end contracts with Adidas.

"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," said Penn State President Erickson, who noted that his school's decision "signals that our commitment is genuine and that we seek to apply our limited influence in the only effective way we can."

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