15 - 21, 2010

The industrial city of Sialkot in Punjab is a hub of cottage industries. It is internationally known for its sports goods. Sialkot's hand-stitched ball industry with nearly 50,000 stitchers is a big business. Some 80 percent of the world's soccer balls are produced in this bustling commercial hub by Nike, a US multinational. Generations of local artisans and laborers have passed down the skills for crafting footballs that are used in international games including the world cups and Olympic Games.

Sialkot is the country's football stitching capital. The export-oriented industries in Sialkot are presently in severe financial crisis due to power and gas shortages. This year, soccer exports witnessed a decline, as the soccer ball exporters are facing cancellation of orders for the World Cup 2010 by their foreign buyers due to long power outages causing delay in timely delivery of consignments.

The industrial set-up in Sialkot is based on small and medium enterprises (SMEs). The SMEs are believed to be the driving force behind the growth in exports from Sialkot. Value-added products like musical instruments, badges, sports goods, surgical instruments, martial arts uniforms and, cutlery have brought Sialkot a name the world over. Sialkot's strong production base has led to the completion of the Sialkot Export Processing Zone (SEPZ). The availability of special incentives, experts, cheap labor and complete infrastructure facilities in the zone has attracted foreign investors to establish joint ventures with local industrialists. The SEPZ has been developed on 238 acres of land and consists of 900 plots of four different categories. About 22 different industrial units have been accomplished at the SEPZ.

In 1985, a dry port was established in the private sector at Sambrial about 15 km from Sialkot for the speedy clearance of export and import consignments. The Sialkot dry port is successfully functioning and is located in the centre of the triangle of three districts- Sialkot, Gujranwala and Wazirabad. It caters to the needs of the entire Gujranwala district. The Sialkot dry port has also started up the container service for Peshawar in NWFP province for the speedy transportation of exportable cargo. Exportable consignments are transported from Sialkot to the Lahore, Islamabad, Karachi and Peshawar airports, Karachi Port Trust (KPT) and Port Qasim seaport.

In February 1997, the Sialkot Chamber of Commerce and Industry (SCCI) had signed an agreement at Atlanta, Georgia, in the US, with ILO-IPEC and UNICEF to completely purge the soccer ball industry from child labor through the progressive implementation of a Sialkot project with special emphasis on social protection to children and their families. Manufacturers were invited to join the programme on a voluntary basis.

In November 2006, the Nike had severed its import relations with Saga Sports, a Pakistani manufacturer, for alleged violation of code of conduct on worker rights and child rights. It however continued working with its contract factories in China and Thailand to supply hand-stitched balls.

Resultantly, Pakistan lost a guaranteed export of about Rs2 billion per annum. At the time of suspension, Saga was supplying 15,000-25,000 balls per day. Each ball depending on quality is to fetch $5-8 to Pakistan in foreign exchange. Saga Sports alone accounted for $33 million of the industry's $210 million total.

Saga Sports had been unable to comply with international standards on workers rights. Nike's agreement with its new contract factory, Silver Star Group, requires all workers to be registered as full-time employees who are paid hourly wages and are eligible for social benefits. The agreement prohibits the use of part-time workers paid piece wage rates per ball produced without access to health care and other social benefits. The agreement also requires that workers have full rights to freedom of association and collective bargaining, as mandated by International Labour Organization (ILO) conventions. The contract factory also must comply with Nike's labor compliance standards and with all requirements of the 1997 Atlanta Agreement and any identified successor agreements that establish labor and compliance standards in Pakistan's soccer ball industry.

The Nike had alleged Saga Sports for hiring outside manufacturers and part-time workers and paying them in per-ball basis for manufacturing and supplying sports goods to Nike. The sacking of Saga Sports by Nike in fact highlighted the moral dilemma of first-world corporations using third-world labor. By severing its contract with local company, Nike scored moral points with its customers in the West at the expense of 20,000 families who were affected, since 70 percent of the local market relied on Saga Sports for work. The local company was making about 6 million of Pakistan's annual production of 40-million soccer balls.

Former Prime Minister Shaukat Aziz held meeting with President of Nike at Davos in 2007 and assured him of strictly following the international standards and labor laws pertaining to workers rights and working conditions in soccer ball industry.

In 2007, the Nike agreed to resume imports of about 5,000 footballs per day from Pakistan and will subsequently increase it to about 15,000 per day after 90 days of successful operations. Silver Star Group, a local soccer manufacturer, has reportedly been given a contract of 2-3 million footballs per day out of Nike's international supplies of about 6-7 million balls. Nike is the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities.

The Nike had reportedly invited tenders and short-listed four firms on the basis of quality standards and compliance with code of conduct and finally selected Silver Star for the contract. Two years back, Silver Star's chief executive signed a contract for soccer ball supplies with Nike's management in Thailand. Initially, about 5,000 balls were to be exported per day and after three-month successful operation both in terms of quality and compliance with code of conduct, the supply order was to be enhanced to 10,000-15,000 over a period of one year. The continuation of the contract was subject to professional audit from third party for code of conduct and standards on child and worker rights.

There is however a need to develop a strategy for a complete overhaul of the industry with the aim of positioning Sialkot as a center of excellence in soccer ball production with the best global production, best productivity, best quality, best delivery and best labor compliance standards.