On the Nike Workforce Reduction, comments by Larry Eder

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As we enter the second year of recession, the footwear business in the United States has held up relatively well so far. Several companies have made personnel cuts, among them Brooks, Reebok and Zoot. But others, such as New Balance, have been able to avoid layoffs by cutting expenses, according to CEO Rob DeMartini.

When I read that Nike was reducing its workforce by five percent (1,700 globally, about 500 in Oregon), I wanted to get as much information as I could, so our readers could discern what is rumor and what is fact.

I emailed Jacie Prieto and Derek Kent of Nike with a list of questions and Derek got back to me the next morning. Here was our exchange, via my mobile phone:

RunBlogRun: With the current workforce restructuring, what would you like to say to the RSG accounts, and consumers who look to Nike Running. Is Nike still committed to running?

Derek Kent: Our commitment to running and RSG remains strong.

RBR: Will the layoffs affect the launch of the Nike Lunar Glide Plus?

Derek Kent: The launch will not be affected.

RBR: We have heard that Josh Rowe (co-founder of Nike Border Clash, instrumental in Nike XC, Nike Indoor and Nike Outdoor) was let go? Can you confirm this?

Derek Kent: We do not comment on personnel matters.

RBR: Two of the people most instrumental in Nike running products, Tom Hartge and Mike Quinn, were also let go, can you confirm that?

Derek Kent: We cannot comment on specifics on our workforce reductions. The reductions in workforce were done to help us build for future growth. The redesign was more than cutting costs, it was building for the future.

RBR: Obviously, you can’t answer the questions I would like to ask you, so do you have any final comments to our readers?

Derek Kent: Clearly, this is a difficult process, everyone has friends, colleagues, associates who were affected. Nike just does not respond to rumors or personnel matters.
----

I thanked Derek and agreed to forward him a copy of my piece. Problem was, I could not really write it until today. Public relations is an art form, not a science. Nike, like many professional companies, has taken a serious interest in its PR, and no wonder: an offhand statement can make its stock fall, just as a great review by a business writer can send the stock soaring.

But -- Phil Knight has spoken, in the past, about how Nike's people are its greatest strengths, that the capital of Nike’s business is human capital. How then, can one explain the likes of Tom Hartge, Mike Quinn and Josh Rowe being let go? I for one am speechless.

"In the history of Nike,” said former Nike Running manager Mark Bossardet, “after Phil Knight and Bill Bowerman, after Steve Prefontaine, after Alberto Salazar, if one looks at who has influenced Nike running product more, Tom Hartge is one of Nike's great ones."

Several phone calls came in last week and over the weekend concerned about Tom, Mike Quinn, Josh and the five hundred others in the HQ, and the thousand plus globally.

One of the cruelest and savviest communicators of the twentieth century noted: " One death is a tragedy, a million deaths is a statistic." We loose interest in large numbers, but in truth, one job loss affects one family in many ways, and for years after the occasion.

Nike is a $17 billion corporation. It has evolved from the little company that imported Japanese running shoes, to making its own shoes, to a publicly traded footwear company. As such, Nike must answer to its' stockholders. Stockholders like lowered expenses in difficult economic times. These are difficult economic times.

Some changes are good. Some changes, however, for some of us, who remember the first Waffle Racer, the Nike Air Mariah, the Nike LDV, and designers surviving product meetings with Bowerman, are open for conjecture. Those of us who remember the guys who stood on tables, screaming at the top of their lungs, that the product is no good, that an ad needs to be changed, that this is not what Bowerman would have liked-are saddened. Those men and women are the human capital that built Nike. Those intangibles can not be found on a financial report.

Hartge and Quinn worked on Nike Running during the heady days of the 80s and 90s. Rowe and a friend came up with the Nike Border Clash, which in my mind was the impetus for Nike management, like Mark Parker, to rededicate Nike efforts on running. To me, it is ironic that human capital, such as Tom, Mike and Josh, do not fit into a plan that helps Nike grow in the future, as they were part of why it grew so robustly in the past.

That, in my mind, is a tragedy.

NIKE, Inc. Restructuring Statement

14 May, 2009

BEAVERTON, Ore. (May 14, 2009) -- Today NIKE, Inc. announced the completion of its workforce review. As previously stated, NIKE, Inc. began a global workforce review in February in an effort to enhance its consumer focus, speed decision making and to create a stronger organizational structure for the future.

NIKE, Inc. will reduce its overall global workforce of nearly 35,000 by approximately five percent. Nike will eliminate approximately 500 jobs from its World Headquarters near Beaverton.

“Our new structure sharpens our consumer focus globally to drive continued growth while positioning NIKE, Inc. competitively in today’s marketplace,” said Mark Parker President and CEO, NIKE, Inc. “We remain a growth company and we know these changes have created a stronger organization that will enable us to invest in our most significant opportunities. However, the decision to reduce our workforce has been a difficult and challenging one as it affects our colleagues, teammates and friends.”

Departing employees will receive a robust and enhanced severance to help support their transition from the company. Over the next several weeks, the company expects to complete the majority of employee transitions.

For more on Nike, browse http://www.nike.com

For more on the sport and business of running, please browse: http://www.runningnetwork.com

To reach RBR's Larry Eder, try [email protected], to reach RBR staff, email [email protected]

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