Nike's hockey plans put Bauer on thin ice

Closing of Cambridge plant could spell end of skate maker's Canadian presence

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The Globe and Mail, Wednesday, July 2, 1997

By John Heinzl

When giant Nike Inc. stick-handled into Canada's hockey equipment industry a few years ago, Pete Stergiou was expecting business to boom at the company's newly acquired skate plant here.

"Nike promised us bigger and better things, a bright future," said the employee of Bauer Inc., which Nike swallowed in 1994. Now, he said, "I feel like a cheap date, you know what I mean? A guy promises everything, uses you and throws you off to the side after he's done with you."

This spring, Bauer stunned the plant's 400 unionized employees with news that the doors will shut by the end of next year. The way Mr. Stergiou sees it, Nike never had any interest in preserving Bauer's operations. All it wanted was the legendary Bauer name and access to the company's technical expertise, so it could teach workers in Asia how to make hockey skates.

Nike's takeover of Bauer, the world's largest maker of hockey skates and protective gear, was supposed to herald great things for the Montreal-based company. Instead, the top player in Canada's cherished skate manufacturing industry may soon look as if it's been run over by a Zamboni.

At Bauer's only other Canadian skate plant, in St-Jerome, Que., the 800 unionized employees are watching their backs. Although the plant is supposed to get some of the work when Cambridge closes, nothing can be taken for granted with Nike, said union representative Georges Leduc of the United Steelworkers of America. "They've got to be making money, and a lot of it. They're not people-oriented, they're money-oriented."

A unionized plant in Canada that pays $12 an hour doesn't necessarily fit into Nike's money-making strategy. Nike is primarily a marketing company, and it almost always leaves the manufacturing to someone else - -- someone far away where wages are low and unions virtually non-existent.

Wherever Nike goes, controversy isn't far behind. The Beaverton, Ore.-based company, with 1997 sales hitting a record $9.19-billion (U.S.), has faced a storm of negative publicity over poor wages and working conditions at its subcontracted factories in Asia. Recently, it was stung by a U.S. labour group's report that Vietnamese workers were forced to run laps for failing to wear regulation shoes. Twelve women fainted and were taken to hospital. Nike suspended the manager and she was later charged by Vietnamese authorities.

Hoping to repair its image, Nike last week took out full-page advertisements in major newspapers, including The Globe and Mail, to trumpet a report that said it is "doing a good job" at its Asian plants but "can and should do better."

The report was by Andrew Young, former U.S. ambassador to the United Nations, who was paid by the company to evaluate its Asian factories.

With so much attention focused on Nike's alleged abuses offshore, many Canadians aren't aware of what the company has been up to in their own backyard. Nike would probably like to keep it that way. Canadians, after all, are passionate about their hockey. They don't appreciate anyone intruding on their national sport -- least of all Americans, whose offences to date have included the Fox television network's glowing blue puck, named FoxTrax, and last year's humiliating defeat of Canada at the World Cup of Hockey.

Nike's quest to dominate hockey began in December, 1994, when the athletic footwear and apparel company launched its $545-million (Canadian) bid for Canstar Sports Inc., as Bauer was then called. It was Nike's biggest acquisition yet and gave it control of many of the best-known brands in the game, including Bauer, Cooper, Lange, Daoust and Micron.

Hockey, one of the world's fastest-growing sports, was a natural extension for Nike. The National Hockey League was expanding into the U.S. Sunbelt, creating thousands of new fans in cities such as Dallas and Tampa Bay. And kids across the United States who had never seen the inside of an ice rink were lacing up in-line skates and playing roller hockey in big numbers.

If there were any worries that Nike's fondness for outsourcing would spell the end of Canadian manufacturing jobs, Nike chairman Philip Knight appeared to put them to rest on Dec. 14, 1994, the day the Canstar deal was announced. "We plan to have Canstar continue to operate as an autonomous organization without any change to its structure, operations, management or personnel," he said.

Plenty has changed since the Nike takeover, however. The company changed its name. It consolidated all of its products under a single brand, Bauer, discarding Cooper, Lange and the others. And it launched a sweeping examination of its manufacturing operations with a view to outsourcing.

Hockey fans noticed little of this. What they saw was Nike pouring millions into promoting the game and slapping its trademark swoosh on NHL stars such as Detroit's Sergei Fedorov and Toronto's Mats Sundin. This spring, Nike couldn't have planned a better Stanley Cup final. Because it supplies jerseys to the Detroit Red Wings and Philadelphia Flyers, every player on the ice was sporting a swoosh.

The playoffs coincided with the long-awaited launch of Nike's new ice and roller hockey skates. Most are manufactured at the Cambridge plant alongside products bearing the Bauer logo, but the Nike skates cost significantly more. The top-of-the-line Air Accel Elite retails for an eye-popping $649.99.

In the months before the Cambridge closing was announced, workers said they had no inkling that anything was wrong. The plant had plenty of orders, partly because of the launch of the new Nike line. Bauer, a perennial money maker before the Nike takeover, seemed to be doing fine.

According to Nike's latest annual report, the Canadian unit's sales rose $173.3-million (U.S.) in 1996. Bauer had turned a profit of $15.3-million (Canadian) on sales of $201.6-million in 1993, the last year full financial results were available before it was taken private.

Whatever money Bauer was making lately, it apparently wasn't enough for Nike. In one of the first clues something was about to give, Nike president Thomas Clarke told analysts in a December conference call that Bauer would have to be "repositioned."

In a subsequent interview with The Gazette of Montreal, Bauer president Pierre Boivin said the company might contract out some production to factories in Asia, but he said Bauer's Canadian employees were not at risk. "The bottom line," he said, "is that there are no plans for layoffs."

Then Bauer, with Nike's blessing, just did it. On the same day in April that negotiations were to begin on a new union contract at the plant in Cambridge, management abruptly cancelled the meeting, according to a union official. Employees were then told the plant will close.

For its part, Nike said it didn't make the decision to close Cambridge. Bauer management did and Nike merely endorsed it, a Nike spokeswoman said. Bauer's Mr. Boivin declined to be interviewed for this story.

As the Cambridge plant winds down, Canadian skate production is being consolidated at St-Jerome, a larger operation north of Montreal that also houses Bauer's research and development centre. The company said it hasn't yet worked out details concerning what products will be outsourced and to where, although plants in Asia and Europe are high on the list of possibilities.

At first, only low-end skates will be affected. There is no intention to contract out mid- and high-end skates, but Bauer and Nike have both shown intentions can change. In fact, Nike is already producing its $349.99 Air Pursuit ice and roller hockey skates in Taiwan.

A spokeswoman for Bauer defended the decision to outsource, saying it was necessary because of the increasingly competitive nature of the skate manufacturing industry. "We're not the only manufacturer that outsources its ice and roller hockey skates. We had to re-evaluate our manufacturing strategy and adjust ourselves accordingly," the spokeswoman said.

She said workers in Quebec needn't be concerned about losing their jobs. "I can guarantee you that Bauer will not close St-Jerome."

But that doesn't offer any comfort to Mr. Stergiou.

The other day, a group of workers from St-Jerome arrived at the Cambridge plant to learn how to operate the equipment. He was asked to train one of them on his rivet machine -- presumably the same person who will soon be doing his job. "It was another slap in the face," he said.

Mr. Stergiou just walked away from his machine. All around the plant, other workers did the same.

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