MADISON, Wis. (AP) -- The University of Wisconsin canceled its licensing agreement with Nike Inc. on Friday, becoming the first university to take that step over concerns about the company's treatment of workers in Honduras.
Chancellor Biddy Martin said Nike hasn't done enough to help workers collect severance payments they are owed at two factories that abruptly closed last year.
"Nike has not developed, and does not intend to develop, meaningful ways of addressing the plight of displaced workers and their families in Honduras," Martin said. "It has not presented clear long-range plans to prevent or respond to similar problems in the future. For this combination of reasons, we have decided to end our relationship for now."
Nike expressed disappointment with the university's decision in a statement released Friday night, while noting the factories were operated by subcontractors. Under Nike policy, subcontractors are responsible for compensation of their employees.
Wisconsin's code of conduct requires the 500 companies that make products bearing its name or logos to take responsibility for the subcontractors' actions. Its contract with Nike generated $49,000 in royalty income for the university last year.
Nike said no Wisconsin-branded products were made at the two Honduras factories.
"We have been engaged with the University of Wisconsin-Madison over the past few months while working with stakeholders in Honduras to better understand the particular issues facing the former workers," Nike's statement said.
Anti-sweatshop activists said they hoped Wisconsin's decision would resonate at several other universities across the country where students are pushing for similar actions and put pressure on Nike to fix the Honduras situation.
"It's a major, major victory nationally," said Jonah Zinn, 19, a Wisconsin sophomore who was part of a student campaign urging Martin to cancel the contract. "We're hoping that our victory here really propels them forward and pushes those universities to make the right decision."
Nike hired the factories, located in Choloma and San Pedro Sula, as suppliers to produce apparel. They closed without notice in January 2009 with the workers being owed $2.6 million in severance payments required under Honduran law.
Nike has offered to provide job training and give workers priority for jobs at nearby factories. But the Worker Rights Consortium, a labor rights watchdog, told college leaders in a report last month the company's response has been insufficient.