Penn State University has suspended its licensing contract with Adidas, one of the firms that manufactures campus items including apparel, giving the company 60 days to resolve issues that include severance owed to 2,600 workers of a factory shut down in Indonesia.
"If the period expires without resolution, the University will terminate Adidas' license to produce Penn State merchandise," the university said in a statement posted to its web site.
The company is barred during the suspension from producing any item that bears Penn State's logo, the university said.
"Members of the Penn State community, including students, faculty and administration, have engaged in collaborative discussion and decision-making for months regarding the very important issues raised by the closure of the PT Kizone factory in Indonesia in 2011," Penn State President Rodney Erickson said in a letter dated Wednesday and released by the university.
"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. 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."
Lauren Lamkin, a spokeswoman for the Adidas Group, said the company is disappointed with Penn State's decision.
In a statement last month regarding the closure, Adidas said it did not own the factory and is not responsible for the severance owed to the workers but nevertheless has offered assistance.
"We have directly given $525,000 in humanitarian aid to the former workers and their families, provided job placement services and advocated for the workers."
Damon Sims, vice president for Student Affairs, said Penn State students who belong to United Students Against Sweatshops have made ongoing efforts to secure "fairness for workers in the garment industry around the world."
He added: "This action is the result of a collaborative effort among students, faculty and administrators, and will ensure that workers' rights remain at the forefront of concerns for our licensees."
Alex Zimmerman contributed Bill Schackner: email@example.com, 412-263-1977 and on Twitter: @BschacknerPG.