Swoosh Wars : EXCLUSIVE - In an operation modeled on the Clinton campaign machine, Nike takes on its enemies.

The campus radicals met their shadow from Nike in Chicago. It was day six of a barnstorming summer "Truth Tour," accusing Niketown megastores of selling sneakers and clothes made in sweatshops. Starting out from New York, the 10 college activists had planned excitedly for a daily Webcast of their coming adventure, modeled on MTV's "Road Rules." But as they motored west in a big recreational vehicle, they grew increasingly bewildered that Nike managed to call out the local police to foil their every rally. Finally, banished to the street outside Niketown Chicago, Carrie Brunk spotted a lean man with salt-and-pepper hair who stood out in a motley crowd chanting anti-Nike slogans. "He was wearing the Nike corporate-casual line--you know, with the swoosh on the collar. Real sharp," says Brunk. "Frankly, we were amazed they would send this bigwig from the corporate headquarters to follow 10 kids in an RV."

The elegant gentleman introduced himself as Vada Manager, Nike director of global issues management, but the students still had no idea what they were up against. Over the course of the 13-day tour, a NEWSWEEK reporter interviewed dozens of students, fellow activists and company officials, assembling an inside look at one battle in the running war between anti- globalization protesters and one of their favorite targets, the world's largest shoe and apparel company. While rivals lie low, Nike has launched a counteroffensive true to its "in your face" culture. A longtime Washington operative, Manager says he was hired by Nike in 1997 to provide "political insight and strategy." Using the "permanent campaign" of the Clinton White House as a model, Manager now answers every attack, no matter how small, from unions and activists to the United Students Against Sweatshops, who organized the summer Truth Tour. Behind the scenes, Manager taps a network of campus allies for "direct intelligence" on the student movement. Tipped off in advance, he dispatched teams of senior sales and security executives to head off the Truth Tour at every store on its route. He alerted police to the identity of the students and to be ready for violence, and took some satisfaction when the tour fell apart before reaching its final target: Nike headquarters in Beaverton, Oregon. "When the students saw the growing security and police presence, it had a deterrent effect, and I think it went very smoothly," says Manager. "Nike approaches this as it approaches everything--as competition. And we aim to win."

Inside the Nike campus, set on 174 verdant acres behind a high earthen wall, executives described the students as tools of far more powerful forces. Exposes about long hours, child labor and toxic glues at factories used by Nike first linked it to the "sweatshop" charge in 1992. Nike quickly became what Manager calls "the poster corporation" of the emerging anti-globalization movement, targeted for its size, fame and worldwide reach. By 1998 the sweatshop cause had taken hold on U.S. campuses, mingling on occasion with union protests at Niketowns. By the time black- suited anarchists stormed Niketown Seattle during the World Trade Organization summit in December 1999, Manager was waiting inside with extra security, escape routes at the ready and a sense that students, anarchists and unions were now part of one broad anti-Nike front. "It saddens me," says Nike VP for corporate responsibility Dusty Kidd. "I think one day the students will wake up and realize they've been used by their mentors in the union movement."

The counteroffensive came straight from the top. In an office overlooking Lake Nike at the heart of his campus, founder and chairman Phil Knight says he decided in late 1997 to seize "the initiative" against protesters out to trash the brand he once called "my novel, my painting." It was a dark time for Nike. After tripling in the 1990s to more than $9 billion, Nike sales had hit a plateau. Shares were falling, morale was tanking and sweatshop activists were at the gate with a 40-foot cutout of Knight, "corporate villain." Debate erupted inside Nike over whether to abandon collegiate apparel, rather than risk further controversy in a niche that provides only about 1 percent of Nike sales. Rival brands were lying low or pulling out of the college market--an option Knight rejected. "The students are just one of the weird anti-globalization bedfellows who have made Nike their main target from the beginning, and they're not going away," says Knight. "This is going to be a long fight, but I'm confident the truth will win in the end."

The risks seemed obvious. "It's interesting Nike has chosen to take on these students, who represent their core young customers," says Atlanta brand consultant Alicia Reiss. "In the long run, they risk alienating youth, subtly eroding the brand." Interesting, but no surprise. Nike had revolutionized the $2.5 billion college-apparel market by signing multimillion-dollar marketing deals that allowed it to place its trademark swoosh on the uniforms and stadiums of nearly all the top collegiate sports teams in America. For Nike, retreat would have been high-profile humiliation. "Nike had a choice, fight back or sit back and take it," says Mike Pallerino, editor of Sports Trend Info. "And remember, this is Nike. They don't f--k around."

Working from a "war room" in Beaverton, a team of Nike executives came up with a plan. They would set the "industry standard" for sweatshop reform, and promote it with Nike's famous attitude. On May 8, 1998, Knight delivered his first speech in Washington, introducing himself sarcastically to the National Press Club as "the great Satan." Knight acknowledged past problems in Nike's network of 700 contract factories overseas, and unveiled a package of reform, including a minimum working age of 16, maximum weekly hours of 50 and inspectors to ...