Nike and Adidas hit by factory closures in Vietnam

Before the pandemic, Vietnam had made a virtue of low labor costs and smoothed paths for multinational investment to attract global manufacturers.

Many manufacturers divide their work over a range of suppliers. Nike, for example, works with 200 manufacturers who employ 500,000 people producing finished products, materials, footwear, clothing and accessories.

Most Adidas shoes are made in Vietnam, where the company buys around 28% of its stock. The company said this week that it was looking to move production to other centers and expressed hope that the Vietnamese factories would be back up and running by mid-August.

Garment factories closed

In a call for results at the end of June, Nike warned that it expected supply chain shortages and higher logistics costs to persist until the middle of next year – that was before Ho Chi Minh is not following Hanoi in the lockdown.

By the end of this week, up to a third of the country’s garment factories were closed. American clothing & The Footwear Association, which represents more than 1,000 brands, including Gap and Levi Strauss, has called on Hanoi to prioritize vaccinations for garment and footwear workers. He also urged the United States to increase vaccine donations to the country.

The Vietnamese Communist government is already trying to redirect vaccine supplies to Ho Chi Minh City from other areas. The country’s largest conglomerate, VinGroup, has also reportedly pushed for preferential access for its workers, sparking more debate over vaccine fairness.

“Samsung, Foxconn and Nike are just a few examples of key multinational companies that have experienced a temporary suspension of operations, which has prompted others to set up on-site facilities for employees in an effort to keep factories running. HSBC economist Yun Liu said.

The closed factories fail to recover raw material imports, which has caused problems in the country’s ports. The new Saigon port in Ho Chi Minh announced this week that it will stop accepting imports for companies that have suspended production.

The number of containers in the port is around 100 percent of its capacity.

It’s a similar story in the country’s ports, with some container ships being turned away by operators forced to make do with half of their regular workforce.

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