VIETNAMS LOCKDOWN ENSNARES WORLD’S CLOTHING GIANTS
From shoes and sweaters to car parts and coffee, Vietnam’s strict and lengthy coronavirus lockdown has led to product shortages among global brands such as Nike and Gap that have grown increasingly dependent on the country’s manufacturers.
Lockdowns have finally started to ease this month as case numbers decline, but snarl-ups at Vietnam’s factories are part of a broader crisis around the planet that is sending inflation surging and raising concerns about the recovery of the global economy.
At a fabric mill east of Hanoi, Claudia Anselmi — the Italian director of Hung Yen Knitting & Dyeing, a key cog in the supply chain of several clothing giants — worries daily if the factory can keep the lights on.
Its output plunged by 50% when the latest virus wave first struck Vietnam in the spring, and it faces perpetual problems securing the yarn it needs for its synthetic material.
“At first we were lacking people (to work) because everyone was stuck at home,” said Anselmi, whose company’s fabric is used in swimwear and sportswear for customers including Nike, Adidas and Gap.
Now, “travel restrictions have jeopardised all logistics in and out. … This has created long, long delays,” she told AFP. “We only survive if we have the stock.”
While lockdowns are gradually loosening, complex web of checkpoints and confusing travel permit regulations have made life impossible for truck drivers and businesses trying to move goods across, as well and in and out of, the country.
Hamza Harti, managing director at FM Logistic Vietnam, said several drivers in the Mekong Delta had been forced to wait three days and nights in their vehicle to enter the city of Can Tho.
“They were without food, without anything,” he told a French Chamber of Commerce panel discussion in Hanoi.
In the south — where Covid struck the hardest — up to 90% of supply chains in the garment sector were broken, the Vietnam Textile and Apparel Association (Vitas) said in August.
Nike — which warned last month that it was struggling with shortages of athletic gear and cut sales forecasts — said 80% of its factories in the south and nearly half of its apparel plants in the country had shut their doors.
The sports colossus sources around half of its footwear from Vietnam.
Although some factories were able to set up a system where staff could eat, work and sleep on site, Vitas said that the cost was prohibitive for many.
Fast Retailing, that Japanese company that owns the popular Uniqlo brand, also blamed the situation in Vietnam for hold-ups on sweaters, sweatpants, hoodies and dresses. Adidas said supply chain issues — including in the country — could cost it as much as 500 million euros (US$585 million) in sales by the end of the year.
Even as conditions start returning to normal, many are fretting over the long-term impact on Vietnamese manufacturing, with Nike and Adidas admitting they were looking to temporarily produce elsewhere.
In a letter to Prime Minister Pham Minh Chinh, leading business associations representing the US, the EU, South Korea and Southeast Asian nations sounded the alarm over production shifting away from Vietnam, warning 20% of its manufacturing members had already left.
“Once production shifts, it is difficult to return,” they wrote.
Nguyen Thi Anh Tuyet, deputy general director of Maxport Vietnam, whose 6,000 workers make activewear for the likes of Lululemon, Asics and Nike, told AFP the firm had “been very worried” about clients withdrawing orders — even though it was one of the lucky few to have navigated the recent brutal months largely unscathed.
Without foreign customers “our workers would become jobless”, she said.
The pandemic has not only hit the country’s textile industry but is also threatening global coffee supplies, with Vietnam the world’s largest producer of robusta beans. Prices for the commodity are at a four-year high.
Car companies have not escaped either — Toyota slashed production for September and October owing partly to virus issues, telling AFP “the impact has been big in Vietnam”, as well as Malaysia.
Back at her textile mill near Hanoi, Anselmi believes companies will stick with Vietnam if it can return to some kind of normality this month.
“If we can allow the factories to work then I think the trust (in Vietnam) is still there.”