NIKE, ADIDAS MAY RUN OUT OF SNEAKERS AS COVID-HIT FACTORIES HALT PRODUCTION

Asia Coronavirus (COVID-19) Lifestyle Most Read

Sat 24 July 2021:

As manufacturers in Southeast Asia battling against one of the world’s fiercest Covid-19 resurgences, some of the world’s leading footwear and apparel firms are seeing production plummet, Bloomberg reported.

Many companies that produce products for global giants such as Nike Inc. and Adidas AG have suspended factories in Vietnam over the past few weeks as authorities in Vietnam imposed restrictions to stem the virus.

“Things will be worse before they get better,” said Deborah Elms, executive director of the Singapore-based Asian Trade Center, as lockdowns and employee disruptions intensify in Asia. “Places like Vietnam that have largely avoided lockdown cannot maintain an open posture. With vaccinations painfully slow, I’m assuming more factory closures, with ripple effects elsewhere.”

The delta-driven boom has affected Southeast Asia in particular, underscoring the delicate choices of policymakers balancing vaccination campaigns with restrictions on mobility as they try to keep their economies afloat.

 

Vietnam has long been instrumental to Nike’s sneaker production, with the footwear giant increasing output throughout the past years. Currently nearly half of its shoes are made in Vietnam, with Indonesia accounting for just under 25 percent of production.

Chang Shin Vietnam Co. Ltd. and Pou Chen Corp. both stopped manufacturing according to Reuters as Southeast Asia continues to battle against a raging pandemic.

Other industries, such as Toyota Motor Corp’s plants in Thailand, are also declining, with many countries in the region seeing record increases in cases and deaths.

More than 90% of the 800 group members among footwear manufacturers and exporters in the south of the country have temporarily halted operations, Phan Thi Thanh Xuan, vice president of the Vietnam Leather Shoes and Handbag Association, said Friday.

“Most of the factories that supply Nike and Adidas in Vietnam have stopped production,” Chuan said. The two companies’ production accounts for about 80% of Vietnam’s footwear exports and employ at least 500,000 workers, or about half of the workforce in the Vietnamese shoe industry.

“The health and safety of our teammates, as well as the health of our suppliers, remains our top priority,” Nike said in an email statement. “We continue to work with our suppliers to support their efforts in response to the dynamic and unprecedented nature of Covid-19.” Adidas declined to comment, citing a “quiet period” for companies to take before they announce their earnings, which they will do on August 5th.

Research released by Panjiva, a division of S&P Global Market Intelligence, shows Vietnam accounted for 49 percent of U.S. seaborne imports linked to Nike and its products in the second quarter of 2021 after growth of 6.6 percent year over year.

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