Companies are scrambling to increase production

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Timber producer Hiep Long Fine Furniture Company in the southern province of Binh Duong is striving to increase production to 70 percent of capacity to meet orders it received for the year.

Social distancing in the third quarter caused it to halt most activities even as there was a 30% increase in orders from 2020, its chairman, Huynh Quang Thanh, said.

As Binh Duong and other towns in the south began to allow factories to reopen in early October, Thanh’s company began to ramp up production.

“Sales for the entire year are expected to increase by 10% if we can complete our orders in the past two months.”

In nearby HCMC, the biggest employer, shoe maker Pouyuen Vietnam, is also rushing to complete orders while looking for new orders for next year.

More than 38,000 employees, or 70 percent of the total, have returned to work, down from just 20 percent in early October, said union president Cu Phat Nghiep.

All workers have received at least one injection of a Covid vaccine, and the company is working on giving them the second.

To make sure things go smoothly, Pouyuen organizes buses to transport workers between home and factory.

It also keeps workers separate to reduce the risk of contagion.

As the federal government eased Covid-19 restrictions and reopened the economy, businesses are looking to catch up on the hiatus in the third quarter.

Nearly 200 Vietnamese contractors for Nike have resumed production after a period of suspension, the US company said recently.

About 90 percent of enterprises in Binh Duong and Dong Nai have resumed production, and 84 percent in Can Tho.

In HCMC, 96 percent of enterprises in industrial parks and processing areas have resumed operations, and the rate outside is 90 percent.

Some 15,000 workers have returned to the city to work from their hometown in the Mekong Delta and the central highlands, according to the Ministry of Labor, Invalides and Social Affairs.

The purchasing managers’ index broke the 50-point threshold in October after four months of decline, a sign of expansion in the manufacturing sector.

Clothing company May Saigon 3 added an evening shift to its two-day shifts as the number of orders increased.

He has been able to deliver millions of items to buyers in Japan and the United States

But there are challenges that prevent businesses from making a smooth recovery.

One of the problems that Hiep Long, for example, faces is the increase in transportation costs.

Shipping a container from Vietnam to the United States now costs US $ 12,000, six times more than pre-pandemic levels, Thanh said.

Dao Trong Khoa, permanent vice president of the Vietnam Logistics Association, said rising freight rates and a series of surcharges imposed by shipping companies have become a financial burden on businesses.

Another problem is the labor shortage.

Intermix food powder producer is struggling to meet a 30% increase in orders as its capacity is declining by a similar rate due to a lack of workers after leaving town amid the pandemic.

It currently only has 180 of its 300 employees, said founder Huynh Kim Chi.

“We have refused orders and asked to delay delivery,” she said, adding that it would take the company at least a month to fulfill its orders.

Other businesses are suffering from a lack of liquidity.

Hiep Thang Furniture, in the northern province of Bac Ninh, is struggling to obtain loans to finance its production.

“What we need most is capital to keep production going,” CEO Nguyen Tran Hiep said at a recent forum, adding that banks should change their conditions to make more companies eligible for ready.

Hiep Long’s Thanh said the costs of Covid testing and disinfection are still a financial burden, while the company must also raise wages to persuade workers to return.

“Even though revenues are expected to increase, our business is only hoping to break even. It will be very difficult to make a profit in 2021 ”.


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