HANOI, October 10 (Bloomberg): Millions of migrant workers in Vietnam are expected to flee the heart of the country’s factory – home to suppliers for companies such as Abercrombie & Fitch Co., Nike Inc. and Adidas AG – in the latest blow to the world’s ailing supply chains.
Tens of thousands of workers have already left the Ho Chi Minh City National Mall and neighboring Binh Duong, Dong Nai and Long An provinces, the government said on its website.
As many as 2.1 million industrial belt workers wish to return to their home province, the government reported, citing data from the Public Security Ministry.
The threat adds to months of strain on global manufacturing supply chains as the Covid-19 pandemic forces factories and ports to shut down across Asia – a key producer of computer chips, raw materials and finished consumer goods such as sneakers, toys and automobiles.
Vietnam, in particular, has been a bottleneck, having attracted investment in recent years from global companies seeking an alternative to China as a production base, a trend that has accelerated with the tensions. trade between the United States and China.
Workers are currently obsessed with the pandemic and believe they are safer with their families in rural provinces, where they can also find work in factories, the Zing news site reported, citing Chu Tien Dung, head of the Ho Chi Minh City Business Association.
The risk of a growing exodus of workers reinforces warnings from industry leaders of an impending labor shortage after many countries returned to their home provinces in a difficult shutdown that forced factories to set up dormitories for workers or to close temporarily.
The easing of restrictions on October 1 saw a wave of workers flee the southern industrial center, the first time in months that they have been allowed to leave the city.
The Vietnamese garment industry could see a 37% drop in the number of workers for the remainder of 2021, according to the president of the Vietnamese Textile and Clothing Association, Vu Duc Giang.
About 40% of employees in the shoe industry have returned home and it is not known how many will return, said Phan Thi Thanh Xuan, vice president of the Vietnam Association of Leather Shoes and Handbags.
Loss of productivity
The Southeast Asian nation has for years been the second largest supplier of clothing and footwear to the United States, according to the American Apparel & Footwear Association, which represents more than 1,000 brands.
Global brands are already bracing for the fallout.
Urban Outfitters Inc. and Abercrombie & Fitch have warned of holiday season deficits, while Nike has lowered its sales forecast after 10 weeks of lost productivity in Vietnam, CFO Matthew Friend said last month. .
The company has also transferred some orders to other countries, Vietnamese news site NDH reported, citing the Commerce Ministry. Meanwhile, Gap Inc. said it was using “expedited transportation” to counter the delays, CFO Katrina O’Connell said on an analyst call in August.
Adidas supports the measures taken by Vietnamese authorities, the company said in an emailed statement.
“Health and safety is a top priority for Adidas, also in our supply chain,” said the sports equipment giant. “We are in contact with our partners to mitigate the impact of the current lockdown on our business and, for example, to temporarily reallocate production to other countries.
Gap declined to comment. Other companies did not respond to requests for comment.
The virus and the current blockages weigh on the Vietnamese economy. The country’s statistics office recently predicted that gross domestic product would rise 2.5 percent this year, well below the official target of up to 6.5 percent, as strict pandemic policies impact nearly every corner of a country that had already been through the pandemic by helping factories stay open.
The response to the Vietnam pandemic has been rocked by the delta variant and one of the lowest vaccination rates in the region. Authorities have organized hundreds of buses to bring workers back to rural areas, the government said. Returning workers who are not vaccinated are sent to quarantine centers – Bloomberg