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How long will the Vietnamese shoe factory shut down?

According to the research report sent by analysts to customers over the weekend, the impact of factory shutdowns in Vietnam may be more severe than planned by many apparels and footwear retailers. The negative effect may last until 2022.

Comprehensive source: Economic Daily (Taiwan)

On November 16, according to Taiwan media reports:

According to a research report sent to customers by analysts at BofA Securities over the weekend, the impact of factory shutdowns in Vietnam may be more severe than planned by many apparels and footwear retailers. Analysts said that the recovery there is slower than expected, and companies are too optimistic about the time required for the recovery period, and the negative impact may continue until 2022.

The reasons for the Bank of America’s forecast include that Vietnam’s southern region, where many clothing and footwear manufacturers have gathered, has reopened its economy much slower than the northern region.

In July and August last year, the number of confirmed cases of the new crown in Vietnam surged, triggering another blockade round. The temporary suspension of production at the factory has dealt a blow to Adidas and Nike, which rely heavily on the region to produce sneakers and sportswear. The Bank of America pointed out that although the business has restarted since then, the vaccination rate is still far lower than in other countries.

Bank of America economist Mohamed Faiz Nagutha said: “Production activities did recover quickly after a brief interruption last year due to the epidemic, but this time it may take a long time to return to normal-maybe six months.”

He added that the current operating regulations of the Vietnam factory are still stringent and very complicated, which may hinder the rework of personnel: “In short, the expectation of rapid recovery of production activities is expected to encounter unfavorable factors-including labor shortages are likely to continue… but It’s also because of rising raw material costs and supply chain disruptions in many other parts of Asia.”

Sportswear and footwear brand Puma has warned that bottlenecks in the supply chain, especially in Vietnam, will cause a shortage of products next year. Last week, Adidas lowered its 2021 outlook because the procurement was interrupted.

Companies including department store chain Kohl’s and Macy’s, chain retailers Walmart and Target, and major shopping mall brands Victoria’s Secret and Foot Locker will all announce financial reports this week. This topic may appear on their phone calls. Dharma talks at the meeting.

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