Nike, Adidas output snarled as Covid shuts Asian factories

Bloomberg

Some of the world’s biggest footwear and garment companies are seeing production pinched as factories in Southeast Asia struggle to keep the lights on amid one of the world’s deadliest Covid-19 resurgences.
A number of firms that churn out products for global giants like Nike Inc and Adidas AG have reported plant suspensions in Vietnam over the past few weeks as authorities impose restrictions to stop the virus. Other industries, such as Toyota Motor Corp factories in Thailand, also are scaling back as multiple countries in the region see record high cases and deaths.
“It’s going to be worse before it gets better,” with shutdowns and staff disruptions increasing in Asia, said Deborah Elms, executive director of the Singapore-based Asian Trade Centre. “Places like Vietnam that largely avoided locking down cannot maintain an open posture. With vaccinations painfully slow, I assume more shutdowns in factories, with the ripple effects felt elsewhere.”
The temporary shutdowns come as assembly lines gear up for the holiday shopping season in the US and Europe. Delays could mean shoes, suits, sweatshirts and other clothes won’t be on department-store racks by Thanksgiving Day, the traditional kickoff for the holiday shopping season, said Michael Laskau, founder of Ho Chi Minh City-based Paradigm Shift, which works as an intermediary between manufacturers and overseas customers.
Trade in goods has been a rare buffer for the Covid-ravaged global economy — especially for export-heavy Asian countries — but the latest reports show cracks in this growth pillar.
The delta variant-driven surge has hit Southeast Asia especially hard, underscoring the delicate choices for policy makers who are balancing vaccination drives and mobility restrictions while trying to keep their economies afloat.
The manufacturing pain is especially acute in Vietnam, where officials have taken drastic steps to ensure factories can continue operating. In some instances, electronics and tech companies have had workers sleep overnight on-site.
The garment industry, with lower profits and more workers, hasn’t been able to replicate that effort. Feng Tay Enterprise Co, Pou Chen Corp and Sports Gear Co are among manufacturers that have suspended some operations in Vietnam.
Phan Thi Thanh Xuan, vice chairwoman of Vietnam’s Leather Footwear and Handbag Association, said that more than 90% of the group’s 800 members among shoe manufacturers and exporters in the country’s south have temporarily halted operations.