Nike coaches exit at key factory affected by Covid epidemic
Production at some of Nike’s largest factories in Vietnam has been halted as Covid has spread to factories.
The company declined to say whether supplies to stores would experience shortages due to the outbreak.
About half of Nike’s shoes were made in Vietnam in the past fiscal year, which will present challenges for its supply chain.
Vietnam has seen a record increase in cases since last April with numerous outbreaks of infection in its industrial provinces.
Apple, Samsung and Puma could also be affected by the surge in cases in supplier factories nationwide.
“The health and safety of our teammates, as well as that of our suppliers, remains our top priority,” said a statement from Nike.
Nike said the company will continue to work with its suppliers to support them in response to the increase in Covid cases.
“We are confident in Nike’s ability to navigate this dynamic in the near term, and we remain cautious in our planning,” the statement added.
One of the most affected Nike suppliers in the region, Pou Chen Corp, also makes shoes for Adidas and is the world’s largest manufacturer of branded sneakers.
It suspended operations at its Ho Chi Minh City plant on Wednesday due to the epidemic of infections.
In a statement, the country’s health ministry said the Pou Chen factory in Pouyuen Vietnam would be suspended for 10 days.
The factory is Ho Chi Minh City’s largest employer, with a total of 56,000 workers. But he was unable to stay open and put his workers to sleep at the factory, as authorities demanded to limit the spread of infections, according to the health ministry.
Nike employs more than 450,000 workers nationwide, 80% of whom are women.
Similar challenges could also be faced for Puma, whose shoes are also made in the country. Apple and Samsung also have large suppliers in the worst affected factories in the northern region of Vietnam.
Apple did not say whether the outbreak would cause a shortage of items in stores, while Adidas, Puma and Samsung did not immediately respond to the BBC’s request for comment.
Samsung manufactures about half of its phones in Vietnam and has had to stop working at three factories in Ho Chin Minh City. According to the Department of Health website, Samsung Electronics expects workers to sleep in factories and has currently downsized from 7,000 to 3,000.
Many companies had started moving production from China to countries like Vietnam due to tariff challenges during the pandemic.
Dr Patsy Perry, senior lecturer in fashion business at the Metropolitan University of Manchester, told the BBC that these problems are being made worse by the increase in demand for sportswear linked to Covid as people pass more time at home.
“This shows the risk of over-reliance on a particular supply region,” she explained.
Bu, Dr Perry said Nike’s manufacturing map means it could potentially move production to other countries, depending on the agility of its supply chain relationship.
“Costs may increase in the short term if production has to be moved to more expensive areas, but meeting demand is more important than risking a stock-out situation,” Dr Perry added.
Dr Steve New, professor of operations management at Oxford University’s Said Business School, told the BBC that previously, because Vietnam has been effective in containing Covid, it has been able to respond quickly with short local stops. But he said as the situation worsens, “it will be much more difficult to continue this approach without disrupting the supply chain much more.”
Vietnam has vaccinated around 4% of its 100 million people. Its capital Hanoi has shut down all non-essential services due to new clusters of Covid infections and urged its citizens on Sunday to stay at home.
The government added factory workers to its priority vaccine list after an increase in cases in late April forced the closure of manufacturing areas in the north of the country.