COVID Surge Shutters Asian Factories, Slows Nike, Adidas Output

Nike and Adidas are among the footwear and athletic clothing manufacturers facing setbacks due to the surge in new COVID cases that has recently shuttered factories across Asia, Bloomberg reported on Friday (July 23).

Many firms that relied on the region to crank out clothing and sneakers for athletics are now facing plant suspensions in Vietnam and other places following authorities’ restrictions in light of the virus. Toyota also has faced disruptions from factories in Thailand amid the record-high infection rate.

“It’s going to be worse before it gets better, with shutdowns and staff disruptions increasing in Asia,” Deborah Elms, executive director of the Singapore-based Asian Trade Center, told Bloomberg. “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 Delta variant of COVID-19 has attacked regions in Southeast Asia particularly hard. 

In Vietnam, mandates by government officials have worked to continue production at factories while curtailing the spread of the virus. Some electronics and technology firms have had workers spend the night on the premises to keep up with demand.

The garment industry, however, was not able to do the same, despite having more people to work and lower overhead. By way of example, Feng Tay Enterprise, Pou Chen and Sports Gear all had to ditch some of their Vietnam operations. Phan Thi Thanh Xuan, vice chairwoman of Vietnam’s Leather Footwear and Handbag Association, told Bloomberg that more than 90 percent of the group’s 800 members suspended operations.

Last March, Nike said that a surge in demand for products wouldn’t be an issue, and that it would keep up with users’ desires for its top labels. As of March, however, supply chain snarls have caused a three-week lag in getting new products to factories. 

Closed garment factories due to the virus have cost Bangladesh factory workers almost $12 billion in annual wages.