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Sneaker giants face supply-chain disruption after Vietnam factory closure

Pou Chen Corp, the world’s largest manufacturer of branded athletic and casual footwear, has been forced to close its giant factory in Vietnam for at least 10 days due to a worsening Covid-19 outbreak in Ho Chi Minh City. 

Pou Chen manufactures footwear for companies including Nike and Adidas. The company has not yet commented on the suspension. 

A health ministry spokesperson said production at the Pouyuen Vietnam business has been suspended because the company cannot accommodate workers on its site. The giant factory has some 56,000 workers and is the city’s largest employer. 

As the pandemic worsens in Vietnam – with most of the 2900 new cases detected on Wednesday located in Ho Chi Minh City and surrounding provinces – factories have been told they must have facilities for their workers to sleep on-site or be bussed to and from locked-down dormitories or hotels if they wish to continue operations.  

After successfully containing the disease for much of the pandemic, Vietnam has faced a more stubborn outbreak since late April, with daily infections climbing to record levels.

Companies in Vietnam’s business hub and its neighbouring industrial provinces have been struggling to keep running after strict movement curbs were imposed across much of the area. 

Earlier this week, state media said city authorities also ordered 29 companies in the Tan Thuan Export Processing Zone, an industrial park, to suspend production due to the outbreak. 

At the neighbouring Saigon Hi-Tech Park, which houses international companies, more than 700 infections had been detected in recent days, state media reported.

City authorities had ordered companies to shut units with infected workers, the Thanh Nien newspaper reported.

“The highest objective at the moment is to contain the outbreak,” the paper cited the vice chairwoman of the park’s management board Le Bich Loan as saying.

In May, the outbreak also forced companies in the northern industrial provinces of Bac Ninh and Bac Giang to scale down production, including Samsung Electronics and Foxconn.

Despite the latest outbreak, Vietnam has recorded far lower caseloads than many other countries with 35,409 infections in total and 130 deaths.

In April last year, Pouyuen Vietnam was ordered to suspend its production for two days after failing to meet local rules on social distancing.

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