Vietnam's footwear firms forced to lay off workers due to Covid-19
The coronavirus pandemic has left tremendous impact on Vietnam's footwear industry, with the lack of production orders and the consequent drop in exports forcing them to lay off employees.
The situation would worsen if the coronavirus is not put under control in Europe and the United States.
That Hue Phong Leather Shoes Co., Ltd. and PouYuen Vietnam Co., Ltd. have recently fired 2,220 workers and some 2,790 workers, respectively, indicating the severe impact of Covid-19 on their business.
As a major business in HCMC’s Go Vap District with some 4,700 workers, Hue Phong has had to lay off thousands of employees and scale down operations due to declining orders. PouYuen Vietnam has also experienced a similar situation.
Despite measures such as adjusting production and shifts to ensure work for their employees, the limited number of orders in the second half of the year has forced these enterprises to lay off workers.
Many other businesses in the field are also cutting staff or asking them to take unpaid leave.
Nguyen Xuan Tu, director of Phuoc Thanh Export, Import, Trading and Production Co., said that some 90% of the company’s production output is for export to Europe. Since Covid-19 broke out in the continent, there has been no demand from the firm's clients in Poland, Austria and Sweden, Tu added.
“Normally, at this time of the year, we receive orders for three months or even till the end of the year, but there have been no orders from this region so far,” Tu said.
With no direct orders, Tu sought to outsource orders to retain his workers but even this was not enough, forcing his firm to lay off 30% of its employees.
Though the pandemic in Vietnam is essentially under control, the main footwear markets such as the United States and Europe are still struggling with the disease, leading to a lack of demand.
The prolonged suspension of imports in the EU and U.S. markets has severely hit domestic footwear firms, which employ a large number of manual workers. The firms admitted it is impossible to survive or retain staff without orders.
According to Nguyen Chi Trung, chairman of Gia Dinh Group Joint Stock Company, his firm still has some orders for April-June but has seen no new orders from American and European importers, compelling the firm to lay off or give unpaid leave to some 60% of its employees.
Trung said that such difficulties could lead to thousands of people being laid off.
The United States and the EU have been the two major markets of Vietnam’s footwear over the past years and accounted for some 65% of the country’s total export turnover last year.
Massive layoffs have also been seen in the textile-garment and woodwork industries. As there are no orders and import markets are yet to recover, it is impossible to resume production and ensure enough jobs for workers.
Though a large number of workers will be needed once the pandemic is over, businesses are still unable to retain workers amid the current difficulties. SGT
A global economic recession caused by the COVID-19 pandemic might put Vietnam’s economy at stake due to its strong dependence on partner countries and the international trade environment.
Footwear maker Pouyuen Vietnam Co. Ltd., which is based in Ho Chi Minh City's Binh Tan District ended its contract with nearly 2,800 workers on June 20, according to the Nguoi Lao Dong (Labourers) Newspaper.