COVID forces Vietnamese factories to choose sleepovers or stops

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HO CHI MINH VILLE / TAIPEI – Factories in Vietnam making products for Netflix, Ikea and Nike have joined a list of companies forced to stop production as the country battles its deadliest wave of the virus, while other facilities are setting up COVID “bubbles” in an attempt to keep running.

After Samsung and shoe maker Pou Chen suspended some production at their factories last week, Vietnamese authorities increased the number of factories subject to rules requiring them either to house staff on site or to suspend their operations.

Apple supplier GoerTek, South Korean Kumho Tire, packaging giant Tetra Pak and Nestle are among those who have implemented bubbles in their factories.

Among those who have had to suspend operations is ASRock, a producer of motherboards and servers owned by supplier Apple Pegatron. ASRock, whose clients include Netflix, estimated that its July revenue would suffer a 5% to 20% impact after temporarily halting production on Monday, according to a security file. ASRock chairman Hsu Lung-luen told Nikkei Asia the company will shift production to other contract manufacturers pending local approval of its COVID bubble.

The pandemic is weighing on supply chains in export-dependent Vietnam, which reported a record 5,926 cases on Sunday, nearly four times the figure for all of 2020.

“[It’s a] tough times for everyone, but our frontline workers are showing incredible resilience, ”said Fausto Tazzi, CEO of Nestlé Waters Vietnam.

Nestle has 1,200 workers camped out in factories nationwide, but needs vaccines for a lasting solution, Tazzi said.

After Pou Chen, other Nike suppliers took a break, namely Feng Tay Enterprises, Eclat Textile and Changshin, according to the Vietnamese government. A spokesperson for Eclat Textile, which also supplies Under Armor, told Nikkei that it requested its reopening on Monday and did not yet know the extent of the business impact of COVID.

Vietnam is a major exporter of textiles, electronics and home goods.

Ching Feng Home Fashions, which makes curtains for Walmart and Ikea, told a securities depository in Taipei on Monday that its factory in Binh Duong province would close from July 19 to August 2, saying it had to meet the requirements of the government that employees eat, live and work at the same locations.

Ho Chi Minh City and adjacent industrial provinces – including Binh Duong – topped the latest daily COVID counts. Factories in these locations are required to set up production bubbles in order to stay open. This means providing either food and beds at work, or transportation to ensure workers get straight home.

The bubbles were first needed in the south, but are spreading to places extending from central Da Nang, where authorities have warned factories that sleepovers may become necessary, north of Bac Ninh, where the assembler of ‘AirPods GoerTek pitched orange and purple tents for workers, according to images. on state television.

Other companies whose staff sleep on site include: Kumho Tire, South Korea’s second-largest tire manufacturer in terms of sales; Tetra Pak, the world’s largest food packaging company; feed producer Cargill, one of the largest unlisted companies in the United States; and Digi-Texx, a major software subcontractor in Europe and the United States

Ho Chi Minh City is in its second week of Vietnam’s toughest lockdown, including a ban on taxis and restaurant delivery. Hanoi and 16 other localities joined the city on Monday to issue stay-at-home orders.

As a new parliament meets on Tuesday, leaders seek to push back a stubborn wave of the delta variant that has dragged on for three months. With less than 400 deaths for the entire pandemic, Vietnam remains outperforming after its rapid response to COVID kept the virus at bay last year.

However, the Southeast Asian country only vaccinated 4% of the population due to a shortage of doses across the world, forcing it to keep one of the most border closures in place. strict in the world.

Additional reports by Kim Jaewon in Seoul



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