Brands Like Apple, Samsung, Nike & Adidas Have Been Forced to Close
In a new hit to the supply chain, top brands report that they have been forced to close down factories in Vietnam as the country struggles with a COVID resurgence of surprising resiliency. Notable brand names like Samsung, Nike, Adidas, Apple, Coca-Cola have all at one time or another over the last 90-days been forced to close some or all of their factories as employees came down with the illness.
See more on this new supply chain disruption…
It seems as though it has been one setback after another as the world’s supply chain – for electronics and for all goods – has struggled to come back from the economic calamity of 2020. And while the economy is clearly growing, there are serious challenges to keeping it going as integrated circuits (chips) and other parts and materials have been struggling with supply disruptions such as factory fires, snowstorms, and now, new COVID outbreaks.
Such is the situation in Vietnam, a country that has for years been a significant contributor to international trade, especially in certain industries such as athletic shoes and smartphones. But the country saw a surge in production move there last year when COVID caused the shutdown of China’s factories. Now, a new wave of COVID has hit Vietnam and the tables have been turned, with the government ordering factories to close.
Factories ‘Have Suspended Operations’ After Getting Hit by COVID
According to a report in the Nikkei, factories in Vietnam making Samsung, Nike, and Adidas products “have suspended operations after detecting cases of coronavirus at their facilities.” In the case of Samsung, this is actually pretty big news, as the company produces about 50% of its entire global supply of smartphones in Vietnam.
Ho Chi Minh City has issued a directive that “manufacturers must shut [down] their facilities” unless they provide an alternative plan. Some factories, for example, are experimenting with providing facilities for their employees to stay at the factory full time, rather than commuting and increasing their risk of COVID exposure. However, this is no easy task as factories generally have no great expanses of unused space to house employees. And then there is the necessity to feed them.
Vietnam is one of the world’s biggest exporters of electronics, footwear, clothes, and bags.”
The Nikkei
Only Option from Gov’t – Keep Workers at Facility with Housing & Food
Because of these challenges, many factories are refusing to try and provide on-site housing facilities. However, Coca-Cola set up large tents in their parking lots for their staff, in hopes of keeping their operations up and running.
It is a big problem for some companies. Take Nike for example. The company has 200 suppliers employing half a million people in Vietnam. This is a huge logistical matter to house and feed that large of a number of employees. Local news is reporting that dozens of factories have been closed down just in Ho Chi Minh City.
Panic Causes a Run on Grocery Stores
In the meantime, much as we experienced here in the U.S., there has been a run on grocery stores as the Vietnamese fear food and material shortages. Most stores have already begun rationing certain staples, such as eggs and noodles. The local government has banned food deliveries and is issuing fines to people who go out “without an approved purpose.”
Vietnam has put factory workers on its priority list for receiving vaccines, which are in short supply as the world grapples with a resurgence of COVID or one or more variants. Right now, only about 4% of the Vietnamese population has been vaccinated.
This chip shortage keeps getting uglier. Dare I ask how this will affect all of our smart home suppliers? Receiver, preamp/power amp suppliers? I can’t help but think this segment will see continued scarcity of the all important chip sets. Also, should we expect to see retail prices rise? Finally what is the U.S. doing to help U.S. companies find suppliers or are they all shut down for one reason or another? Yikes.