Yahoo Finance Fears over Nike footwear supplies as major factories hit by Covid outbreaks
Nike could be at risk of footwear supply shortages following coronavirus outbreaks at two major factories in Vietnam.
Suppliers Pou Chen Corp and Chang Shin Vietnam Co have been forced to shut down production at plants near Ho Chi Minh City as Covid-19 tears through the country.
About half of all Nike’s shoes over the last financial year were made in Vietnam, which could mean supplies will be significantly affected.
Taiwan's Pou Chen Corp, which also makes footwear for Adidas, suspended production for 10 days last Wednesday after state media reported 49 infections had been detected at its plant in Ho Chi Minh City.
Chang Shin Vietnam Company, a South Korean shoemaker, became the second major Nike supplier to halt production in the city after a Covid outbreak caused it shut three factories for almost a week just a day later.
According to analysis from Panjiva, a business line of S&P Global Market Intelligence, Vietnam accounted for 49 per cent of US imports by sea linked to Nike and its products in the second quarter of 2021.
Nike's imports from Vietnam are led by footwear, Panjiva said, which was included in 82 per cent of shipments in the 12 months.
“That raises the question as to whether other major sneaker brands may face similar challenges,” senior researcher Christopher Rogers wrote in the report.
Adidas could face similar challenges as it too has its footwear made by Pou Chen Corp.
Samsung has also temporarily closed three factories at an enterprise park in Ho Chi Minh City.
The company is planning to isolate workers by having them sleep at the plants after a Covid outbreak saw the workforce cut from 7,000 to 3,000, according to the health ministry’s website.
After cases were detected at Changshin Company, workers were asked to stay at hotels in the area, the ministry said.
After successfully containing the disease for much of the pandemic, Vietnam has faced a more stubborn outbreak since late April.
Record infections and strict curbs on movement have left plants operating below capacity in northern provinces where suppliers for Apple, Samsung Electronics and other global tech firms are located, sources have said.
The Independent has contacted Nike and Adidas for comment.
Additional reporting by Reuters
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