Textile and garment businesses in Nghe An province are struggling during the pandemic.
(Baonghean.vn) - Garment businesses are receiving optimistic signals as many orders increase, but the complicated development of the pandemic is also causing many challenges for this sector. Labor shortages and rising input costs are obstacles for the textile and garment industry.
Labor shortage due to the pandemic.
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| Currently, textile and garment businesses are proactively securing orders to ensure employment for workers. Photo: Thu Huyen |
Currently, Nghe An province has more than 20 garment manufacturing projects that have been invested in, built, and put into operation, providing jobs for over 25,000 workers, mainly in rural areas. In addition, more than 10 other projects in the province have also been or are in the process of new investment or capacity expansion.
Mr. Nguyen Van Hiep, Head of the Industrial Management Department of the Department of Industry and Trade, said: Despite the complicated developments of the Covid-19 pandemic, the supply chain for textile raw materials has not been disrupted. A positive sign for textile businesses is the abundant orders and continued growth in production, with export turnover reaching US$139 million in the first six months, a 34.5% increase compared to the same period last year. At the beginning of 2021, many textile businesses in Nghe An signed orders for the end of the year and the following year.
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| Textile and garment businesses are strictly implementing disease prevention and control measures to maintain stable production. Photo: Thu Huyen |
To dodual objectives: economic development and epidemic prevention and control.Businesses are proactively equipping themselves with hand sanitizer, face masks, rapid tests, and developing work plans, arranging safe accommodation and meals, and providing transportation for workers…
However, the company is also struggling with many difficulties:labor shortageShortages of shipping containers, rising production costs... affecting profits, and the risk of many orders not being delivered on time are major concerns for businesses.
According to our investigation, Hoang Thi Loan Textile and Garment Joint Stock Company currently only has 1/3 of its workers operating the machines; Minh Anh - Kim Lien Garment Company is short 500 workers; Prex Vinh Company Limited is doing better but its capacity is still below 90%...
“Many workers have to be quarantined, causing the production line capacity to fall short; due to lockdowns and social distancing measures in some localities, and strict control of transport vehicles, the cost of transporting goods to and from the site has also increased, wasting a lot of time and effort for businesses,” worried Mr. Tran Duc Long, Chief Accountant of Prex Vinh Co., Ltd.
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| Minh Anh Garment Company in Nghe An province is implementing Covid-19 testing for its workers. Photo: Thu Huyen. |
Mr. Nguyen Dinh Vinh, Deputy General Director of Minh Anh Garment Joint Stock Company in Nghe An, further shared: "Our biggest difficulty right now is the labor shortage and soaring production costs. During the period when Vinh City implemented Directive 16 and maintained checkpoints to prevent and control the epidemic, many workers from the districts were unable to enter the Bac Vinh Industrial Park to work. Many workers from communes in Thanh Chuong and Nam Dan districts and Ha Tinh province had to self-isolate at home."
Container rental prices have risen to a record high.
Furthermore, most import and export businesses are facing difficulties due to a shortage of containers. Container rental prices have increased significantly, yet there are still none available for rent, greatly impacting their import and export plans. Currently, Minh Anh - Kim Lien Garment Company has an inventory of approximately 100 containers, requiring them to rent storage space.
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| Many garment businesses in Nghe An province have arranged accommodation and meals for their workers to ensure disease prevention and control while maintaining production. Photo: Thu Huyen |
To maintain production, we have to arrange transportation for workers. For example, the Minh Anh - Kim Lien Garment Factory has over 3,000 workers, with 1,500 concentrated in the districts. Every day, the company arranges nearly 100 round trips to transport workers, ensuring compliance with pandemic prevention and control principles. Then, rapid Covid-19 testing for thousands of workers also increases costs. Some orders that have already been shipped are experiencing delays in disbursement because our trading partners are also being affected by the pandemic.
Sharing this same difficulty, the leader of Hoang Thi Loan Textile and Garment Joint Stock Company stated that currently, only one-third of the factory workers operate the machinery; some workers are living on-site at the company. Besides the shortage of machine operators, another problem is transportation costs. Each month, our company needs approximately 40 containers for round trips, but currently, we don't have any. From the end of 2020 until now, transportation costs have increased cumulatively, and now, sea container shipping rates on some routes continue to rise to record levels.
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| Containers being loaded and unloaded at Cua Lo Port. Photo: Thu Huyen |
For example, shipping costs from Hai Phong Port to Europe, which previously cost around $1,500 per container, are now at $7,000-$8,000 per container; shipping from Hai Phong to the US, which cost less than $1,000 per container before the pandemic, has now exceeded $10,000. Besides the excessively high shipping costs and the difficulty in securing space on ships, there is also a shortage of empty containers available for rent, with shipping companies constantly delaying shipments. Currently, businesses are trying to export goods to Egypt but lack containers, and similarly, containers for importing raw materials from Singapore are also in high demand.
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| Due to a labor shortage, the Hoang Thi Loan Textile Factory currently has only one-third of its usual workforce operating the machines. Photo: Thu Huyen |
According to the leaders of the Department of Industry and Trade, in the current complex situation of the pandemic both domestically and globally, although textile and garment orders have returned, in order to develop sustainably and overcome the challenges from the pandemic, textile and garment businesses urgently need supportive policies from the State. Besides reducing and deferring taxes, fees, and bank interest rates, there is a need for favorable policies for domestic and foreign investors to build closed-loop textile and garment supply chains. This will increase the capacity of domestic businesses, increase the quantity and value of exports, and increase profits.
According to the Ministry of Industry and Trade, regarding the increase in container shipping rates, representatives of shipping companies explained that the pandemic had caused delays in cargo clearance and empty container turnover. In addition, the surge in exports to Europe and the US led to a shortage of empty containers for loading.
In response, shipping companies have also proposed that authorities consider addressing the situation of thousands of unclaimed containers at ports in order to "resource" empty containers for export.
