Thailand
Vietnam: Firms ramp up production to meet bulging order books as country reopens
The manufacturing sector in October saw significant expansion for the first time in five months as firms ramped up production to meet rising export orders spurred by the COVID-19 pandemic gradually coming under control, experts said.
After much of the restrictions were lifted, localities, especially epicentre HCM City and other southern provinces, are focusing on restoring production to meet the new export orders mostly from the EU and the US.
Dony Garment Co Ltd in HCM City’s Tan Binh District, which employs 100 workers, has increased production since the beginning of October to meet export orders from the EU, the Middle East, the US, and Japan worth a total of US$2 million.
Viet Thang Jean Company in Thu Duc City with nearly 600 workers also resumed operations in early October. It has received orders until mid-2022.
A spokesperson for the Nam Hoa Company in Binh Chanh District, which makes wooden toys for exports, said it has increased production to export to the EU and the US as orders increased by 30 per cent last month.
He said it would not accept more orders for delivery until April next year.
Over the past month the Thien Loc Joint Stock Company factory on Nguyen Anh Thu Street in District 12 has stepped up production to meet orders for the Christmas season as more than 2,300 workers, or 90 per cent of the company’s total workforce, have returned to work.
Vu Thanh Binh, its general director, said buyers are willing to make advance payments for timely delivery. “The company has orders for until the end of the second quarter of next year and is likely to have orders for the entire 2022.”
Nguyen Chanh Phuong, vice president of the HCM City Handicraft and Woodworking Association, said there is now big demand for wood products such as decorative items for Christmas and New Year in many markets.
Many wood products businesses have orders for until June next year, and more than 70 per cent of them have resumed production, he said.
Production resumes
Le Bich Loan, deputy head of the HCM City High-Tech Park, said all enterprises have resumed production and are at 50-70 per cent of capacity now, and plan to return to 100 per cent by the middle of this month.
According to the Dong Nai Industrial Zones management, more than 92 per cent of enterprises in industrial parks have resumed production with many operating at full capacity.
They are looking to hire workers, who are now allowed to go home daily and do not have to stay at the workplace unlike earlier, it said.
Fujitsu Vietnam Computer Products Co., Ltd (in Bien Hoa 2 Industrial Park in Dong Nai Province) said it has got more than 1,000 of its workers back after the province lifted most restrictions.
Lixil Vietnam Global Manufacturing Co., Ltd (in Long Duc Industrial Park in Dong Nai) has got back workers from ‘low risk’ areas, and its partners have agreed to extend the delivery time.
According to statistics from the Binh Duong Industrial Zones management, nearly 2,000 enterprises or more than 96 per cent of tenants in industrial zones, resumed production in early October.
Some 373,000 workers, or 76.4 per cent, have returned to work, with many companies reporting 100 per cent turnout and production.
In Long An Province, more than half of all enterprises have resumed operations with over 150,000 employees returning to work.
Pham Van Viet, vice president of the HCM City Textile and Garment – Embroidery and Knitting Association, said the number of orders for the textile and garment industry continues to rise, with many businesses having orders for until June next year.
It helps that businesses could now make certain decisions on pandemic prevention measures (instead of completely following local authorities) to ensure smooth production, he said.
British information provider IHS Markit Ltd’s latest survey shows that business confidence improved markedly in October as the fourth wave of the outbreak showed signs of easing.
Renewed expansions were seen in output, new orders and purchasing activity, while business confidence jumped higher, it said.
Challenges
Experts said however that most businesses still face problems with sourcing and distribution due to interrupted transportation and disrupted supply chains.
A number of them are still waiting for workers to return from their hometowns, and labour shortages are thus a major problem, they said.
Higher freight charges are exacerbating the higher costs caused by raw material shortages, and manufacturers are hiking prices at the fastest pace in five months, they said.
According to the General Statistics Office, the Index of Industrial Production grew at 6.9 per cent month-on-month in October.
Exports are estimated at $27.3 billion in October, a 1 per cent rise and up 0.3 per cent from the same period last year.
Retail sales of consumer goods and services were estimated at VND357.9 trillion, up 18.1 per cent.
Source: VNS