Production chain breakdown looms after HCMC firms suspend operations

After Covid-19 infections were detected at the Tan Thuan Export Processing Zone in District 7, 29 enterprises have had to cease operations. Many said they have had to apologize to customers for potential late deliveries.

Furukawa Automotive Parts Vietnam Inc., which has an 8,000 workforce, had to close four of its five workshops in the EZ Monday, Hoang Xuan Thai, head of the company’s labor union, told VnExpress Tuesday.

The sole workshop open has to operate at full capacity, but the company finds it impossible to deliver goods on time and very hard to fulfill orders, he said, adding that it was forced to apologize to clients.

The automotive parts producer also faces labor shortages because many workers are so afraid of the pandemic that they have unilaterally decided to stay at home or returned to their hometowns.

Meanwhile, the leader of a garment maker in the zone said: "We are negotiating with clients. If they agree, we will deliver goods late; otherwise, we will lose orders."

Many enterprises in other HCMC districts are facing the same situation.

Covid-19 related problems have forced Taiwan’s footwear maker Pouyuen Vietnam with over 56,000 staff to suspend operation from Wednesday.

Cu Phat Nghiep, head of the company’s labor union, said production had slowed down significantly due to the worker shortage at a time it has many urgent orders to fulfill. If the company, the biggest employer in HCMC, cannot negotiate with clients successfully, it will have to compensate for late delivery, he said.

Under the ongoing circumstances, enterprises are struggling because of deadlocked production, said Tran Thien Long, vice chairman and general secretary of the Ho Chi Minh City Export Processing Zone and Industrial Park Authority Business Association (HBA).

He said a survey by HBA found most enterprises saying production chains will be broken if they are locked down for a long period of time. "They want production back. They have proposed a plan on maintaining social distancing in their factories, with all production, dining and residing taking place inside to prevent infections," he said.

A HCMC working group including the HBA will keep studying the actual situations of firms to suggest practical solutions.

The road leading to the Tan Thuan Export Processing Zone in HCMC is deserted during rush hour. Photo by VnExpress/Tat Dat.

"After one survey of 29 enterprises at the Tan Thuan Export Processing Zone, we concluded that some 50 percent can return to normal operation and meet conditions for production, accommodation and having meals in their factories," Long said.

Meanwhile, firms outside the industrial zones, like My Hao and FPT Software, are also creating areas for employees to work, sleep and eat within the premises.