Global brands from Toyota to Nike are being forced to down tools at key production sites in China and Vietnam as the two communist export powerhouses batten down swathes of their populations to fight rising levels of Covid-19 cases. Global supply chains, already reeling from one of the most challenging years ever recorded in peacetime, look set to face greater disruption.
Toyota and Honda, Japan’s top two car manufacturers, have been forced to close plants in Guangdong and Wuhan respectively in recent days due to Covid-19 outbreaks. In Thailand too, Toyota, the world’s largest automaker by sales volumes, had to suspend production last month at three factories due to a pandemic-related parts shortage.
A spokesperson for Honda revealed yesterday the company has made a downward revision of its sales volume outlook due to the Covid resurgence around the world but centred around Asia, as well as the impact from a global shortage of chips. A global semiconductor chip shortage has hit most automakers hard this year. General Motors said earlier this week it will shut down several North American plants because of the shortage.
Since July 20, community-spread infections have been confirmed in about 30 cities across China, including Beijing, Shanghai and Chongqing. Apart from the three provincial-level metropolises, infections have been found in 12 provinces and autonomous regions such as Sichuan, Henan and Yunnan.
Newly reported positive Covid-19 cases in China have recently forced the country to re-introduce restrictions to curb the spread of the virus. Most ports in the country are now requiring a nucleic acid test (NAT) for all crew, with vessels forced to remain at anchor until negative results are confirmed.
Many ports in the country are also requiring vessels to quarantine for 14-28 days if they previously berthed in India or performed a crew change within 14 days of arriving in China. Meanwhile, in increasingly locked down Vietnam, one of the world’s most important apparel manufacturers, roughly one third of the country’s textile and garment factories are currently closed because of Covid-19.
Data from the Vietnam Textile and Apparel Association (Vitas) shows 30 to 35% off the nation’s apparel factories are currently shuttered, with Nike one of the big brands struggling with this outage. Electronics firms including Samsung and Foxconn are also reported to be struggling with production due to the lockdown rules in place across parts of Vietnam.
The south of the nation has been in lockdown for nearly a month with massive ship queues building in the South China Sea.
Mr Sam Chambers