Not only small businesses, but also many “big players” in the manufacturing industry, such as textiles, clothing, leather and footwear, which have contributed billions of dollars in export value, have expressed concerns about the less optimistic picture in the first quarter.
The decline in orders will be difficult in 2023. This situation may even continue into the second quarter. The decline in orders will have an adverse impact on the production and operation efficiency of the company and will not contribute much to the economy.
According to Mr. Vu Duc Giang, Chairman of the Vietnam Textile and Clothing Association, Vietnam’s total textile and clothing exports in the first three months of 2023 are estimated to be US$8.701 billion, a decrease of 18.63% compared to the same period in 2022.
The current customer situation is small orders, and the low unit price has dropped by about 20-50% compared with 2022. Many apparel companies even had to change their product mix and were forced to manufacture non-main products in order to maintain production activities. Meanwhile, Vietnam’s exports to most major markets fell sharply over the same period. For example, the EU market fell by 4.2%; ASEAN fell by 8%; in the first two months of this year, Japan fell by 5.9% and the United States fell by 21%.
800 shoe workers laid off
On April 3, the Ministry of Labour, Invalids and Social Affairs of Dong Nai Province stated that starting from April 2023, TKG Taekwang MTC Vietnam Co., Ltd (a shoe factory, headquartered in Loteco Industrial Park, Bien Hoa City) will lay off nearly 800 workers. . The reason is that starting from the end of 2022, the company will face a decrease in orders, so it will proactively lay off employees as planned. The company decided to close from April 2023 and let its remaining 800 workers (out of more than 2,000 workers at its peak) resign.
Functional departments of Dong Nai Province have cooperated with enterprises, requiring them to fully implement systems and policies, prepare files, and close employee social insurance account books. The company and its employees have agreed that all employees will be given half a month’s salary support for each year they work in the company, but no more than 11 months’ salary. In addition, the company also provides each employee with VND 14 million.
Currently, Dong Nai Province’s Ministry of Labour, Invalids and Social Affairs is coordinating relevant units to create job opportunities for these workers. According to the Dong Nai Provincial Employment Service Center, since the beginning of 2023, the center has received applications from more than 12,000 employees who have paid unemployment insurance benefits. When will the industry downturn end? From the end of 2022 to the beginning of 2023, many forecasts indicate that industrial production may enter a recovery period in the second quarter of 2023. However, so far, many experts and businesses say the chances of an early recovery are very low. But a representative from the Ministry of Industry and Trade said there were still positive signs that domestic production was recovering.
Economist Dr. Dinh Trong Thinh, associate professor and senior lecturer at the School of Finance, assessed that the lack of orders from export companies has had a negative impact on many other companies in supplying goods to customers. They were forced to cut back on the production process. Therefore, in order to break bottlenecks and help the economy clear up, the expert suggested that enterprises should speed up structural adjustment, reorganize management and production and operation activities, optimize costs, enhance competitiveness, and make greater contributions to the economy.