Delta Variant Outbreaks in Sparsely Vaccinated Asian
Countries Disrupt Production
By Jon Emont & Lam Le, 8/25/21, Wall St. Journal

But the Delta variant has slipped thru Vietnam’s defenses—
just as it has recently for other largely unvaccinated
exporters including Indonesia, Sri Lanka & Thailand. The
strain spreads so quickly that it is difficult to track,
acc. to the govt. Authorities have ordered some factories
to shut & others to drastically reduce on-floor workers.
That has left in the lurch Western brands—such as Adidas,
Crocs, & Steven Madden —that rely heavily on Vietnamese
manufacturing.

Vietnam, which produces more than 30% of American shoe
imports, is the 2nd-largest supplier of shoes & apparel
to the U.S. after China.

In mid-August, over 80 shoe & apparel companies, incl.
Nike & Gap, wrote a letter to Biden, asking him to
accelerate U.S. vaccine donations to Vietnam.

The White House said that it was donating an additional
one million doses of a vaccine developed by Pfizer &
BioNTech to Vietnam, a country of about 100 million people,
after VP Kamala Harris met with govt officials in Hanoi
on Wednesday.

Supply-chain experts say the added costs from lockdowns
in Vietnam & other Asian countries will further increase
the sales price of consumer goods like shoes, which rose
4.6% in July compared with a year ago in the U.S.

Adidas, a German shoe company that sources 28% of its
product from Vietnam, said in early August that most of
its supplier factory capacity in the country has been
unavailable since mid-July. Adidas says that could contribute
to roughly $600 million in lost sales in the 2nd half of the
year. The company said supply disruptions meant it wouldn’t
be able to fully cater to the strong demand for its products
& would look to raise prices.

To try to maintain production, Vietnam’s govt has ordered
factories to adopt strict measures, including a “3-in-1-
place” policy that requires employees in some highly
affected regions to eat, sleep & work in the workplace
to avoid catching & spreading the virus.

One laborer at a paper manufacturer in Binh Duong province—
an industrial region in Vietnam’s south, where there is a
major outbreak—sleeps on a bed constructed from paper
cartons in the factory’s conference room. A cup next to
his pallet holds his toothbrush & toothpaste. He wears a
mask 24 hours a day, including while sleeping, & all
conversations with co-workers must be conducted at least
2 meters apart, he said.

The factory has decreased its workforce to 150 workers
from around 600 to reduce density, & many of those who
remain take on longer shifts of 12 hours in part because
there's little else to do, said the laborer, who asked to
be identified by his surname, Dao. “It doesn’t feel right
to rest when others are working,” said Dao, 23 years old.
Some workers can’t stand the isolation & leave for home,
he said, although he'd rather have this job than return
home with no income.

Last week, Vietnam’s Ministry of Industry & Trade acknow-
ledged issues with the 3-in-1-place system. Many companies
in Ho Chi Minh City had to stop production because their
workspaces weren’t large enough to house large numbers of
employees, & after a month, workers had tired of spending
all their time confined to their workplace, the ministry
said. Ho Chi Minh City has promoted alternatives, incl.
a system where workers live in dorms near factories but
their movements are restricted to prevent infection.

Vietnam had a total of 81 Covid-19 deaths until July 1.
Since then, there have been over 8,000 deaths from the
disease & around 6,000 new cases a day on average & rising.
The outbreak is worse in the south, including regions near
Ho Chi Minh City, where much of the country’s garment &
footwear industry is concentrated.

Vietnam began its inoculation campaign later than other
countries in the region, which analysts say in part
reflects the govt’s lack of urgency, as it may have felt
it had Covid-19 under control. Around 16% of Vietnamese
have received at least one vaccine dose, acc. to Our
World in Data, with a mix of vaccines from AstraZeneca,
Moderna, Sinopharm & others.

“Plan A worked so well, they just didn’t put effort into
Plan B” said Maciej Boni, an epidemiologist at Penn State
who frequently conducts research in Vietnam. “In fairness
to them, nobody predicted that SARS-CoV-2 was going to
evolve this Delta variant that was going to be almost
twice as transmissible. That’s a genuine surprise for
the entire scientific community,” he added.

Economists & supply-chain experts say that Vietnam’s
vaccine problems are prompting some companies that
shifted electronics, shoe & apparel production from China
because of rising prices & trade-war tariffs to reconsider
how much they can rely on the country.

Wolverine World Wide, a U.S. footwear company that produces
a large share of its goods in Vietnam, said its production
there had been disrupted amid factory closures, part of
what CFO Michael Stornant called a “really choppy supply
chain situation.” Stornant said the company has moved some
of its production back to China this year to mitigate risk.

The disruptions are making it hard for companies to meet
fall demand as students return to school.

Steven Madden, the fashion co, has seen huge interest in
its midprice Dolce Vita brand, driven in part by TikTok
videos of women rushing sororities saying they are wearing
its braided block-heel sandals. Industry publication
Footwear News called the Dolce Vita the “unofficial shoe”
of the U. of Alabama’s sorority recruitment drive.

There is only one problem for the brand.

“We make the majority of our Dolce Vita products, pretty
much all of our first-tier products, in Vietnam,” said
Edward Rosenfeld, Steven Madden CEO. “A number of their
Dolce Vita factories are shut down.” A recent visit to the
brand’s website showed that some of its shoes aren’t ready
to ship for at least a week after ordering.

https://www.wsj.com/articles/delta-variant-outbreaks-in-sparsely-vaccinated-asian-countries-disrupt-production-11629807725