'Nothing left but fear': Factory workers in Vietnam hesitate to return to work amid Covid-19

Staff-starved companies in Vietnam are imploring workers to return for what would normally be peak production. PHOTO: AFP

HANOI (BLOOMBERG) - Whether yoga pants and Air Jordans appear under Christmas trees in the United States and Europe may come down to Vietnamese assembly line workers such as Ms Le Thi My.

Ms My is part of an exodus of factory employees who have gone back to their home villages from Vietnam's southern industrial belt, the epicentre of the nation's worst coronavirus outbreak.

Millions more are poised to follow, as months-long mobility restrictions that confined workers to cramped housing recently eased.

"We had almost nothing left but fear," said Ms My, who is back in her home in Tay Ninh Province along the Cambodian border after leaving Ho Chi Minh City. "We saw many people die of Covid-19 in our neighbourhood."

The flight from Vietnam's industrial heartland in the south - with the government estimating more than two million may vacate - followed an increasingly strict lockdown that started in July to combat the Delta variant.

Factories slowed or closed, wiping out months of production for companies such as Nike and exacerbating problems in a global supply chain already in disarray.

Now staff-starved companies are imploring workers like Ms My to return for what would normally be peak production for winter clothing and Christmas gifts. The government is offering transportation back and companies are upping pay and benefits, but little is working.

"This is uncharted water," said BTIG analyst Camilo Lyon, who estimated that Nike's output alone has already been reduced by 180 million pairs of shoes. "No one understands how quickly, or slowly, the ramp-up in production will be."

While small, Vietnam plays an outsized role in the global consumer economy, supplying everything from Walmart furniture and Adidas sneakers to Samsung smartphones.

After China, it is the second-largest supplier of clothes and shoes to the US, according to the American Apparel and Footwear Association. Its importance increased during the trade war between the US and China as manufacturing moved there to avoid tariffs.

At this point, there is little brands like Nike, which recently cut its sales forecast largely on the lack of goods from Vietnam, can do. Factories in other countries are overloaded with orders, and it would take months to train workers and move machinery.

The missed production will be especially apparent at retailers in December and extend well into the first quarter, according to Mr Lyon, who projected that output from Vietnam would not normalise until the middle of next year.

The full impact of this upheaval has not been priced into the stocks of apparel and footwear companies with big exposure to Vietnam, he said.

"The challenges are by no means over," Mr Lyon said.

The factory shutdowns could also affect tech companies such as Apple, which may see disruptions to deliveries of the iPhone 13 due to closures at component suppliers. A Samsung unit that makes household electrical appliances in Vietnam said it expects to meet export targets if it can quickly return to normal operations.

Vietnam contained Covid-19 last year, giving its people a false sense that the country had dodged the pandemic. But the Delta variant struck hard in the spring, bringing the harsh realities of the virus that much of the world had experienced a year earlier.

Cases and deaths surged, including more than 15,000 in Ho Chi Minh City over the summer.

That prompted the authorities to impose severe restrictions, such as bans on shopping for food and curfews.

Factories were instructed to establish on-site accommodations - essentially forcing employees who want to work to live in tents - or temporarily shut down. This left many workers who remained with no paychecks for months, dwindling savings and reliant on government food packages delivered by soldiers.

The experience traumatised many migrant workers, said Mr Vu Tu Thanh, Vietnam's chief representative of the US-Asean Business Council. Instead of isolating themselves at makeshift factory lodging, or staying in the area without pay cheques, many workers returned to their home provinces.

The lifting of some restrictions in Ho Chi Minh City and surrounding provinces earlier this month only further motivated those who had not yet left to do so.

Adding to the fear is that Vietnam has one of the lowest vaccination rates in South-east Asia. About 14 per cent of its 98 million people are fully vaccinated.

The American Apparel and Footwear Association has lobbied the Biden administration to donate more vaccines to the country.

Out of desperation, local authorities have been sending text messages to workers to convince them to return. They are also chartering buses to bring them back from their home provinces.

Ms Tran Thi Hoa, a 31-year-old mother of two, has so far ignored these pleas. She has no immediate plans to return to her job in Ho Chi Minh City, where she made about US$350 (S$474) a month stitching clothing.

"I can't bring my family back to the city now, as it's still too risky," Ms Hoa said from Vinh Long, a province in the Mekong Delta where she now lives with her children and husband, an out-of-work motorbike taxi driver. "As the woman of the house, I've got to think of my family first."

With restrictions easing at the beginning of the month, production is increasing at some factories.

Pouyuen Vietnam, a unit of Taiwan's Pou Chen Corp, the world's largest athletic shoe manufacturer, resumed production last Wednesday with no more than 30 per cent of its workers, according to Vietnamese news website Zing. More than 40,000 workers have not returned, and the company may fail to reach its goal to operate at full capacity by the middle of next month.

There are signs that the situation may be improving, however. Industrial parks and export processing zones in Ho Chi Minh City reported that about 57 per cent of workers had returned as at last Wednesday, up from 24 per cent before the relaxing of restrictions, according to the city's media centre.

Though the pandemic is starting to ease - daily new cases this month have fallen to about 5,000 on average from 10,800 in September - the country needs to continue accelerating its vaccination programme. The government has said that it hopes to fully vaccinate 70 per cent of adults by the end of March.

For now, even the offer of free meals at work and a pay bump is not enough to entice Ms Hoa back to work.

"I feel sorry if someone in the US can't get her husband or her kids some new clothes for Christmas," she said. "But I can't leave my family here either."

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