The COVID-19 pandemic is having a severe impact on production and on the business activities of the apparel and footwear industry in Vietnam. The total textile and garment export value in the first four months of this year dropped by 6.6% year-on-year to USD 10.64 billion, according to the Vietnam Textile and Apparel Association (VITAS).
As a result, to guarantee businesses continuity, many factories have shifted to producing Personal Protective Equipment (PPE), such as face masks, to meet both domestic demand and boost exports. The Z76 company is one of those many factories that restructured their facilities to meet the global demand for PPE.
At the beginning of the crisis, customer’s orders started to be halted, and the inventory was accumulating, including non-woven fabric. To handle this, the factory started to look for opportunities and stepped into the production of face masks for the domestic market. The inventory of non-woven factory quickly allowed them to switch to mask production without depending on raw materials imported from China.
Having been part of skill and awareness raising sessions of Lean-Productivity and Worker Engagement trainings, organized by VITAS and IDH in 2018, the factory management decided to move from theory to practical action for new products development and exports. They participated in all online and offline events offered by VITAS, the Ministry of Health, the Ministry of Industry of Trade, which were supported by IDH, to make their new production plan happen. In addition, the factory received support and cooperation from global brands such as Decathlon and IKEA.
The factory’s machinery has been adapted according to the specifications of CE and FDA requirements, and investments in new equipment to produce glued masks have been made. By training workers, in combination with applying LEAN manufacturing under the guidance of productivity experts, a smooth transition was realized. Now the non-woven fabric production line has a capacity of 4.5 tons a day; and producing up to 1 million masks a week.
The VITAS and IDH trainings on certification requirements were particularly helpful, as a factor manager shared during the event:
Without attending this event, I never know whether our product needs a certification for export or not. I learned a lot from the detailed requirements presented by the certification agencies, and the workshop materials distributed for exporting products to the EU and US.
Though many businesses have successfully pivoted to PPE production, many SMEs face difficulties to acquire the appropriate machinery to meet the requirements of the US and European markets and to quickly restructure production and business.
Early on during the pandemic, the Vietnamese government issued a variety of incentives to mitigate the economic impact of the COVID-19 outbreak, including measures to help businesses affected by the pandemic. A bailout has been launched, supporting people with difficulties, such as workers who lost jobs; and providing companies with the possibility to get a loan to pay workers during furloughs and/or discontinuation of business.
IDH supported the Ministry of Labour, Invalid and Social Affaires to develop the communication measures around this and to communicate these widely. Through these and other support mechanisms, which include providing tax breaks, delaying tax payments, and land-use fees for businesses, the Vietnam government has provided US$1.16 billion (VND 27 trillion) in bail-out support.
IDH is supporting the apparel sector to alleviate the impact on factory workers and people dependent on the apparel industry, who have been affected by the COVID-19 crisis.
To address the global shortage of Personal Protective Equipment (PPE), IDH has set up a Dashboard where buyers and suppliers can connect, and where factories can find guidance regarding PPE production.