Nike could soon run out of trainers as two of its major suppliers halt production entirely due to a spike in Covid-19 cases.
Two of Nike’s Vietnamese suppliers, Pou Chen Corp. and Chang Shin Vietnam Co. have ceased operations abruptly as a new wave of infections sweeps across southeast Asia, according to new research from S&P Global Market Intelligence.
According to Nike its Vietnamese contract factories made up a whopping 50 per cent of branded footwear last year, while 49 per cent of all of Nike’s seaborn imports to the US came from its Vietnamese suppliers in the second quarter of 2021.
Around 82 per cent of shipments coming out of Vietnam during the 12 months to June 30 included footwear, seeing a 28.8 per cent increase over the second quarter.
These stoppages are likely to severely impact Nike’s supply chain, already under intense pressure from ongoing pandemic disruptions.
Nike’s chief executive officer warned in late June that the company expected “supply chain delays and higher logistics costs to persist throughout much of fiscal year 2022”.
A spokeswoman for Nike told CNBC: “The health and safety of our teammates, as well as that of our suppliers, remains our top priority.
“We continue to work with our suppliers to support their efforts in response to the dynamic and unprecedented nature of Covid-19.
“As we continue to navigate these circumstances, we expect our suppliers to prioritize the health and livelihoods of their employees and continue to comply with legal requirements and the Nike Code of Conduct on the provision of wages, benefits and severance. We are confident in Nike’s ability to navigate these near-term dynamics and we remain prudent in our planning.”