Factbox: How COVID-19 in Southeast Asia is threatening global supply chains
06/10/2021 09:30
SINGAPORE, Oct 6 (Reuters) - Fresh coronavirus outbreaks in
Southeast Asia have hurt factory activity across industries,
threatening the region's recovery from the COVID-19 pandemic and
disrupting global supplies of goods such as apparels,
automobiles, and electronics.
Coronavirus curbs have led companies to shut factories and
suspend or reduce operations at a time when Asia's manufacturing
sector is already grappling with rising raw material costs and
signs of a slowing Chinese economy. urn:newsml:reuters.com:*:nL1N2QX07A
Vietnam, Malaysia and Thailand are three of the region's
major manufacturing hubs and produce goods for some of the
world's largest consumer brands.
VIETNAM
A coronavirus wave since April forced Vietnam's largest
cities and industrial hubs to impose strict lockdowns, prompting
electronics, apparel and footwear manufacturers to suspend or
reduce operations. The restrictions have been eased in recent
weeks.
The outbreak initially hit northern industrial areas, where
suppliers for Apple AAPL.O , Samsung 005930.KS and other
global tech firms are located. urn:newsml:reuters.com:*:nL3N2NF0XM
In May, the northern province of Bac Giang ordered four
industrial parks, including three that house production
facilities of Taiwan's Foxconn 2317.TW , to temporarily shut
down. urn:newsml:reuters.com:*:nL3N2N52JU
The outbreak spread further south and, in July, Ho Chi Minh
City and neighbouring industrial provinces imposed strict
lockdown measures.
That month, Taiwan's Pou Chen Corp 9904.TW , which makes
footwear for Nike NKE.N and Adidas ADSGn.DE , suspended
operations at its plant in Ho Chi Minh City and Changshin
Vietnam, a South Korean firm manufacturing shoes for Nike, shut
three of its factories. urn:newsml:reuters.com:*:nL1N2OR0O1
Nike has cut its fiscal 2022 sales expectations and warned
of holiday delays. Buyers of Apple's new iPhone 13 are facing
longer-than-expected delivery times because of the outbreak in
Vietnam, where components for the device's new camera module are
assembled. urn:newsml:reuters.com:*:nL1N2QV0TI
The Vietnam Textile and Apparel Association said several
international fashion brands have shifted their orders away from
Vietnam and 60% of apparel and footwear makers in the country
have been fined for slow deliveries.
MALAYSIA
Several automakers and semiconductor companies have said in
recent months that pandemic-related disruptions in Malaysia were
hitting supply chains. urn:newsml:reuters.com:*:nL4N2PX1JA
Malaysia imposed a lockdown in June as infections hit record
levels but has gradually eased restrictions on manufacturing
since July.
Curbs in Malaysia, which supplies about 67% of the global
rubber glove market, also forced many glove makers to suspend
operations in June and July. urn:newsml:reuters.com:*:nL4N2PA0XZ urn:newsml:reuters.com:*:nL2N2OJ0V5
Malaysia is home to factories serving semiconductor makers
such as Europe's STMicroelectronics STM.BN and Infineon
IFXGn.DE , as well as major carmakers including Toyota Motor
Corp 7203.T and Ford Motor Co F.N .
STMicroelectronics said in July it temporarily closed its
assembly plant in Malaysia for 11 days due to the coronavirus.
German chipmaker Infineon said in August the firm will take
a hit in the high double-digit million euros from shutdowns at
its Malaysia plant. urn:newsml:reuters.com:*:nL8N2PA236
That same month, Ford Motor Co said it would temporarily
shutter the U.S. plant that builds its best-selling pickup truck
due to a semiconductor-related parts shortage caused by the
Malaysian outbreak. urn:newsml:reuters.com:*:nL1N2PP2OC
THAILAND
Thailand imposed tougher restrictions in July and August in
high-risk provinces including Bangkok. urn:newsml:reuters.com:*:nL1N2P807N
To avoid the factory shutdowns seen elsewhere in Southeast
Asia, the government adopted "bubble and seal" measures, whereby
confirmed COVID-19 cases are sent for treatment and close
contacts isolated from the other workers.
But several companies have had to temporarily close
operations for deep cleaning after COVID-19 cases in recent
months, including Charoen Pokphand Foods CPF.BK , Thai Plastic
Industrial TPLASm.BK , and Soomboon Advance Technology
SAT.BK . urn:newsml:reuters.com:*:nL2N2NH04B urn:newsml:reuters.com:*:nFWN2PD12Y urn:newsml:reuters.com:*:nFWN2P215B
In July, Toyota 7203.T halted vehicle production at three
of its Thai plants due to parts shortages caused by the
pandemic. urn:newsml:reuters.com:*:nL4N2OY1XX.
Thailand is Asia's fourth-largest autos assembly and export
hub for some of the world’s largest carmakers such as Toyota and
Honda 7267.T . urn:newsml:reuters.com:*:nL3N2OC2UH
A shortage of migrant workers, due to strict border
controls, infections and quarantines, has also hit food and
rubber production. urn:newsml:reuters.com:*:nL4N2OV0R3
Siam Agro-Food Industry, a Thai processed fruit exporter,
has only been able to fill 400 of the 550 roles it has available
as workers, who returned to their home countries, are unable to
enter Thailand due to border closures.
(Reporting by Liz Lee in Kuala Lumpur and Orathai Sriring in
Bangkok; Writing by Ana Nicolaci da Costa; Editing by Sam
Holmes)
((Ana.Nicolaci@thomsonreuters.com;))