Recently, news that domestic manufacturing factories are short of orders has flooded the screens of major platforms.
Some time ago, factories in Southeast Asia, which had been unable to recruit workers and were full of orders, began to run out of orders. Many factories have also implemented measures such as reducing overtime hours, taking holidays, and laying off employees.
global recession
India’s textile export orders drop 20%
According to foreign reports, affected by the global economic recession, the Indian textile industry has felt the cold wind. The impact of the recession on new orders received by Indian exporters is clear. Industry bodies and businessmen said export orders for clothing and home textiles from the United States and Europe fell by about 15%-20% as Western retail brands faced slow demand.
In Panipat, an important center for home textile production, there are signs that export orders have dropped by as much as 40%. It is reported that inflation and rising interest rates caused by the Russia-Ukraine war are the reasons for the economic recession and reduced export orders.
Industry sources said importers from Western countries have not only reduced orders for the next season but also delayed deliveries of previous orders. Last month, importers for several home textile exporters refused to accept deliveries. Buyers say retail sales in Western countries have slowed sharply due to high inflation. Warehouses are filled with unsold goods. Therefore, it is impossible for them to deliver immediately.
Exporters from Panipat, after attending a trade fair in Germany in June, said they had received 40% fewer export orders for home textiles than last year. Ramesh Verma, a Panipat exporter and member of the Handloom Export Promotion Council, said big companies and retail brands from the US and Europe purchased a large number of home textile products last year, but retail sales remained very weak. Therefore, they have to buy less, and exporters have fewer orders for the next season.
Not even in Vietnam?
No one is filling the orders at the beginning of the year, but there are no orders in the middle of the year, and the workers all take turns
At the same time, factories in Vietnam that were full of orders and were unable to recruit workers some time ago are also starting to run out of orders. Many factories have also implemented measures such as reducing overtime hours, taking holidays, and laying off employees.
On July 30, according to Vietnamese media vnexpress:
After six months of strong recovery in the first half of the year, many factories began to run out of orders in the second half of the year and had to shorten production times, stop recruitment, and reduce labor force. The second half of the year is also a difficult period for textile, footwear and clothing workers and companies to reduce orders. Some factories have had to arrange for workers to be furloughed on a rotating basis.
In the second quarter, the Russia-Ukraine war broke out, oil prices rose, and the epidemic… had an impact on people’s global consumption habits. The purchasing power of fashion apparel products has dropped sharply, and inventory cannot be sold. The brand does not sign new orders. Some factories are running out of orders, forcing them to recalculate appropriate labor plans, such as giving workers Saturdays off.
Mr Nguyen Huu Tuan, human resources director of Tanh Cong Textile – Investment – Trade Joint Stock Company located in Tan Binh Industrial Park (Tan Phu District), said the factory is still operating normally, but orders will be lost by September to October.
Mr. Duan, who has more than 30 years of experience in the textile industry, said that the second half of this year will be a good time to “purify” the industry. If financial companies are weak and have no orders, they will find it difficult to survive due to high costs, and they will have to reduce production or go bankrupt. There is a shortage of workers and unemployment is easily visible.
Mr. Tran Viet Anh, Vice Chairman of the Ho Chi Minh City Business Association (HUBA), said that not only electronics, textiles, shoes and clothing, but also wood and steel production… are also facing many difficulties due to the purchasing power of key markets. Usually, starting in June, the sales season starts with Mid-Autumn Festival, the new school year, Christmas… But this year things are quite quiet.
“Many factories have a lot of inventory and have cut prices, but there are no buyers,” Mr. Viet Anh said, adding that difficulties from the pandemic, world wars, inflation… are slowly seeping in. Many businesses have had to rearrange production activities and reduce working hours. The means of production in some industries have begun to cool down, and many powerful financial institutions will buy reserves and wait for recovery. The market for this group looks warm, but no new jobs are being created.
According to the person in charge of HUBA, judging from the scale of production, many companies are still short of workers and have stopped hiring. Currently, the factory is mainly reducing overtime and giving annual leave. However, the next work will not be enough for a full week of 8 hours a day. At the same time, workers are eager to work, working overtime to pay for post-pandemic expenses, prices are rising, and children in the new school year…
Vietnam’s “Youth Daily” reported on July 28 that on July 27, Pham Chung Cheng, executive president of Vietnam Textile and Garment Group (Vinatex), said at the opening ceremony of the “2022 Textile and Garment Industry Industry-Equipment and Raw Materials International Exhibition” that due to some The Vietnamese textile and apparel industry will face many difficulties in the first few months before the end of the year due to the decline in international market demand caused by national inflation, political instability and other reasons. At the same time, in addition to the sharp drop in cotton prices, the prices of other raw and auxiliary materials in the clothing industry continue to rise due to transportation factors. Some distributors are building large backlogs of goods and are faced with both overstocking and declining sales. Manufacturers and colleagues��We must face the difficulty of rising raw material prices against the backdrop of declining purchasing power. Pham Xuan Hong, chairman of the Ho Chi Minh City Textile, Garment and Embroidery and Weaving Association, said that the textile and apparel industry is facing a downward trend due to tensions between Russia and Ukraine and rising inflation. Sales in the United States and Europe have been on a downward trend. Many customers have postponed orders and are likely to face many challenges.
European and American consumer demand slows down
Orders from various industries are booming
Risks of global recession rising
Narendra Goenka, chairman of the Indian Apparel Export Promotion Council, had earlier said that apparel export orders are expected to decrease by about 15% to 20%. Indeed, the current situation around the world remains uncertain. Foreign buyers are wary of placing new orders.
Exporters are currently placing orders for Christmas and next summer. A Tiruppur exporter said the impact of the economic downturn on export orders in the textile industry was clear. In western countries, due to inflation and unfavorable economic conditions, the average consumer does not have enough money to purchase textiles and other discretionary items.
It is reported that the global PMI has entered a downward cycle, and multiple forward-looking indicators in US economic data hint at recession; Europe is facing high inflation, with multiple indicators pointing downward, and expectations for a global economic recession are heating up. According to the 2022 Panoramic Outlook mid-year report “Inflation – Meeting the Challenge” recently released by UBS Asset Management, global growth panic will be the economic factor most likely to be priced by market participants in the second half of 2022.
Data show that the growth momentum of the global manufacturing industry dropped significantly in July compared with June. The global manufacturing PMI index in July was 51.1, a decrease of 1.1 percentage points from the previous month. The readings in most countries have been declining for many consecutive months, and the trend of regional differentiation is obvious, showing a situation of “weak in Europe and Latin America, divided in Asia, and strong in North America”.
Major U.S. retailers have warned that sales of clothing, electronic products, furniture and other goods are slowing down, but the Christmas supplies, gifts and daily food market is ushering in another wave of peak shipments!
Some time ago, truck drivers at U.S. ports went on strike. Containers shipped from Asia to the United States could not be transported from the port in time, and the goods were seriously piled up at the port. And as large retailers like Walmart and Target find themselves in an unprecedented inventory crisis, warehouse capacity across the U.S. remains tight and excess inventory continues to pile up.
However, some experts hope that the situation will improve in the coming months. Most foreign buyers have placed orders for the upcoming Christmas in December this year. If the global economic situation improves, export orders may increase.
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