Power cuts threaten Vietnam garment sector recovery

Garment firms trying to recover from the economic slowdown in Vietnam are worried that upcoming dry season power cuts will delay production and anger customers.

The industry has received a lot more orders than last year, and the export target of US$10 billion for 2010 looks within reach.

But the predicted power shortages could throw a spanner in the works.

“We were informed that there will be blackouts eight days a month, which means we will produce a quarter less,” Tran Dang Tuong, general director of the Thien Nam Garment Company, was quoted by Nguoi Lao Dong as saying on Monday.

The company worked on Saturday last week as well as on the Hung Kings’ death anniversary the day before, which was a national holiday.

Tuong said they had to make use of any day the power was on. “The pressure to finish the export orders in time is weighing down on us,” he said.

Ho Thi Thu Ha, general director of the Phuoc Long Investment Joint Stock Company in Ho Chi Minh City, told Nguoi Lao Dong her company was working on weekends and holidays to ensure timely delivery.

As the process of avoiding blackouts has forced garment workers to work more hours every day and work on holidays, Tuong said they will have to raise their prices, thus violating the contracts and losing customers.

He said power supply should be ensured on a priority basis to firms working on export orders like his.

Pham Xuan Hong, vice chairman of Vietnam Textile and Apparel Association (Vitas), was quoted by Tuoi Tre as saying last month that working through weekends reduced productivity (because of workers’ fatigue) but raised costs as the firms have to pay higher wages for holidays than weekdays.

The firms have been informed of the power cuts in advance, but too many of them in a month has affected the garment business rather seriously, he said.

Vitas is keeping a close eye on the situation so that it can ask for help from the Ministry of Industry and Trade when necessary.

Binh Duong Province, a hotspot for garment firms in the south, last weekend received a government note saying Deputy Prime Minister Hoang Trung Hai has agreed to the province’s request that power suppliers should try to meet the demand of garment firms to boost the business and recover garment exports.

Since early this year, garment firms and textile mills have signed many export contracts as the US, China and South Korean markets recover.

Most textile mills have signed contracts until June.

Since late last year, Vitas has made efforts to help garment firms recover from an earlier slump, informing them of the latest trends in the market, Vitas chairman Le Quoc An told Nguoi Lao Dong.

The association is planning a conference for Vietnamese garment firms and around 100 US importers to meet and discuss market trends and demand, he said.

Tags: Vietnam electricity, Vietnam energy, Vietnam power shortage