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Nike, Adidas Face Supply Chain Threats

  • A surge in COVID-19 cases in Vietnam has caused a massive labor shortage in Vietnam, leading to supply chain issues for Nike and Adidas.
  • The world's largest athletic shoe maker is facing a labor shortage of around 40,000 workers.
Nike/Design: Alex Brooks

The world’s biggest athletic shoe manufacturer — which works with Nike and adidas — is facing massive labor shortages in Vietnam related to the pandemic.

Around 40,000 workers did not return to a Ho Chi Minh City facility owned by Taiwanese company Pou Chen Corp. when it reopened on Wednesday. The facility closed in July due to rising COVID-19 cases.

Nike could lose up to 160 million pairs of shoes due to factory closures in Vietnam, which normally supplies around half its shoes.

Both Nike and adidas are coming off strong quarters.

  • Nike posted $12.2 billion in revenue in the first quarter of fiscal 2022 — a 12% rise from the same period the previous year.
  • Adidas’ quarterly revenue rose 51% year-over-year in Q2 to $6 billion, bouncing back with $470 million in net income after a $349 million loss in Q2 2020.

After having very few recorded COVID-19 cases through April, the virus surged in Vietnam in September, with active cases peaking at over 225,000. The Southeast Asian nation has just under 100 million people.

Active cases dropped precipitously over the last week to 48,126 on Thursday.