Some points along the supply chain in China may be inching back into partial operation as they face the disruptive reality of the coronavirus outbreak, but the halt on raw material production is putting other countries’ garment manufacturers at risk.
“We have problems as 90 percent of raw materials come from China,” Myanmar garment manufacturer U Myint Soe told local newspaper The Irrawaddy Wednesday. “We are waiting for the day when the Chinese side will resume operations.”
Already, most of the garment factories there have ceased running overtime as the stock on hand shrinks, and few are still operating on weekends as is typically the case when business is good.
“As a first step, the working hours are being reduced. Next, there will be redundancies. And then the factories will have to close temporarily,” Soe said. “If the situation doesn’t improve, there will be permanent shutdowns.”
The auto parts industry has been dealing with the bleak reality of an inputs shortage for weeks as the main output in Wuhan—where the coronavirus was first discovered—is parts for vehicles. Major car makers, like Toyota, Tesla and Ford, have frozen production in certain China facilities. Hyundai shuttered production within China as well as in its South Korea facilities because of its struggle to obtain critical components.
This, however, is among the first mentions of potential widespread garment factory closures as a result of limited raw materials.
While the Myanmar Garment Manufacturers Association (MGMA) has been meeting to work on contingency plans, solutions so far have been few, and factory stocks won’t replenish without a quick fix.
“Some still have stocks and others have already run out,” MGMA’s U Khin Maung Oo told The Irrawaddy. “It appears that those who still have stocks will not survive through March. Factories which have run out of stocks will have to close.”
For the year ended December 2019, Myanmar’s total apparel exports to the United States amounted to $399 million worth of goods, a sizable 72 percent uptick year over year as the country saw more U.S. brands return to sourcing there after years of trade sanctions. Still, garments from the country make up less than a 1 percent share of total U.S. apparel imports.