As orders plummet, Vietnam factories may close for over a month for Lunar New Year - Furniture Today

VIETNAM – As orders for Vietnam factories fell to a 13-month low in October, an extended closure over Lunar New Year is all but confirmed.

Several furniture importers have indicated that the factories they source from will be closed for extended time for the holiday, which is set to begin Jan. 22. The exact amount of time factories will close isn’t certain, but some believe there could be more than a month of downtime.

“Our main factory is closed for about 10 days, which is certainly manageable for our operations,” said Hanna Hajjar, vice president of operations and supply chain for furniture importer BDI.

“But we are worried about some of their sub suppliers, who are expected to be closed for longer periods,” he continued. “We are watching the situation very closely with the help of our agents. As of now, we are not anticipating any significant delays thanks to some forward planning. We anticipate to ship our new bedroom collection, as promised, middle of the second quarter of 2023.”

Martin Furniture sources from many Vietnamese factories, making the situation harder to track.

“We work with more than a dozen different factories, and each are unique on to themselves,” said Pat Hayes, vice president of imports. “I’m currently gathering their proposed factory closure schedule. The stronger factories seem to stay with a two-week closure. Others are talking about all January and into the first week of February. It really depends on how many orders they are receiving up until December.”

Hayes isn’t concerned. As long as the company plans for it, it shouldn’t be too much of a disruption.

“There is really no effect to us as we work very closely with our factories and their production schedule,” he said. “We’ve been considering their proposed closures and have increased our orders to cover the down time heading into next year.”

Legends Furniture — both an importer and a domestic manufacturer — said the closure will happen much earlier than usual and continue all the way up until after the holiday.

“All six of the factories we source from will close the last week of December,” said Tim Donk, vice president of sales. “They’re not getting many new orders, and the ones they are getting are for post-Chinese New Year. There’s too much inventory, and business is soft.

“We’re not necessarily worried,” Donk continued. “We introduced two groups at market that we’re not expecting until April anyway. We have enough existing inventory, and we can pull from our warehouse. We’re sitting in a good position with our domestic factory.”

Christian Rohrbach, president of solid wood importer A-America, also confirmed the extended closure.

“What we’re hearing is that factories are closing for the Lunar New Year anywhere between two and four weeks,” he said. “Normally they close one to two weeks. Now that is subject to change. Orders are down, so they want to consolidate.”

Like Hayes and Donk, Rohrbach isn’t too concerned.

“It wouldn’t be a huge effect,” he said. “As long as you’re projecting out for it, it shouldn’t be too bad. Now if it happened last year when inventory was down, it would be a lot worse. But luckily, much of the industry has strong inventory positions. But it’s still a negative, of course.”

Several other importers told Furniture Today that they’ve heard about an extended closure but weren’t confident enough to be quoted. The consensus seems to be that an increased downtime will occur, although it isn’t quite certain of how long it will be.

A few Vietnamese business publications have issued ominous warnings on the situation. One, from VnExpress titled “Factories brace for ‘cold winter’ as Western orders decline”, said factories are preparing for the worst as orders plunge from the U.S. and Europe. One factory already terminated the contracts of more than 1,100 of its workers.

The S&P Global Vietnam Manufacturing Index, which tracks Vietnam’s manufacturing output, measured a 13-month low in October.

“Although expected improvements in new orders and a lack of COVID-19 disruption meant that manufacturers remained optimistic that output will rise over the year ahead, confidence dropped to a 13-month low amid some concerns around signs of waning demand,” said Andrew Harker, S&P economics director.