Kieran Magnes – September 24th, 2021
Nike Inc, known for their signature slogan “Just Do It,” has shown that despite their commanding share in the global footwear and apparel industries, overseas supply-chain issues have slowed production and led to an underwhelming performance in the summer quarter. Inti Pacheco of the Wall Street Journal notes that “more than half of Nike’s footwear and about a third of its apparel manufacturing comes from Vietnam.” And while Vietnam’s apparel manufacturers have been supplying American consumer markets for years, a recent uptick in COVID cases in the nation has led to closures of all garment manufacturing plants until at least October 1st.
These findings call into question the changing nature of doing business overseas in a globalized world still in the grips of the COVID-19 pandemic. While the standard course of operations for companies like Nike has, for some time, been to utilize overseas markets and manufacturing as much as possible, Nike’s recent market flop will serve as a warning sign for other companies that rely on overseas manufacturers in their supply chain.
Citing concerns over the health of the U.S. apparel industry’s future, Nike and several other major shoe and apparel companies authored a letter to President Biden in mid-August urging his administration to increase the speed and volume of COVID-19 vaccination donations to Vietnam. As of now, the Biden administration has “delivered six million vaccine doses to Vietnam since July” (Pacheco, WSJ).
Just how much these supply chain issues will hamper Nike’s ability to deliver on its high demand during the holiday season is still yet to be seen. However, consumers would be wise to seek out alternative gift ideas for their friends and family this holiday season.
Original Source: Wall Street Journal, “Nike’s Revenue Pinched By Supply Chain Disruptions”