Danish footwear maker ECCO halts Vietnam factory operations

Danish footwear maker ECCO halts Vietnam factory operations

Danish footwear manufacturer ECCO Sko A/S has ceased all production and business operations at its Vietnam factory as part of its dissolution procedures, affecting more than 1,600 workers.

Photo: Obayashi Vietnam

The factory, located in Bau Bang Industrial Park in Ho Chi Minh City, halted production on November 2, according to Ho Chi Minh City Export Processing Zones and Industrial Parks Management Board. The company employs 1,611 people, including 259 outsourced workers.

The move is part of ECCO Group's global restructuring strategy to reduce costs amid a challenging economic environment. After years of declining demand and significant overcapacity, the group aims to concentrate production at a few existing plants, with a focus on expanding its headquarters in Denmark and other existing factories to achieve long-term sustainability.

A small number of employees will remain over the next few months to assist with completing the dissolution process in accordance with regulations. They will be informed of their subsequent working arrangements. The employment contracts of most employees will be terminated on November 30.

Established in Denmark in 1963, ECCO is a footwear brand with manufacturing operations in Vietnam.

Construction of the Bau Bang footwear factory began in October 2019 across 120,000 square metres, with registered investment capital of $38.18 million. The facility commenced operations in April 2020.

As reported by Women's Wear Daily, ECCO has also decided to cease operations at its Portugal factory, which has about 650 workers. The Danish shoemaker's global restructuring also includes about 400 additional positions that will be lost across global and regional functions.

ECCO has been under pressure over the years. All sales channels experienced declining sales, most profoundly in its own operated direct-to-consumer business.

VIR