Cut shifts or ramp up output? Vietnam's exporters face dilemma amid tariff chaos

Yahoo

17-04-2025

By Francesco Guarascio and Khanh Vu
HANOI (Reuters) - Some factory workers in Vietnam have been told to increase output of products for the U.S. market, while others have had their shifts cut to three per week as U.S. orders were postponed or cancelled, industry executives said.
The radically diverging strategies, largely the result of shifting U.S. orders, show the chaotic reaction of exporters in the Southeast Asian industrial hub, which was slapped by the Trump administration with 46% tariffs before most duties were paused until July.
"Factories change their production plan and human operations too, dividing work shifts to Mon-Wed-Fri and Tue-Thu-Sat instead of working full time, as huge orders are on hold," said Calvin Nguyen, the head of Vietnamese logistics firm WeDo Forwarding.
He cited three companies producing garments, shoes and agricultural goods that changed their work plans because orders were postponed even after U.S. President Donald Trump paused "reciprocal" tariffs on April 9.
Two business surveys and another three industry sources confirmed cost-cutting measures by companies in Vietnam and foreign firms' pausing of investments.
Vietnam is a major exporter of footwear and apparel to the United States - manufactured by dozens of suppliers to large multinationals, such as Nike, Adidas and Gap.
A survey of 183 European businesses in Vietnam conducted by the European chamber of commerce from April 4-9 found most were considering cuts in response to tariffs, including workforce reduction and downsizing operations.
POWERING DOWN
In the electronics sector, which represents the largest share of Vietnam's multi-billion-dollar exports to the U.S., top investor Samsung Electronics briefly ramped up production before tariffs kicked in, two workers said, and is considering adjusting production.
South Korea's LG Electronics, a maker of home appliances, suspended production of refrigerators at its factory in northern Haiphong city, according to a survey conducted by local authorities and posted online last week before being deleted.
The survey results, which were still visible on local media on Thursday, also showed LG had stopped investing in expanding microwave oven production at that factory.
A spokesperson for LG Electronics said the company was monitoring the situation in Vietnam and managing production "flexibly".
The survey found that in the Haiphong area, the company most affected by possible 46% tariffs would be Taiwanese electronics manufacturer Pegatron, which did not reply to a request for comment.
However, as tariffs are paused, Pegatron is boosting its output.
"In the next three months, their production of U.S. products will rapidly increase," said a person briefed by Pegatron in Vietnam, declining to be identified because the information was not public.
"Warehouses in the U.S. will be bursting with products in the months to come".