Textile and garment company cuts nearly 2,000 workers, says 'the more it works, the more it loses'

Garmex Saigon, the unit that cut 1,945 employees, said that if it continued production, it would lose more money, so it chose to save costs and only recruit when the market is favorable.

Garmex Saigon Joint Stock Company (GMC) has just responded to the Ho Chi Minh City Stock Exchange (HoSE) about its production and business activities. This company announced that the number of employees as of the end of September was 37, a decrease of 1,945 people compared to the beginning of the year.

General Director Nguyen Minh Hang said the company's business situation is not favorable. "If we keep production at factories in the garment industry, we will lose a lot of money. The company has reorganized its apparatus, continued to cut labor, and temporarily stopped production to minimize losses," Ms. Hang explained.

The financial report also shows GMC's poor business situation. This enterprise has had 4 consecutive quarters of losses. In the first 9 months of the year, the company recorded only over 8 billion VND in revenue, while in the same period it had over 245 billion VND. Garmex Saigon lost over 44 billion VND, 6 times higher than in the first 9 months of 2022. Accumulated loss up to the end of the third quarter was nearly 66 billion VND.

Management said that in the third quarter, the company had no orders, all revenue came from the service sector. GMC reduced costs but the increase in land rental prices contributed to the increase in losses.

In an extraordinary meeting at the end of September, the company said it had 35 employees with expenses of more than 650 million VND per month. The management board has agreed with employees to reduce salaries since the first months of the year and will continue to reduce reasonable expenses.

Garmex Saigon has been operating for more than 20 years and is one of the garment manufacturers with a large market share, working with many international brands. In the near future, the company's management believes that the textile and garment industry has not had any major fluctuations, there is still a lot of inventory in other countries, the demand in the European and American markets has not grown much, new orders are few, and the goods are of low value. GMC believes that it will take three more quarters (ie until the second quarter of 2024) to know the recovery situation of the industry.

Faced with the above situation, Garmex Saigon said it has not yet recruited workers for the traditional industry. When the favorable conditions in the market are found, the company will invest in restoring the garment industry.

At the same time, GMC is implementing maximum cost savings and diversifying its business to avoid risks. In the short term, the company will invest in real estate with a housing project. GMC is also selling unused assets. In November, the company will auction 9 trucks with a total starting price of more than 3 billion VND.

The company has 5 factories with a total area of over 10 hectares and 70 production lines. Before the pandemic, GMC created jobs for more than 4,000 workers in 2019.

In the previous period, the company recorded a revenue of thousands of billions and a profit of more than 100 billion VND a year. Even at the peak of the epidemic in 2021, GMC still made a profit of more than 43 billion VND. This enterprise suffered its first loss in 2022 when export orders decreased sharply, with export sales dropping by 93% compared to 2021.

Siddhartha

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