Apparel maker Makalot Industrial Co (聚陽實業) yesterday said it aims to invest from US$5 billion to US$10 billion on capital expenditure this year, in a bid to expand capacity in Vietnam and Indonesia.
“We plan to raise the production capacity of our existing plants in both countries, as Makalot follows its business strategy to diversify operational risks,” company spokesman David Lieu (廖維) told the Taipei Times yesterday.
Factories in Vietnam contributed 34 percent of Makalot’s total capacity last year, while those in Indonesia took up 32 percent.
The Taipei-based company also operates plants in China, the Philippines and Cambodia.
Asked about its plants in China, Lieu said the company has no plans to withdraw from the Chinese market, despite soaring labor costs there.
Makalot’s local peer, Eclat Textile Co (儒鴻), has decided to sell its last plant in China, due to increasing labor costs and high employee turnover.
“Given manufacturing clusters [in China], we still hope to join the global supply chain of apparel,” Lieu said, citing that plants in China only accounted for 7 percent of Makalot’s total capacity last year.
The company is also considering setting up a new plant in the US or in Latin America to reduce tariffs and transportation costs, in response to US President Donald Trump’s call to bring manufacturing back to the US.
The US imposes tariffs on Taiwanese exporters of between 5 and 30 percent, Lieu added.
Looking ahead, the company voiced optimism about the sales outlook for this year, saying that it expects revenue to pick up in the second quarter.
Makalot said it is to add two European clients and one from Japan this year, in an effort to reduce reliance on US customers.
Revenue from the US contributes nearly 80 percent of the company’ total sales, while sales in Japan account for 20 percent, data showed.
The garment maker yesterday reported revenue of NT$1.81 billion (US$58.15 million) last month, a 22.89 percent decline from the same period last year, with company officials attributing the figure to fewer working days because of the Lunar New Year holiday and foreign-exchange losses.
For the whole of last year, Makalot saw cumulative revenue drop 5.3 percent year-on-year to NT$22.13 billion, because of a decrease in orders from its branded customers from the US.
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