Pou Chen Corp (寶成工業), the world’s largest maker of sports shoes, apparel and accessories, is mulling pay cuts and furloughs for its Taiwanese employees as orders slump amid the COVID-19 pandemic.
The Taichung-based company — whose clients include Nike Inc, Adidas AG, Puma AG, New Balance Athletic Shoe Inc and Timberland Co — is contemplating temporary pay cuts of 10 percent, furloughs and other cost-saving measures that would affect 3,000 employees in Taiwan and officials based in overseas factories.
Pou Chen spokesman Ho Ming-kun (何明坤) told reporters that the firm has not made a final decision, as it requires the consent of its workers’ union and the government.
Photo: AFP
The 51-year-old company is seeking to furlough employees for six days per month for three months, which might be extended depending on how the pandemic pans out, Ho said.
“It is better to be furloughed than laid off” in hard times, local Chinese-language media quoted Pou Chen employees as saying after a meeting with officials about the issue on Monday night.
Pou Chen’s first-quarter revenue tumbled 22.4 percent year-on-year to NT$59.46 billion (US$1.98 billion), the weakest in six years, company data showed.
Orders have reportedly plummeted 50 percent in the current quarter, with little visibility beyond, analysts said.
Nike, Adidas and other international sports brands have shut down retail outlets in the US, Europe and elsewhere to support social distancing orders by governments around the world to curb the spread of the virus, analysts said, adding that indefinite suspensions of major sports events have compounded the problem.
The company’s original equipment manufacturing (OEM) business for major footwear brands reported that sales declined by up to 16.4 percent year-on-year in the first two months of this year, Yuanta Securities Investment Consulting Co (元大投顧) said in a note earlier this month.
“Pou Chen’s OEM shoe sales volume was 322.4 million units in 2019, down 1.1 percent year-on-year,” Yuanta said. “Given that 60 percent of its OEM shoe business is from the EU and US markets, which will likely be impacted by COVID-19 in the first half of 2020, we estimate its OEM shoe business sales would fall by up to 10 percent year-on-year this year.”
The proposed 10 percent pay cuts would apply to employees and officials, including CEO Tsai Pei-chun (蔡佩君), daughter of the company’s founder, Tsai Chi-jui (蔡其瑞), media reports said.
It would be the first time Pou Chen had invoked such measures to stay afloat, and it said it hoped employees would understand and help the company survive the crisis. Pou Chen employs 350,000 workers at factories in China, Vietnam and Indonesia.
Operations in overseas markets are not covered by the belt-tightening scheme, local media said.
Shares of Pou Chen yesterday fell 5.54 percent to NT$27.30 in Taipei trading, underperforming the broader market’s 2.82 percent decline, Taiwan Stock Exchange data showed.
Earlier, the firm’s Vietnamese unit, Pouyuen Vietnam Co, suspended production for two days after failing to meet local rules on social distancing to curb the outbreak.
The EU and US are nearing an agreement to coordinate on producing and securing critical minerals, part of a push to break reliance on Chinese supplies. The potential deal would create incentives, such as minimum prices, that could advantage non-Chinese suppliers, according to a draft of an “action plan” seen by Bloomberg. The EU and US would also cooperate on standards, investments and joint projects, as well as coordinate on any supply disruptions by countries like China. The two sides are additionally seeking other “like-minded partners” to join a multicountry accord to help create these new critical mineral supply chains, which feed into
For weeks now, the global tech industry has been waiting for a major artificial intelligence (AI) launch from DeepSeek (深度求索), seen as a benchmark for China’s progress in the fast-moving field. More than a year has passed since the start-up put Chinese AI on the map in early last year with a low-cost chatbot that performed at a similar level to US rivals. However, despite reports and rumors about its imminent release, DeepSeek’s next-generation “V4” model is nowhere in sight. Speculation is also swirling over the geopolitical implications of which computer chips were chosen to train and power the new
Elon Musk’s lieutenants have reached out to chip industry suppliers, including Applied Materials Inc, Tokyo Electron Ltd and Lam Research Corp, for his envisioned Terafab, early steps in an audacious and likely arduous attempt to break into the production of cutting-edge chips. Staff working for the joint venture between Tesla Inc and Space Exploration Technologies Corp (SpaceX) have sought price quotes and delivery times for an array of chipmaking gear, people familiar with the matter said. In past weeks, they’ve contacted makers of photomasks, substrates, etchers, depositors, cleaning devices, testers and other tools, according to the people, who asked not to
Japan approved ￥631.5 billion (US$3.97 billion) in additional subsidies to hasten Rapidus Corp’s entry into the high-stakes artificial intelligence (AI) chipmaking arena, ramping up support for a project widely regarded as a long shot. The capital is intended to bankroll Rapidus’ work for information technology firm Fujitsu Ltd, one of the initial customers that Tokyo hopes would get the signature endeavor off the ground. The new money raises the fees and investments that the government is injecting into the start-up to ￥2.6 trillion by the end of the current fiscal year to March next year, the Japanese Ministry of Economy, Trade and
RSS