Nien Hsing Textile Co (年興紡織), one of Taiwan’s leading denim fabric and jeans makers, on Tuesday night announced that it would close its factory in Miaoli County’s Houlong Township (後龍) due to falling orders.
Nien Hsing president Andy Tsai (蔡樹軒) told a news conference that the factory was running at a heavy loss amid weakening demand, and would be shut down soon after its remaining orders have been delivered.
The closure, approved by Nien Hsing’s board of directors, would result in 600 to 700 employees being retrenched, Tsai said.
Nien Hsing would follow local labor rules, reporting its layoff strategy to the authorities and compensating affected workers, he said.
The factory’s business was affected not only by weak global demand, but also huge fluctuations in international cotton prices and a labor shortage in Taiwan, Tsai said.
Founded in 1986, Nien Hsing is the sixth-largest denim fabric producer in the world and provides its clients with one-stop contract manufacturing services. Levi Strauss & Co is believed to be one of Nien Hsing’s biggest clients. Its main production bases outside of Taiwan are in Vietnam, Mexico and Lesotho.
The Houlong factory posted a pre-tax loss of NT$220 million (US$6.96 million) in the first 10 months of this year, Tsai said.
The company’s consolidated sales totaled NT$5.24 billion over the period, he added.
Factory utilization was low, averaging production of only 1.07 million yards (978,408m) of denim fabric a month, or about 76.4 percent of its capacity of 1.4 million yards a month, he said.
The closure would enable Nien Hsing to cut its losses, improve its operations and shore up shareholder equity, Tsai said.
In the first three quarters of this year, Nien Hsing posted losses per share of NT$1.23, compared with earnings per share of NT$2.36 over the same period last year.
Wang Hao-chung (王浩中), head of Miaoli County Government’s Labor and Youth Development Department, yesterday said that the department had not received any reports of major layoffs from Nien Hsing, but would keep a close eye on the matter.
To his knowledge, Nien Hsing has a workforce of more than 790, including about 200 migrant workers, Wang said.
Earlier this month, Nien Hsing reported to labor authorities that it was laying off 11 workers, he added.
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