Textile company sells land after laying off thousands of workers

Garmex Saigon wants to sell two plots of land in Ba Ria - Vung Tau and Quang Nam after cutting nearly 2,000 workers due to lack of orders.

In a recent shareholder consultation document, Garmex Saigon Joint Stock Company (GMC) wants to transfer land use rights and all assets attached to land in Ba Ria - Vung Tau and Quang Nam , with a total area of 76,000 m2. Both are under the ownership and use rights of GMC and its subsidiaries. The price and transfer time have not been determined.

Selling assets is the next move of this business after cutting nearly 2,000 employees by the end of 2023, in the context of business crisis, no orders.

According to the policy proposed at the extraordinary meeting at the end of September 2023, GMC will auction machinery and equipment to collect about 30 billion VND. The company will also liquidate by selling by weight all kinds of tools, equipment and machinery that have no value.

Since the beginning of the year, Garmex Saigon has continuously organized auctions to liquidate many assets and machinery, such as cars, embroidery machines, trucks... for more than 2.2 billion VND.

Workers at Garmex Tan My factory (Ba Ria - Vung Tau). Photo: GMC — Workers at Garmex Tan My factory (Ba Ria - Vung Tau). Photo: *GMC*

Last year, the company's revenue decreased nearly 35 times compared to the same period, reaching VND8.6 billion. The reason was a sharp decrease in orders, mainly individual orders, small quantities, and low unit prices. From the third quarter of 2023, GMC had no orders at all. The company lost nearly VND52 billion after tax despite maximum cost reduction.

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. Before the pandemic, GMC created jobs for more than 4,000 workers in 2019. During that period, the company recorded a revenue of thousands of billions and a profit of more than 100 billion VND a year. In 2021 - when the Covid-19 pandemic broke out, GMC still made a profit of more than 43 billion VND. This business suffered its first loss in 2022 when export orders decreased sharply, with sales dropping by 93% compared to the previous year.

The loss forced Garmex Saigon to temporarily suspend production to reduce losses and save costs. In two years, about 3,775 workers lost their jobs at Garmex Saigon.

In 2023, textile and garment exports will decrease by more than 9% compared to 2022, reaching more than 40 billion USD. Difficulties will continue to spread this year as the industry is still affected by the global economic recession. Textiles and garments are expected to continue to face difficulties in the first half of the year.

According to the Ho Chi Minh City Textile, Embroidery and Knitting Association, many export groups have improved in the first two months of the year, but textiles and garments are still sluggish. Some businesses with export orders at the beginning of the year are mostly small and accept to break even to provide jobs for workers and maintain production.

In this context, Garmex Saigon's management board said that the company's operations focus on asset protection, liquidation of long-term inventory of raw materials, as well as planning to exploit unused premises and transfer assets.

Siddhartha

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