Garmex Saigon Joint Stock Company (GMC) will cut nearly 2,000 employees and retain only 35 people by the end of 2023 as it continues to suffer losses.
According to the financial report for the fourth quarter of 2023, the number of employees at Garmex Saigon at the end of the year was only 35, a reduction of 1,947 workers compared to the beginning of the year. This cut was even more severe than in 2022, when GMC reduced 1,828 jobs. Thus, about 3,775 people have lost their jobs at Garmex Saigon in the past two years.
Cutting labor is one of the main measures that this enterprise has chosen to reduce losses in 2023. Garmex Saigon's revenue only reached about 8.6 billion VND, down nearly 35 times compared to the same period. The reason is the decrease in orders, mainly individual, small quantity, low unit price. From the third quarter of 2023, this enterprise has had absolutely no orders. Despite cutting costs, the company still has a loss after tax of nearly 52 billion VND.
The management said that the business situation was not favorable, if production was maintained at the factories, "the company would lose a lot". They had to reorganize the apparatus, cut labor, and temporarily suspend production to reduce losses and save maximum costs. Labor costs alone were reduced by 6 times in 2023, to just over 11 billion VND.
The labor cut was calculated by GMC in advance when they set aside more than VND20 billion in unemployment benefits in 2022. Thanks to the pre-set provision, the company's loss in 2023 improved by 39% over the same period.
In an extraordinary meeting at the end of September, the company said that with 35 employees, the cost is about 650 million VND per month, with each person receiving an average salary of about 18.6 million VND. The Board of Directors has negotiated with employees to reduce salaries since the first months of the year and will continue to reduce reasonable expenses. Last year, the company did not pay remuneration to Chairman of the Board Nguyen Viet Cuong, while General Director Nguyen Minh Hang received a salary and bonus of nearly 950 million VND.
Workers at Garmex Tan My factory (Ba Ria - Vung Tau). Photo: GMC
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 board 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 still few, and the goods are of low value. GMC believes that we will have to wait until the second quarter of this year to know the recovery situation of the industry.
Faced with the above situation, Garmex Saigon said it has not recruited workers for the traditional industry yet. When it realized the favorable conditions in the market were sufficient, the company invested in restoring the garment industry.
At the same time, GMC will maximize cost savings and diversify its business to avoid risks. In the short term, the company will invest in real estate with a housing project. GMC will also sell unused assets.
The company has 5 factories in Ho Chi Minh City, Ba Ria - Vung Tau and Quang Nam, 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. During that 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 pandemic in 2021, 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 export sales falling by 93% compared to 2021.
Siddhartha
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