Denim fabric, jeans maker to close factory in Miaoli

Taipei, Nov. 22 (CNA) Nien Hsing Textile Co., one of Taiwan's leading denim fabric and jeans makers, announced Tuesday night that it will close a factory located in Houlong Township of Miaoli County in response to a decline in orders.

Nien Hsing President Andy Tsai (蔡樹軒) said at a press conference that the Houlong factory has run heavy losses amid weakening demand, prompting the company to shut down the facility soon after it delivered its remaining orders on hand.

The closure, approved by Nien Hsing's board of directors, will lead to the layoff of 600 to 700 employees, Tsai said.

He promised that Nien Hsing will follow local labor rules in reporting its layoff plan to the authorities and providing the affected workers compensation.

Tsai said the factory's business was affected not only by weak global demand but also huge fluctuations in international cotton prices and labor shortages in Taiwan.

Founded in 1986, Nien Hsing ranks as the six largest denim fabric producer in the world and provides one-stop-shop contract manufacturing services to its clients. Levi's is believed to be one of Nien Hsing's biggest clients.

Its main production bases outside of Taiwan are in Vietnam, Mexico and Lesotho.

According to Tsai, the Houlong factory posted a pre-tax loss of NT$220 million (US$7.01 million) in the first 10 months of this year, while accounting for about 18.8 percent of Nien Hsing's NT$5.24 billion in consolidated sales during the same period.

The Houlong plant was also underutilized, Tsai said, averaging production of only 1.07 million yards of denim fabric a month, or about 76.4 percent of its capacity of 1.4 million yards a month.

The closure will enable Nien Hsing to cut its losses, strengthen its operations, and shore up shareholder equity, Tsai said.

In the first three quarters of 2023, Nien Hsing posted a loss per share of NT$1.23, compared with NT$2.36 in earnings per share over the same period of 2022.

In response, Wang Hao-chung (王浩中), head of the Labor and Youth Development Department of the Miaoli County Government, said Wednesday that the department has not received any reports of major layoffs from Nien Hsing, but it will keep a close eye on the matter.

To his knowledge, Wang said, Nien Hsing has a workforce of more than 790, including about 200 migrant workers.

Earlier this month, Nien Hsing reported to labor authorities that it was laying off 11 workers, Wang said.