Danish shoemaker ECCO to close Vietnam factory, affecting over 1,600 workers

Production at the ECCO Vietnam factory in Bau Bang Industrial Park of Bau Bang Commune officially stopped at 2:00 pm on Monday.

The decision was announced by Petr Milan, general director of ECCO Vietnam, during a same-day meeting with employees, according to the Ho Chi Minh City Export Processing and Industrial Zones Authority (HEPZA).

The company attributed the closure to several years of declining demand and ECCO Group’s global manufacturing restructuring plan.

Citing significant excess production capacity, the group intends to concentrate manufacturing at a smaller number of existing factories to ensure long-term sustainability.

Earlier, a TikTok video posted by the Nguoi Bau Bang account showed a person believed to be an ECCO Vietnam employee announcing the company’s dissolution at what appeared to be its manufacturing facility.

A source from ECCO Vietnam confirmed to Tuoi Tre (Youth) online newspaper that the announcement had been officially communicated to employees, although the company had not yet released the information publicly.

The ECCO Vietnam representative said employees not selected to remain during the liquidation process will have their labor contracts terminated on November 30 this year, or earlier if their contracts expire before then.

A limited number of workers will remain temporarily to support dissolution procedures.

During the transition period, workers will continue to receive benefits in accordance with labor regulations and their employment contracts.

The company pledged to fully pay outstanding wages, unused annual leave, and other legally required payments.

Additional goodwill support payments will be offered, with specific amounts communicated individually to employees.

Social insurance records and related employment documents will be completed and returned.

Truong Van Phong, deputy head of HEPZA, told Tuoi Tre that ECCO Vietnam planned to end its operations in the country to focus on expanding its main factory in Denmark.

He said the company had committed to fulfilling all obligations concerning wages and employee benefits, adding that no outstanding social insurance payments had been reported.

HEPZA officials already met with the company alongside representatives of the city’s labor federation and local authorities to discuss workers’ rights and benefits.

The authority will also guide the company through the required shutdown procedures and coordinate efforts to connect affected employees with nearby businesses seeking workers, Phong said.

Founded in Denmark in 1963, ECCO is a footwear brand with a manufacturing presence in Vietnam.

The Bau Bang shoe factory project broke ground in October 2019 on a 120,000-square-meter site, with a total floor area of more than 24,000 square meters and a registered investment of US$38.18 million.

The factory began operations in April 2020.

First licensed on April 3, 2017, the project was authorized to operate until June 30, 2057.

The factory was registered to produce 8.1 million footwear products and components annually.

It also registered annual production capacities of two million shoe brushes and accessories made from fur leather, as well as two million products made from synthetic leather.

According to information published by the former Bau Bang Labor Federation in 2025, ECCO Vietnam had 1,620 employees when it held its 2025 workers’ conference.

The company reported revenue of $42.2 million in 2024.

Nguyen Van Khanh, vice-chairman of the Ho Chi Minh City Shoes and Leather Association, told Tuoi Tre that the association had not received specific information about the closure, adding that ECCO Vietnam is not an association member.

Khanh said intense competition and broader difficulties facing the footwear industry could have affected the company’s operations, but the association would need to gather more information before drawing conclusions about the reasons for its dissolution.

Vietnam’s footwear industry has seen little improvement in production and business conditions during the first 10 months of this year.

Orders have been slow to arrive, export markets remain unstable, price competition has intensified, and production costs and bank interest rates continue to put pressure on manufacturers.

Prolonged geopolitical conflicts have also affected trade prospects, particularly in major export markets such as the U.S. and Europe.

The Russia-Ukraine conflict has made it harder for businesses to forecast demand and develop long-term production plans, Khanh said.

Manufacturers must also meet increasingly demanding requirements involving labor, raw materials, logistics and environmental standards, adding to costs and further challenging the industry’s competitiveness.