Outdoor financials: Nike to close China factories

Nike to close three China factories

Nike Inc (NYSE: NKE) said it plans to halt production at three shoe factories in China and one in Vietnam to reduce output and streamline its supply chain as a result of declining consumer demand.

According to a Reuters report, Nike might also pull apparel orders from other factories around the world. The report goes on to say that Nike uses about 640 factories around the world to produce apparel, footwear and other goods. Nike did not disclose the locations of the factories it might close, but it is the main buyer or sole buyer at all four, which produce shoes for Nike.

Erin Dobson, Nike’s director of corporate responsibility, told Reuters that once the decision is made to close the factories, it will take six to 12 months to phase out orders completely.

“We have begun notification to four factories that we will be discontinuing orders with them,” Dobson told Reuters. “The goal with giving them six to 12 months is it gives them the opportunity to seek new buyers.”

According tot he report, Nike makes most its shoes in China, Vietnam and Indonesia, and Dobson said China will remain the company’s largest producer of footwear, equipment and apparel.