GMC Sacks Over 1,800 Workers Following New Board Appointment
The Board of Directors of Garmex Saigon JSC (HoSE: GMC) has appointed Mr. Le Van Hung, an independent member of the board, as the new Chairman for the 2024-2029 term, effective July 5th. Mr. Hung, 49, holds a Bachelor’s degree in Accounting and has been an independent board member since May 2021, nominated by major shareholder, Thien Hai Trading and Investment Co., Ltd., which holds 15.86% of GMC’s capital.
Garmex Saigon’s Factory
Mr. Hung is also the CFO of Transimex Corporation (HoSE: TMS) since 2018 and holds several other prominent positions, including Chairman of Ben Thanh Service JSC (HoSE: BSC), and board member of Thuy Dac San JSC (HoSE: SPV), Vinafreight JSC (HoSE: VNF), and Trung Viet Transport and Shipping JSC (HoSE: VMT). Additionally, he serves on the board of Phu Nhuan Trading JSC (HoSE: PNG) and is a member of the Supervisory Board of Cholimex Import-Export and Investment JSC (HoSE: CLX).
The Garmex Board for the 2024-2029 term comprises four members from the previous term: Mr. Le Van Hung, Mr. Nguyen Viet Cuong, Mr. Bui Minh Tuan, and Mr. Nguyen Tran Anh Minh, along with a new member, Ms. Nguyen Thi Diem My, nominated by Giditex Garment JSC.
Similarly, the Supervisory Board for the same term includes a new member, Mr. Tu Vi Tri, alongside two existing members, Mr. Mai Thanh Tol and Ms. Tran Thi Thu Yen.
Regarding compensation for 2024, the Chairman of Garmex’s Board is expected to receive VND 6 million per month, while each board member will receive VND 5 million per month. The Supervisory Board will receive VND 4 million per month for the Chairman and VND 2.4 million per month for each member.
Garmex Saigon, once a leading garment exporter in Ho Chi Minh City, has downsized its workforce significantly, retaining only 35 employees at the end of 2023, amid continued losses. The company, which used to employ thousands of workers, has laid off over 1,800 people.
Can Garmex Turn Its Fortune Around?
Garmex Saigon, a renowned garment company in Ho Chi Minh City, has a history spanning over 20 years. Established in 1976, the company was privatized in 2004 and listed on the Ho Chi Minh Stock Exchange (HoSE) in 2006. With five factories covering an area of more than 10 hectares and 70 production lines, Garmex Saigon was a major player in the garment industry, working with numerous international brands. Prior to the COVID-19 pandemic, the company employed over 4,000 workers and generated annual revenues in the thousands of billions of VND, with profits reaching over a hundred billion VND.
Garmex Saigon, once bustling with over 4,000 workers, now has only 34 employees left.
However, the pandemic took a significant toll on the company’s performance. In 2022, Garmex’s revenue plummeted by 93% compared to the previous year, resulting in its first reported loss. The low productivity led to insufficient revenue to cover expenses. As a result, the company resorted to massive layoffs and temporarily halted production in May 2023 to mitigate further losses.
As of December 31, 2023, Garmex Saigon’s total workforce stood at just 35 people, a drastic reduction from the previous year’s count of 2,066 employees. In the span of two years (2022-2023), approximately 3,775 workers lost their jobs at Garmex Saigon, with 1,947 of those layoffs occurring in the fourth quarter of 2023 alone.
In 2023, the company reported a loss of nearly VND 52 billion, a decrease from the VND 85 billion loss in 2022. As of the end of 2023, Garmex Saigon’s accumulated loss exceeded VND 73 billion. For 2024, the company aims for a revenue of VND 50.5 billion and a net profit of VND 40 billion. In the first quarter of this year, Garmex Saigon recorded a profit of over VND 1 billion, a significant improvement from the loss of nearly VND 21 billion in the same period last year.
Currently, the company is focused on liquidating its assets. The core textile and garment business has yet to secure any new orders. Garmex Saigon has made multiple attempts to sell its unused assets, but most of these efforts have been unsuccessful.
For instance, after eight price announcements, a lot consisting of six trucks and three cars, with a total starting price of approximately VND 3 billion, failed to attract any bidders. Similarly, five attempts have been made to sell a lot of sewing machines belonging to Tan My Garment Co., Ltd. and Garmex Quang Nam Co., Ltd., both wholly-owned subsidiaries of Garmex, since the beginning of 2024, without success.
Garmex Saigon’s Factory in Quang Nam Province
Additionally, there have been six unsuccessful attempts to sell three lots of automatic cutting machines, despite reducing the starting price from over VND 7.5 billion to nearly VND 6.2 billion.
GMC also plans to sell a 5-hectare plot of land in Ha Dich, Tan Thanh District, Ba Ria-Vung Tau Province, and a 2.6-hectare plot in the Ha Lam – Cho Duoc Industrial Cluster, Binh Phuc Commune, Thang Binh District, Quang Nam Province.
During the 2024 Annual General Meeting, Garmex Saigon’s management acknowledged that without restructuring, the company’s losses could double. The restructuring process, which began towards the end of the first quarter of 2023, resulted in significant costs, including labor support and equipment depreciation. However, these costs are expected to decrease substantially this year.
In 2024, Garmex Saigon will focus on two key tasks: liquidating unused assets and recovering receivables from partners. If market conditions are favorable, successful asset liquidation and conversion into cash could provide a significant boost to the company’s resources.
Expansion of International Textile and Apparel Businesses into Vietnam
Mr. Le Hoang Tai, Deputy Director of the Department of Trade Promotion, Ministry of Industry and Trade, stated this at a press conference introducing the International Exhibition of Textile and Garment Industry and Technology 2024 (VIATT 2024) on February 23.
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