Nike Banten Factories Lay Off Thousands: The Reason
- Jakarta, March 6, 2025 - The manufacturing sector in Indonesia faces new challenges as two shoe factories, suppliers for international brands, have reportedly laid off thousands of workers.
- The companies, PT Adis Dimension Footwear and PT Victory Ching luh Indonesia, have been impacted.
- This news surfaces amidst reports of indonesian manufacturing activity reaching its highest level since March 2024.
Indonesia’s Textile Industry Faces Job Losses Amid Order Declines
Table of Contents
- Indonesia’s Textile Industry Faces Job Losses Amid Order Declines
- indonesia Textile industry layoffs: Q&A on Causes,Impact,and Future
- Why are Indonesian shoe factories laying off workers?
- How many workers have been laid off?
- When did these Textile Industry Layoffs start?
- What are the primary reasons for these layoffs in the Textile Industry?
- What are bonded zones and how do they impact production costs?
- How does Indonesia’s minimum wage (UMR) affect the textile industry?
- What are APRISINDO’s concerns and proposed solutions?
- Are the factories ceasing operations entirely?
- Is this situation unique to Indonesia?
- How is Vietnam handling similar challenges?
- What is the outlook for the future of the textile industry in Indonesia?
- Key Takeaways: Indonesia Textile Industry Layoffs
Jakarta, March 6, 2025 – The manufacturing sector in Indonesia faces new challenges as two shoe factories, suppliers for international brands, have reportedly laid off thousands of workers. These factories are located in Tangerang Regency, Banten.
The companies, PT Adis Dimension Footwear and PT Victory Ching luh Indonesia, have been impacted. PT Adis Dimension footwear reportedly laid off approximately 1,500 workers, while PT Victory Ching Luh reduced its workforce by about 2,000 employees. According to its official website,PT Victory chingluh Indonesia,located in Pasar Kemis,Tangerang,Banten,produces goods for Nike.
This news surfaces amidst reports of indonesian manufacturing activity reaching its highest level since March 2024.
S&P Global reported on Monday,March 3,2025,that Indonesia’s Purchasing Manager’s Index (PMI) for February 2025 reached 53.6, a notable increase of 1.7 points from January 2025’s 51.9. A reading above 50 indicates that Indonesian manufacturing is in an expansion phase.
previously, the ministry of Industry (Kemenperin) also noted that the Industrial Confidence Index (IKI) for February 2025 rose by 0.05 points compared to January 2025, reaching 53.15, and surged by 0.59 points from the same month in 2024.
Mass Layoffs Confirmed: What’s Behind the Textile Industry Downturn?
Yoseph Billie Dosiwoda, Executive Director of the Indonesian Footwear association (APRISINDO), confirmed the mass layoffs. He stated that layoffs are a measure companies try to avoid, especially at the beginning of the year when employment contributes significantly to Indonesia’s economy.
Information is correct, after communicating with Public Affair Nike. We from the association are concerned about this situation. Where our member friends try to stabilize so that layoffs do not occur.
He added that APRISINDO is concerned about the situation, as its members strive to maintain stability and avoid layoffs.
Both companies have carried out their responsibilities and provided compensation in accordance with the laws and regulations, what are the rights of workers who have been laid off.
Billie confirmed that both companies have fulfilled their obligations by providing compensation to the laid-off workers in accordance with prevailing regulations.
Root Causes of the Layoffs
Billie explained that the layoffs have been carried out in stages since November 2024.
This happens because they experience uncertain and even declining orders. And it is not balanced with the cost of production as a company in a bonded zone that specifically exports abroad (internationally).
He noted that the situation is a result of fluctuating and declining orders,coupled with high production costs for companies in bonded zones that primarily export.
This condition has to be done as a way taken by the company as of the high cost of sectoral wages and UMR in the midst of declining orders. It is indeed impossible for workers to be paid without a production process.
The high sectoral and regional minimum wages (UMR) amidst declining orders have forced companies to take this measure, as it is unsustainable to pay workers without sufficient production.
APRISINDO has also received complaints from its footwear company members regarding varying and increasing wage regulations. These regulations have made it difficult for companies to pay wages amidst uncertain order volumes.
We hope that this will be a concern for the government, especially the Ministry of Manpower and the Provincial Manpower Office in improving and implementing wage regulations that are a win-win solution, mutually beneficial so that layoffs do not occur by creating a conducive business climate in this region.
billie hopes the government, notably the Ministry of manpower, will address these issues and implement mutually beneficial wage regulations to prevent further layoffs and foster a conducive business environment.
Billie confirmed that both companies are not ceasing production operations.
Until now, the two factories have not closed, it is still limited to reducing workers with layoffs that are being handled by the company.
He clarified that the factories are still operational, with the layoffs being a measure to reduce the workforce.
As a comparison, is this condition experienced by Nike in other countries? Yes. Vietnam is also experiencing the same thing. Decreasing orders and uncertain. but not yet or not doing layoffs because the business climate is good including wage governance can still be overcome. This is the differentiating situation.
billie noted that similar conditions are affecting Nike in other countries, such as Vietnam, where declining orders are also a concern. However, Vietnam has not implemented layoffs due to a more favorable business climate and manageable wage governance.
He hopes that further layoffs can be avoided in the future, although the situation remains unpredictable.
For example, in Central Java, the business climate is good at the moment. Hopefully, the situation will stabilize in the future and layoffs will not spread in the labor-intensive footwear industry.
He expressed optimism that the situation will stabilize,particularly in regions like Central Java,where the business climate is currently favorable,and that layoffs will not spread further in the footwear industry.
indonesia Textile industry layoffs: Q&A on Causes,Impact,and Future
Here’s everything you need to know about the recent layoffs in Indonesia’s textile industry.
Why are Indonesian shoe factories laying off workers?
Two shoe factories in Tangerang Regency, Banten – PT Adis Dimension Footwear and PT victory Ching Luh Indonesia – have laid off a meaningful number of workers due to declining and uncertain orders coupled with high production costs. These factories, which supply international brands like Nike, are struggling to maintain operations under these conditions.
How many workers have been laid off?
PT Adis Dimension Footwear: Approximately 1,500 workers
PT Victory Ching Luh Indonesia: Approximately 2,000 workers
When did these Textile Industry Layoffs start?
The layoffs have been ongoing in stages since November 2024.
What are the primary reasons for these layoffs in the Textile Industry?
The Indonesian Footwear Association (APRISINDO) has identified the core issues behind the layoffs:
Declining Orders: Factories are experiencing a decrease and fluctuation in order volumes.
High Production Costs: Companies in bonded zones that export internationally face elevated production expenses.
High Wages: Increasing sectoral and regional minimum wages (UMR) make it challenging for companies to sustain operations when orders decline.
What are bonded zones and how do they impact production costs?
Bonded zones are designated areas where companies receive special customs, tax, and other regulatory treatment related to manufacturing for export. While these zones aim to boost exports, companies within them can still face high production costs due to factors like imported raw materials, utilities, and rising wages.
How does Indonesia’s minimum wage (UMR) affect the textile industry?
The rising sectoral and regional minimum wages (UMR) in Indonesia put additional financial strain on companies, especially when they’re already dealing with declining orders. Businesses find it challenging to balance wage costs when production volumes are insufficient. This situation forces companies to consider layoffs as a cost-cutting measure.
What are APRISINDO’s concerns and proposed solutions?
APRISINDO,the Indonesian Footwear Association,is concerned about the instability and potential for further job losses. They are advocating for:
Government Intervention: APRISINDO hopes the Ministry of Manpower and Provincial Manpower Offices will address the issue.
Wage Regulation Reform: Implementation of mutually beneficial wage regulations that create a more conducive business habitat is needed.
Win-win Solutions: APRISINDO seeks solutions where businesses can thrive without resorting to layoffs.
Are the factories ceasing operations entirely?
No. Both PT Adis Dimension Footwear and PT Victory Ching Luh Indonesia are still operational. The layoffs are a measure to reduce the workforce and manage costs, not a complete shutdown of production.
Is this situation unique to Indonesia?
No. Yoseph Billie Dosiwoda, Executive Director of APRISINDO, pointed out that Nike is facing similar challenges in other countries, including vietnam.
How is Vietnam handling similar challenges?
While Vietnam is also experiencing declining orders, it hasn’t implemented layoffs on the same scale. This is attributed to a more favorable business climate and manageable wage governance in Vietnam. These conditions enable factories to weather the downturn without resorting to significant workforce reductions.
What is the outlook for the future of the textile industry in Indonesia?
The future remains uncertain. APRISINDO hopes that the government will address the issues and implement more supportive regulations to prevent further layoffs and foster a stable business environment, especially in labor-intensive regions. central Java currently has a more favorable business climate, offering hope for stability in that region.
Key Takeaways: Indonesia Textile Industry Layoffs
| Factor | Impact |
| ————————— | —————————————————————————————————————— |
| Declining Orders | Reduced production capacity,lower revenues,and financial strain on companies. |
| High Production Costs | Eroded profit margins and decreased competitiveness in the global market. |
| Rising Minimum Wages (UMR) | Increased operational expenses and a more challenging environment for labor-intensive industries. |
| Government Regulations | Potential for reforms to stabilize the business climate and prevent further layoffs. |