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ECCO Vietnam suspended operations at its facility in Bau Bang Commune, Ho Chi Minh City, on Monday afternoon as it initiated the process of winding down the company.

The shutdown will impact over 1,600 employees.

Truong Van Phong, deputy director of the Ho Chi Minh City Export Processing and Industrial Zones Authority (Hepza), stated on Tuesday that ECCO Sko A/S, the Danish parent company, had chosen to dissolve ECCO Vietnam Co., Ltd.

The decision was driven by prolonged declines in market demand, leading to underutilized production capacity.

This closure is part of the company’s broader global strategy to streamline manufacturing by concentrating operations in fewer facilities.

ECCO Vietnam’s factory headquarters located in Bau Bang Industrial Park, Bau Bang Commune, Ho Chi Minh City, November 2, 2026. Photo by An Phong

Workers who are not offered new positions will have their employment contracts terminated by November 30, or earlier if their contracts naturally expire before then.

A limited number of staff will remain on board for several months to support the ongoing dissolution procedures.

The company has committed to settling all unpaid wages, compensation for unused annual leave, and other entitlements as required by law.

Beyond the legally mandated severance pay, employees will receive half a month’s base salary for every full year of service, with any tenure under 12 months counted as a full year.

Employees will also be granted a pro-rated 13th-month salary based on the portion of the year they were employed.

Workers who assist in the company’s dissolution process will get an extra bonus equal to 50% of one day’s base salary for each day worked.

ECCO Vietnam has further pledged to finalize employees’ social insurance contribution records and return all related documents to them.

Phong stated that the company has not failed to pay social insurance contributions.

On Monday afternoon, representatives from Hepza, the Ho Chi Minh City Labor Federation, and local authorities convened with company management, urging them to honor all promises regarding employee benefits and to support workers’ reemployment with other firms.

As of Monday, Phong reported that at least eight nearby companies had shown interest in hiring approximately 1,611 workers.

He stated that Hepza, trade unions, and local government bodies would work together to assist affected employees in securing new employment opportunities.

Phung Thai Quang, deputy head of the Ho Chi Minh City Labor Federation, mentioned he had directed trade unions at industrial zones and individual companies to examine employee lists and offer assistance to those who lost their jobs.

The city’s Trade Union Labor Consultation and Support Center will assess the policies announced by ECCO Vietnam against legal standards and oversee their execution.

Workers assembled at the ECCO Vietnam headquarters in HCMC following the announcement of its closure. Photo provided by workers

ECCO is a Danish footwear brand established in 1963. Its facility in the Bau Bang Industrial Park, located in the former Binh Duong Province, started operations in April 2020.

The 12-hectare factory cost VND861 billion (US$34 million) and has an annual production capacity of 8.1 million footwear items and components.

The closure of ECCO Vietnam occurs despite ongoing challenges in finding job openings within the footwear sector.

According to the Ho Chi Minh City Employment Service Center, in October, the garment, textile, and footwear industries had 1,306 job openings but received applications from 2,473 job seekers.