Makalot to expand production capacity of its existing plant

Makalot Industrial Co, Taipei based Apparel Company in a bid to expand production capacity of their existing plants in Vietnam and Indonesia aims to make investment from US$5 billion to US$10 billion on capital expenditure this year.

The company spokesman David Lieu said that as Makalot follows its business strategy to diversify operational risks plans to raise its existing plants production capacity in both countries.

Factories in Vietnam contributed 34 percent of Makalot’s total capacity last year, while those in Indonesia took up 32 percent.

Makalot’s local peer, Eclat Textile Co has decided to sell its last plant in China, due to increasing labor costs and high employee turnover. However, the company has no plans to withdraw from the Chinese market, despite soaring labor costs there.

Given manufacturing clusters [in China], they still hope to join the global supply chain of apparel, Lieu said, citing that plants in China only accounted for 7 percent of Makalot’s total capacity last year.

The company is also considering setting up a new plant in the US or in Latin America to reduce tariffs and transportation costs, in response to US President Donald Trump’s call to bring manufacturing back to the US. The US imposes tariffs on Taiwanese exporters of between 5 and 30 percent, Lieu added.

Revenue from the US contributes nearly 80 percent of the company’ total sales, while sales in Japan account for 20 percent. Makalot to add two European clients and one from Japan this year, in an effort to reduce reliance on US customers.

For the whole of last year, Makalot saw cumulative revenue drop 5.3 percent year-on-year to NT$22.13 billion, because of a decrease in orders from its branded customers from the US.

The garment maker reported last month revenue of NT$1.81 billion (US$58.15 million), a 22.89 percent decline from the same period last year, attributing the figure to fewer working days because of the Lunar New Year holiday and foreign-exchange losses.

Makalot also operates plants in China, the Philippines and Cambodia.