Dior's supply chain is under investigation due to labour exploitation

[AFWQ]

"An Italian subsidiary of French luxury giant LVMH (LVMH.PA), opens new tab that makes Dior-branded handbags was placed under court administration on Monday, after a probe alleged it had sub-contracted work to Chinese-owned firms that mistreated workers.

This is the third such decision this year by the Milan court in charge of pre-emptive measures, which in April named a commissioner to run a company owned by Giorgio Armani due to accusations the fashion group was "culpably failing" to adequately oversee its suppliers. Armani Group said at the time it had always sought to "minimise abuses in the supply chain".

The court said in a copy of Monday's decision which was seen by Reuters that prosecutors alleged that the violation of rules was not a one-off among fashion companies with manufacturing capacity in Italy, but systematic due to the need to pursue higher profits.

"It's not something sporadic that concerns single production lots, but a generalised and consolidated manufacturing method," the document said

The luxury industry's supply chain has come under increased scrutiny by consumers and investors in recent years. To reduce reputation risks fashion labels have curbed the number of sub-contractors and internalised production, in a blow to Italy's leather goods industry, which is mostly based in Tuscany and comprises many firms founded by Chinese immigrants.

Italy is home to thousands of small manufacturers that cover 50% to 55% of the global luxury goods production, consultancy Bain calculated

The Milan court ordered Manufactures Dior SRL, fully owned by Christian Dior Italia SRL, be placed under judicial administration for one year, the document seen by Reuters showed.
The company will continue to operate during the period.

The Dior investigation focused on four small suppliers employing 32 staff who worked in the surroundings of Milan, two of whom were immigrants in the country illegally while another seven worked without the required documentatio

Between March and April, Italian police carried out inspections at the suppliers, named Pelletteria Elisabetta Yang SRL, New Leather Italy SRLS, AZ Operations SRLS, and Davide Albertario Milano SRL, the document said.

Pelletteria Elisabetta Yang and Davide Albertario Milano were direct suppliers of Manufactures Dior SRL, the document said. Pelletteria Elisabetta Yang invoiced 752,881 euros to Manufactures Dior for the fiscal year 2023/24, Davide Albertario 737,623 euros for 2024, it added.

The staff lived and worked "in hygiene and health conditions that are below the minimum required by an ethical approach," it added.

Representatives for LVMH had no comment. Shares in LVMH extended earlier losses on news of the court's decision on Monday, and closed down 2.2%. They were down 0.7% at 0921 GMT on Tuesday, against a flat blue-chip index (.FCHI), opens new tab.

Delphine Arnault, whose family controls a 42% stake in LVMH, is chair and CEO of Dior, LVMH's second largest fashion label. She is the eldest child of Bernard Arnault, who runs the LVMH empire and is among the world's wealthiest people.


'24 HOURS A DAY'

In the 34-page ruling, the judges said the workers were made to sleep in the workplace in order to have "manpower available 24 hours a day".

Data mapping electricity consumption showed "seamless day-night production cycles, including during the holidays".
In addition, safety devices had been removed from the machinery to allow them to operate faster, according to the document.

This allowed contractors to rein in costs and charge Dior as little as 53 euros to supply a handbag, the document said, citing as an example a Dior model coded PO312YKY, which the fashion house then retailed in shops at 2,600 euros.

The Dior unit did not adopt "appropriate measures to check the actual working conditions or the technical capabilities of the contracting companies", failing to carry out periodic audits of its suppliers over the years, it added.

The owners of the contracting and subcontracting companies are under investigation by Milan prosecutors for exploiting workers and employing people off the books, while Dior itself faces no criminal probe.
The Armani investigation also unveiled that suppliers of the Italian brand included Chinese-owned manufacturers in Italy that violated worker protection laws.

Reporting by Emilio Parodi; Writing by Valentina Za; Editing by Aurora Ellis, Stephen Coates and Mark Potter." (source)

 

[upNorth]

This allowed contractors to rein in costs and charge Dior as little as 53 euros to supply a handbag, the document said, citing as an example a Dior model coded PO312YKY, which the fashion house then retailed in shops at 2,600 euros.

Disgusting.

 

[Drusilla_]

the bare minimum I'd expect in exchange for 2600 euros is a guarantee that the people making the thing I bought were paid and treated well no matter where in the world they are. Absolutely disgusting and after last year's disclosures about Loro Piana I'm fairly sure Dior can't be the only "luxury" brand pulling this cost-cutting in the interest of profits.

 

[FashionFanatico]

Fashion in 2024 really sucks. Capitalism sucks.
And there's only one thing we can do about it: Stop buying this Sh!t!

 

[kasper!]

I know some Chinese-owned factories in Tuscany. Their productivity is much more higher than Italian-own because worker are willing work on weekend or at night. You know....Italians...they get off at 17:00 haha.

I am surprised that LVMH pushes so hard on them to make them work 24 hours non stop. MaxMara Group is also working with Chinese-owned factories but they never push so hard like LVMH. They really sucks. Where is the karma?

​

 

[TaylorBinque]

the bare minimum I'd expect in exchange for 2600 euros is a guarantee that the people making the thing I bought were paid and treated well no matter where in the world they are. Absolutely disgusting and after last year's disclosures about Loro Piana I'm fairly sure Dior can't be the only "luxury" brand pulling this cost-cutting in the interest of profits.

Can you give me link to the Loro Piana story? I would have thought they treated their workers like royalty given the hefty price tags.

 

[FashionFanatico]

Can you give me link to the Loro Piana story? I would have thought they treated their workers like royalty given the hefty price tags.

US Lawmaker Demands LVMH’s Loro Piana Answer for ‘Exploitation’ in Peru

A US lawmaker wants Loro Piana to answer for what he sees as the “exploitation” of Indigenous workers providing raw materials for the Italian fashion house’s trademark luxury sweaters.

www.businessoffashion.com

 

[GRCF]

Can you give me link to the Loro Piana story? I would have thought they treated their workers like royalty given the hefty price tags.

Bloomberg had a longer read. The issue seems to pre-date LVMH, not that it makes it better. Not surprising, just surprised that both of these stories even saw the light of day considering LVMH's influence on media.

The Vicunas and The $9,000 Sweater

​

Businessweek | The Big Take​

THE VICUÑAS AND THE $9,000 SWEATER​

Thirty years of providing the world’s finest wool to the fashion house Loro Piana has done almost nothing for the Indigenous people of the Peruvian Andes.​

By Marcelo Rochabrun​

Photographs and video by Angela Ponce​

​

Once a year, Andrea Barrientos, a 75-year-old subsistence farmer in the Peruvian Andes, works free of charge for the world’s richest person.​

She does that by joining dozens of people from her village in herding wild vicuñas for miles on a remote plain 13,000 feet above sea level and shearing them for their soft, golden-brown wool. Vicuñas, big-eyed camelids that roam the southern Andes, produce the finest and most expensive wool there is. In New York, Milan or London, the fashion house Loro Piana sells a vicuña sweater for about $9,000. Barrientos’ Indigenous community of Lucanas, whose only customer is Loro Piana, receives about $280 for an equivalent amount of fiber. That doesn’t leave enough to pay Barrientos, whose village expects her to work as a volunteer.​

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Loro Piana, meanwhile, is owned by the luxury conglomerate LVMH Moët Hennessy Louis Vuitton SE and controlled by Bernard Arnault, who’s worth $202 billion, according to the Bloomberg Billionaires Index. Based in Italy, where it was founded in 1924, Loro Piana has become a touchstone brand in the so-called quiet luxury trend, made visible in shows about the wealthy. A Loro Piana cashmere baseball cap, famously worn in Succession by the character Kendall Roy, retailed in the real world for about $600.​

​

The sweater in question, from Loro Piana’s US website. As the company’s vicuña goes, the price is modest. Source: Loro Piana/LVMH​

Vicuñas were hunted almost to extinction in the 20th century by poachers who shot and skinned them instead of shearing them. Trade in the wool was outlawed in 1969. An international treaty later helped reinstate a legal market while dictating that income derived from vicuñas benefit Indigenous Andean peoples, a historically impoverished population. Lucanas was the first community to shear vicuñas under this regime, in 1994, and Loro Piana has been its buyer ever since. The trade has done little for the 2,700 people of the village. Most houses are made of mud, as is Barrientos’, and don’t have plumbing. Older residents remain subsistence farmers while the younger people either move to cities or work in the unregulated and often dangerous gold mines that dot the region.​

There are now about 200,000 vicuñas in Peru, close to half of the world’s population. The increased supply seems to have increased demand, and Loro Piana’s prices keep rising. The rate paid to the people of Lucanas for raw fiber, however, has fallen 36% in the past decade. In 2018 a government-commissioned study found that 80% of those living in the town said they hadn’t benefited from the community’s participation in the trade. “The vicuña has not helped any community escape poverty,” says Omar Siguas, the researcher at Peru’s National University of Huancavelica who led the study.​

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Inside Peru's Secret Luxury Supply Chain​

Loro Piana disputes that conclusion. “Since it arrived in Peru in the ’80s, Loro Piana has been committed to upholding the highest standards of ethical and responsible business practices,” the company said in a statement. “Loro Piana represents a key economic support locally, protecting and fortifying the demand and the value of the vicuña fiber, regardless of market dynamics.”​

Peru’s wildlife and forestry agency, known as Serfor, said in written answers to questions that the vicuña trade “does not improve the quality of life of peasant community members.” Some communities, the agency added, derive more income from tourist activities surrounding vicuña shearing than from the sale of the most expensive natural fiber on Earth. Serfor officials have in the past said it’s a priority to find ways for Andean communities to sell value-added vicuña products, but no policies to do so have been put in place. Barrientos, for example, has never had an opportunity to make a vicuña garment. She’s never even seen one.​

​

Herding wild vicuñas is hard, physical work, done at an altitude of 13,000 feet or more.​

​

​

Over several hours, the animals are directed into an enclosure.​

​

The animals are restrained and sheared, then released to return to the peaks and plains.​

​

The vicuña is one of four South American camelids. A domesticated vicuña is known as an alpaca, a separate, fluffier species that can grow seemingly unlimited amounts of fiber and can even die, smothered by the weight of its coat, if not sheared regularly. Alpaca fiber is fine but not as fine as that of its wild counterpart. The guanaco is a more muscular, wild species, with coarse hair. A domesticated guanaco is a llama; its fiber is also used, but it’s rough, making it relatively undesirable and cheap.​

Loro Piana calls vicuña “the fiber of the gods.” But vicuña’s fame is more closely associated with royalty. Philip II, a 16th century king of Spain, reportedly had linens made out of vicuña, as did the Inca, as the head of the Inca Empire was known. “Vicuña wool, because it was so esteemed for its fineness, was all for the Inca, who then ordered it delivered to his royal-blooded relatives,” the historian Inca Garcilaso de la Vega wrote in 1609. “Others could not wear that wool under penalty of death.”​

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Volunteers and workers are driven to higher elevations where they’ll begin herding the animals. Photographer: Angela Ponce for Bloomberg Businessweek​

What remains in place in Lucanas today is a stark sense of who can wear vicuña and who cannot. “I’ve never had a vicuña garment,” Barrientos says, “because they are banned.” Papias Sosaya, a Lucanas resident who specializes in holding vicuñas during shearing, says that “as a Lucanino, as a Peruvian, I would love to wear a garment made of vicuña wool. But it is totally banned.”​

It isn’t in fact banned, but the perception persists, perhaps because Lucanas’ role in the trade is so strictly limited. The community’s leaders say they lack the resources to buy the machinery necessary to weave vicuña, a notoriously tricky fiber to spin into yarn because of its short length and small diameter. (Vicuña has a diameter of less than 13 microns, versus 15 microns for fine cashmere.) Without that specialized technology, communities such as Lucanas are unable to move up the supply chain.​

When vicuñas were placed under protection in 1969, a majority of the Peruvians who shared territory with the animals were illiterate Quechua speakers. The poverty rate in the mountains exceeded 80%; most people were subsistence farmers. While Peru has made significant economic strides since, the Andean regions remain the poorest in the country. In 2018, when Peru last calculated detailed poverty rates, 41% of the population of the village of Lucanas and the surrounding district was poor, meaning an individual lived on less than $91 a month.​

​

Peru’s vicuña population, having fallen to about 10,000, recovered in the 1980s, at a time when the country’s Southern Andes were terrorized by a bloody war between government forces and Maoist insurgents known as the Shining Path. Around 70,000 people died in the conflict, the vast majority of them Indigenous citizens. The head of the Shining Path was captured in 1992, which ended the fighting and helped enable Peru’s government, then led by President Alberto Fujimori, to allow vicuña fiber sales to restart.​

The government put out feelers for international interest, the prize being a monopoly on the vicuña market for the next decade. Loro Piana won as the main investor in a three-part conglomerate. In 1994 the first legal shearing of vicuñas in decades was done in Lucanas, with Fujimori in attendance. The next year, Peru granted Indigenous communities the exclusive right to shear and sell vicuña fiber, as long as the animals were found within their territories. Loro Piana and others would have to enter into commercial agreements with communities to access the vicuña. For a while.​

​

On Sept. 24, 2000, as his government collapsed from graft allegations, Fujimori issued a decree giving companies the same rights as peasant communities to shear vicuñas found on their property. Now, companies could buy land in the Andes and shear the animals there. Records show that Alfonso Martinez, head of the government office created to regulate the new vicuña market, pushed for the change behind the scenes, writing in one memo that it was “indispensable.” Soon after Fujimori’s decree, Martinez left the government and set up a company that worked as an intermediary between Indigenous communities and corporate buyers. In 2007, Loro Piana hired him as chief executive officer of its Peruvian operation.​

Martinez, who died in 2019, got to work turning Fujimori’s decree into practice. Property records show that Loro Piana bought 4,942 acres (2,000 hectares) of barren land near Lucanas for $160,000. The company’s application for a vicuña shearing permit gives a sense of its goals. Loro Piana proposed creating a 12.5-kilometer (7.8-mile) fence around its property, which would ensure that the vicuñas wouldn’t leave and get sheared by somebody else. The fence would also ensure that the animals reproduced at a maximum rate, enabling the population to grow by as much as 50% a year. The company’s application listed some disadvantages, including the loss of genetic diversity and lower life expectancy.​

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The fence, which formally places vicuñas in “semicaptivity,” is controversial; wildlife experts say it goes against the principle that vicuñas are wild animals, even if their cage is ample. Loro Piana’s application to shear the vicuñas on its land was approved in 2010. The area had few of the animals, but the government agreed to supply some, making Loro Piana the first company to be able to shear vicuñas without paying Indigenous communities for the fiber.​

As the vicuña population at Loro Piana’s property grew, fiber prices in Lucanas fell, from $420 per kilo in 2012 to $330 in 2022, according to official figures from Serfor. Roberto Carlos Sarmiento, the Lucanas community president, says the contract for 2023 established a price of $280.​

Loro Piana has consistently bought all the fiber Lucanas can produce, but production has fallen along with the price, for reasons that are unclear. In 2012, the village sold 1,877 kilos. Ten years later, the figure was 460 kilos. The village’s vicuña revenue fell in that period by about 80%—from a high of $788,526 to $151,974. In the pandemic years of 2020 and 2021, there was no vicuña roundup and no money.​

In the early 2000s, Pier Luigi Loro Piana, one of the two brothers then leading the company, had appeared committed to paying a higher price. “If one year I say, ‘I have too much wool and I don’t buy from you this year,’ everything would fall apart for them, so we support them by buying constantly at around $400 per kilo,” he told the Telegraph. “If you never try to cheat them, you get a lot of advantages and privileges.” The brothers sold their company to LVMH in 2013, becoming billionaires in the process.​

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After the vicuñas are captured and before they’re sheared, some locals dress as Incas for a ceremony meant to attract tourists. Photographer: Angela Ponce for Bloomberg Businessweek​

Capturing vicuñas for shearing is a laborious process steeped in history. The most recent roundup in Lucanas was in June, on a clear day under a blazing sun. Barrientos, Sosaya and other residents walked for miles on the high plain to gather vicuñas and drive them toward a central corral. Peruvian peasant communities have an elected president who can decide how to use and redistribute community resources; in Lucanas, the rule is that community members must work for free in the roundup, while outsiders can be paid, usually about $20 a day.​

Barrientos says she resents the lack of payment, but she also greatly enjoys experiencing how fast and agile the vicuñas are, how different from her usual herd of sheep. “When I see a vicuña? I feel happy, happy. It moves swiftly. It runs fast and far. You can’t catch up to it,” she says. “They say that when I was born, my parents rubbed my little feet and hands against a vicuña, so that I could run like one.”​

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Holding vicuñas for shearing requires skill and nerve, and sometimes a shot of cañazo, a local liquor.​

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Each animal’s wool is stored separately. Loro Piana is the sole buyer of vicuña fiber from Lucanas and much of the rest of Peru.​

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Newly shorn vicuñas after the 2023 chaccu. If these animals are caught again this year, they will be released—vicuñas can be sheared only every other year.​

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To capture vicuñas, Peruvians partake in a ritual called the chaccu, a Quechua word that’s been used by Spanish chroniclers since the 16th century to describe how Incas would catch, shear and release the animals. The basics of the chaccu have barely changed since.​

“They encircle a huge area of countryside, until they come together from all sides,” wrote José de Acosta in a book published in 1590. “They tend to shear these animals, and from their wool they make covers or blankets that are very regarded.” Garcilaso de la Vega noted that the shearing was done “every four years, leaving three years in between, because the Indians say in this amount of time the vicuña wool grows all it can grow.”​

Nowadays, vicuñas are captured once a year and sheared every two. A consequence of the faster turnaround is that the average weight of wool sheared per animal has fallen over time; it’s now at about 150 grams per animal, down from 250 grams in 1994. Vicuñas have golden and white fur, but only the golden fibers are usually sheared. Vicuña garments are often sold in this original color, without being dyed.​

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At the 2023 chaccu, a set of fit, young people started running to push the vicuñas in one direction. Another group of people that included Barrientos held a rope tied with plastic flags. Steadily, the two groups converged. For the first 3 miles there were virtually no vicuñas to be seen, but as they were pressed into a smaller and smaller space, the animals had no choice but to gather. Eventually, hundreds of them walked into an enclosure. Those whose wool was too short to be shorn were released. The shearers needed two days to get through the rest of them, meaning some of the vicuñas remained caged overnight without food or water.​

Adult vicuñas weigh up to 110 pounds (50 kilograms), and holding them is a two-person job. People like Sosaya walked into the cage and grabbed vicuñas, laying them on their sides and restricting their legs. Other people held the animals’ necks. Vicuñas are afraid of humans and will often kick and bite. Sosaya and his group took shots of a local liquor called cañazo before going in. Grabbing vicuñas is a task not often done sober.​

“These animals are really very savage. They don’t trust anything,” Sosaya said. “To grab the vicuñas, the first person goes toward the head and grabs it, and I go toward the tail, and I go under it and hold the tail and the legs. Why? So that it’s not kicking around or hitting another vicuña, or maybe one of us.”​

After shearing, the buzzed vicuñas were simply flipped so they could land on their feet. They looked around, flinched at the nearby humans and ran off. In a year they’ll be captured again. —With Angelina Rascouet​

 

[GoldenPetals]

Just a reminder that this is the same company that had the nerve to manufacture tops with "Feminist" written on them. This is the same company that will celebrate "Pride". This is the same company that will preach to you in pop culture.

This allowed contractors to rein in costs and charge Dior as little as 53 euros to supply a handbag, the document said, citing as an example a Dior model coded PO312YKY, which the fashion house then retailed in shops at 2,600 euros.

Meanwhile, the level of wealth inequality this creates actively keeps poverty alive.

But people will turn the blind eye because they make pretty things and want to feel part of the "rich club".

 

[GoldenPetals]

Fashion in 2024 really sucks. Capitalism sucks.
And there's only one thing we can do about it: Stop buying this Sh!t!

This is not the fault of capitalism or any abstract idea. This is squarely the fault of degenerate businessmen and businesswomen and their real tangible decisions. Blaming it on capitalism relieves them of guilt and lumps them with good honest businesses, who trade correctly.

 

[Alquimista]

This is not the fault of capitalism or any abstract idea. This is squarely the fault of degenerate businessmen and businesswomen and their real tangible decisions. Blaming it on capitalism relieves them of guilt and lumps them with good honest businesses, who trade correctly.

Exactly. And they think nobody would ever find out.

You can't run a serious company like a mafia.

 

[Lola701]

I will say something terrible but consumers can’t possibly consume HF at the same rate as they consume FF and expect it to be run differently.
Ok they are differences but it is what it is and it has been the case for years for the past 20 years.
The European Union or market has allowed brands to produce all around Europe and reduce costs while producing at a mass level.

In reality, it’s not directly LVMH or any of those big groups issues as they are subscontractors. They will make audit on the situation, publicity investigations and so and so.
And @kasper! told it like it is. Those Chinese workers are more efficient than ever and they can fulfill orders at an amazing speed.

And there’s another reality with Portugal being an attractive destination in terms of factories, no wonder that those subcontractors go above and beyond to keep their clients.

The big groups will turn their blind eye because officially and technically, those are not their employees.

 

[TianCouture]

Gross. Wonder how and if Mama Maria will respond.

 

[GRCF]

Gross. Wonder how and if Mama Maria will respond.

Probably won’t. LVMH generally stays silent. Like Lola701 said, they will probably do internal investigations but they will still keep working with such subcontractors. I doubt this is the only factory with labor rights issues that produces for LVMH. I’m sure papa will throw some money at whomever and make the issue go away.

There was also a whole thing with some resort they are building in the Seychelles in partnership with the Saudis that has reported environmental issues and labor issues. So plenty of issues that Bernard will pay so they won’t get too much air time and keep on with business as usual. You don’t get this rich and build up such an empire without crushing those that don’t really matter in the process.

 

[FashionFanatico]

This is not the fault of capitalism or any abstract idea. This is squarely the fault of degenerate businessmen and businesswomen and their real tangible decisions. Blaming it on capitalism relieves them of guilt and lumps them with good honest businesses, who trade correctly.

I’d highly recommend you to read a 2022 book from Verso titled The Future is Degrowth: A Guide to a World Beyond Capitalism by Matthias Schmelzer, Andrea Vetter, and Aaron Vansintjan.

The term “degrowth” (or rather, the French word décroissance) was established, bringing together the material and mathematical conception of existing within ecological limits with a more political and philosophical perspective that emphasized an economic prioritization of social well-being removed from measures of (over) consumption.

 

[FelipeV]

Big high-fashion brands are nothing but Zara with better PR and, maybe fabrics. Just watch at Chanel.

 

[JohannesL]

I work in the garment production sector on a global scale so I can attest that nothing has really changed in the past decades in spite of all the PR propaganda and legislation efforts in the west. Not only garment workers but also those in other sectors in those developing countries has been exploited for a long time by both their own governments and multinational corporation. In terms of worker rights, those companies know deep in their mind that they are seeking for the lowest-cost sourcing country with cheap labor and manufacturing costs, which is usually a consequence of the exploitation of worker rights. Maybe for the next Dior show, Maria Grazia should reconsider her notion of feminism and women empowerment. After all, it is almost cliche to talk about her corporate feminism where rich women celebrate each other for being inspirational.

 

[susseinmcswanny]

I don’t exactly understand like how this is different than everyone else

 

[GoldenPetals]

I work in the garment production sector on a global scale so I can attest that nothing has really changed in the past decades in spite of all the PR propaganda and legislation efforts in the west. Not only garment workers but also those in other sectors in those developing countries has been exploited for a long time by both their own governments and multinational corporation. In terms of worker rights, those companies know deep in their mind that they are seeking for the lowest-cost sourcing country with cheap labor and manufacturing costs, which is usually a consequence of the exploitation of worker rights. Maybe for the next Dior show, Maria Grazia should reconsider her notion of feminism and women empowerment. After all, it is almost cliche to talk about her corporate feminism where rich women celebrate each other for being inspirational.

READ HER.

 

[JohannesL]

There is an article “Dior and Armani’s Pricey ‘Made in Italy’ Handbags Made by Exploited ...” in WSJ. I would be deeply appreciated if any member has subscription to post it here.