MILAN/PARIS European luxury makers are buying production centers to overcome a dramatic shortage of skilled workers that is putting historic brands at a competitive disadvantage with low-cost production centers, fashion executives told Reuters this week.
Italian textile leaders Ermenegildo Zegna, Marzotto and Loro Piana this week bought a controlling stake in Pettinature Di Verrone, a combing mill specialized in fine wool, cashmere and special fabrics needed for their tailored suits.
Beyond the Alps, vertical integration of luxury producers in France such as Chanel, Louis Vuitton (LVMH.PA) and Hermes (HRMS.PA) begun more than a decade ago and is still going on.
Chanel, which owns the famous embroiderer Lesage, the hat maker Maison Michel and the plume specialist Lemarié, acquired last December the Parisian embroiderer Montex and is constantly on the lookout for other potential small bolt-on acquisitions.
"Bringing production in-house is essential if you want to keep the quality that is needed for luxury products," Toni Scervino, chief executive of Italian fashion house Ermanno Scervino, told the Reuters Retail and Consumer Summit on Milan on Thursday.
In 2002, Ermanno Scervino bought three family-owned makers of haute couture, lingerie, knitwear and childrens wear. Seamstresses and textile workers work with the designer at the company's headquarters on the outskirts of Florence.
"There is a trend among luxury companies to acquire artisans to secure their supply chain," Elisabeth Ponsolle des Portes of the French luxury lobby Comite Colbert told Reuters.
Luxury makers are under pressure to retain skilled artisans as young people are not attracted to handicrafts, a demanding job far from glamorous catwalks and seen as low in the social scale.
"The lack of craftsmen is our biggest problem and schools are not enough," Scervino told the Reuters summit in Milan.
Ponsolle des Portes said some luxury groups in France were also struggling to hire enough artisans to meet demand. Also, experienced artisans were retiring and not being replaced.
"We try to tell young people that these are promising fields which are highly valued and that these jobs can become a passion," Ponsolle des Portes told Reuters in Paris.
To entice youths to consider going into craftsmanship, some luxury brands such as Roberto Cavalli and Cartier have set up their own divisions to train artisans while others such as Hermes have signed partnerships with schools to have access to the best graduates.
Hermes employs about 3,000 in fields ranging from silks to leather goods.
Florentine fashion designer Roberto Cavalli makes his own animal and floral prints for which he is famous worldwide, the group Chief Executive Gianluca Brozzetti told Reuters.
The Florentine-based group has also opened a division with craftsmen making prototypes for leather bags and shoes, he said.
In France, over the past five years the Comite Colbert has invited thousands of students from Paris colleges to visit production sites and invited representatives of luxury companies to make presentations in class.
Brands participating in the Comite Colbert's initiative included jewelers Cartier and Boucheron, Hermes, Guerlain perfumes and watchmaker Breguet.
In Italy, the manufacturing crisis is aggravated by a prolonged recession that is prompting many firms to close.
The number of Italian textile firms has dropped 4 percent to over 21,700 since 2009, according to the Italian Union of Chambers of Commerce.
The number of Italian shoe makers has halved since 1962, according to Il Sole 24 Ore daily. Italy is famous for making shoes for brands such as Christian Dior (DIOR.PA), Yves Saint Laurent (PRTP.PA) and Oscar de la Renta, among others.
Scervino said the crisis could, however, push more young people to manufacturing jobs. "Need is the best motivation," he said.
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(Writing by Antonella Ciancio; Editing by Richard Chang)