Insight: How migrant workers suffered to craft the 'Made in Italy' luxury label

Arman Financial Services

18/09/2024 05:00

* 
      Some luxury goods contractors in Tuscany have employed
undocumented migrant workers
    

        * 
      Migrant workers were offered irregular contracts and had
to work
long hours
    

        * 
      Some labourers had no previous experience of making luxury
accessories
    

        * 
      Montblanc terminated a contractor in Tuscany because it
failed
to meet conduct standards
    

  
    By Emilio Parodi, Elisa Anzolin, Denis Balibouse and Mimosa
Spencer
       PRATO, Italy/GENEVA, Sept 18 (Reuters) - "Made in Italy:
shame in Italy," a handful of migrant labourers who had
travelled from Italy's famed leatherware region Tuscany chanted
last week in Geneva outside the flagship store of luxury
accessory maker Montblanc, holding placards with the slogan. 
    Standing about three kilometers from where Montblanc's $76
billion parent Richemont  CFR.S  was meeting shareholders, the
workers - flanked by more than a dozen Italian and Swiss union
officials - accused the pen and watches maker of dropping its
supplier Z Production last year because of rising costs. 
    The Chinese-owned contractor, based in Tuscany, had improved
its working conditions in October 2022 after years of irregular
contracts and long shifts, workers and union officials told
Reuters. 
    "Montblanc ended the contract because we wanted to work
eight hours a day, five days a week as legal workers," said
23-year-old Zain Ali, from Pakistan. He worked for Z Production
for two and a half years, applying metal Montblanc logos to
leather accessories: "They just wanted slaves." 
    Z Production did not respond to a request for comment for
this story. Montblanc said, in a statement to Reuters, it had
decided to terminate Z Production's contract in early 2023
because its audits showed the contractor had failed to meet its
standards as outlined in Richemont's code of conduct for
suppliers. 
This year, investigations by prosecutors exposed sweatshop-like
conditions at 16 workshops near Italy's fashion capital Milan
that manufactured products for luxury brands Dior, Giorgio
Armani and Alviero Martini, according to court documents
reviewed by Reuters.
    Reuters spoke to seven luxury supply chain workers and three
union leaders, as well as several non-profit organisations,
local officials and industry players, who said that such harsh
working conditions were also a feature of the luxury supply
chain in Tuscany. 
    Z Production and other workshops employed undocumented
migrants there with no prior experience in leather-making to
produce luxury products for Montblanc and other high-end brands,
the sources said, indicating supply chain problems extend beyond
Milan.
    Alessandro Lessi, 53, who was employed at Z Production as
delivery man until 2022, said that, as the only Italian in the
large workshop, he had a regular contract but migrant labourers
there worked long hours.  
    "I left at 6 PM, but everyone else stayed on," he told
Reuters, saying that most of the workers there were either from
China, Pakistan or Bangladesh as the company sought to cut
costs. "It's very common here in Tuscany. It's the big brands
that impose the prices on contractors".    
A Milan court has placed Alviero Martini Spa, Armani's
industrial arm Giorgio Armani Operations, and Italy's
Manufactures Dior into judicial administration respectively in
January, April and June for a period of one year. 
    After that, judges will verify if the companies have
addressed shortcomings and taken steps to prevent a repeat of
the labour problems, according to the court documents and
judicial sources.
    Speaking in July, Dior's parent LVMH said it planned to
strengthen audits and checks of the supply chain and that Dior
would take more direct control of its production. 
    In April, the Armani group said it had "always had control
and prevention measures in place to minimise abuses in the
supply chain." Alviero Martini said this month it was unaware of
the unauthorised subcontracting and of the exploitation of
workers.
Italian prosecutors are now investigating the supply chains of
around a dozen more fashion brands, a person familiar with the
matter told Reuters in June without identifying the brands
because of the case is still ongoing.
        
    LUXURY'S DIRTY SECRET
    Consumer demand for rare and exclusive items has helped to
turn LVMH into one of Europe's biggest companies with a market
capitalisation of over 300 billion euros ($330 billion), leading
the way in the rapid expansion of the luxury sector.
    Brands rely on a chain of contractors and subcontractors to
speed up production when demand is high or to reduce capacity
swiftly when, as currently, it falls.
    Speaking in the presence of a union official in the textile
hub of Prato in Tuscany, Abbas and Arslan Muhammad, who arrived
from Pakistan as undocumented migrants, said they toiled for
years alongside dozens of migrants in workshops supplying luxury
brands. 
    Abbas, 32, who was a welder in Pakistan and arrived in Italy
through the Balkans in 2015, said he started off at a
Chinese-run workshop in Incisa Valdarno, a well-known
leather-working district near Florence, while lacking a worker's
permit. 
    "For my type of work, I had to stand up for 14 hours,
working on my feet," recounted Abbas, who said he worked
alongside around 50 Pakistani, Afghan and Chinese migrants,
making bags and leather accessories for international luxury
brands. He declined to identify the workshop for fear of
retaliation.
    His task was to dye the leather of bags made by separate
contractors, a skill he learned after he came to Italy.
    "My legs hurt so much, I couldn't sleep at night. I couldn't
go to the toilet anymore, or sit down," said Abbas, who declined
to disclose his full name or give details of his current
contractor for fear of losing his job. 
    Abbas told Reuters he earned between 600 and 700 euros a
month from a part-time contract, and between 400 and 500 euros
in cash for additional hours. Francesca Ciuffi, an official from
union SUDD Cobas who helped organise the Geneva protest, said
such practices are still common at workshops in Prato.
    Given his health issues, Abbas was dismissed from the first
job but found work in 2019 in the same industry in Prato. 
    For another three years, his working conditions were similar
to those experienced at the first factory, he said. But in 2022,
with help from SUDD Cobas, Abbas and his colleagues managed to
secure a regular contract for 1,400 euros a month.
    Arslan, a 27-year-old Pakistani migrant working for Z
Production, said he worked long hours after arriving in Italy in
2017.
    "When you work more than 12 hours a day for six days a week,
you don't even have time to do the shopping, you don't have time
to wash your clothes."
    He initially worked without a contract and was then given a
part-time deal. Like Abbas, he eventually got help from the
union and won a proper contract in 2022 from Z Production, he
told Reuters.
     
    ILLEGAL PRACTICES EXPOSED
    The Milan court documents said luxury brands typically hand
production of their designs to a lead sub-contractor but that
company can be little more than a shell, able to produce samples
but with little manufacturing capacity.
    The real work will be done by another workshop, where costs
are low and checks on conditions and the treatment of workers
virtually non-existent.
    "In the course of the inquiries, such tested and deep-rooted
illegality emerged that it can be seen as part of a wider
business model exclusively directed at increasing profit," the
Milan prosecutors wrote in June in documents relating to the
Dior case.
    Keeping tabs on what happens inside the sprawling luxury
supply chain in Italy is challenging. The country accounts for
between 50% and 55% of the global high-end goods production
according to consultancy Bain.
    "An average brand has 7,000 suppliers," said Carlo Capasa,
the chairman of Italian fashion brands lobby group National
Fashion Chamber. "If each supplier has two sub-suppliers, it's
probably another 14,000. I want to see who can do 21,000 audits
a year .... It's impossible, so it is clear that someone escapes
(the controls)."     
    Raids carried out by Italy's Carabinieri on workshops have
put contractors on alert, a judicial source told Reuters,
declining to be named as the case is ongoing: inspections over
the summer show that contractors are putting their house in
order, at least in the Milan hinterland.
    A top investigative source told Reuters some suppliers have
started to shift production to areas such as Veneto, Campania
and Apulia, not currently at the centre of the raids.
    Antonio Franceschini from Italian lobby group CNA Federmoda,
which represents artisans and small fashion enterprises, said
that, in the cut-throat world of luxury, putting staff on proper
contracts and respecting environmental regulations inevitably
comes at a price.
Underpaid staff and unhealthy working conditions allowed, for
example, Dior contractor Pelletteria Elisabetta Yang Srl to
charge Dior as little as 53 euros per handbag, court documents
said, against a retail price of 2,600 euros, Milan court
documents show. 
    Dior said it cut ties with the supplier, which was only
partially assembling bags. 
    A workshop offering to do work for expensive products at
rock-bottom prices, like the ones exposed by the Milan
prosecutors' inspections, should however be a red flag for the
big brands as the risk of abuse of workers rights rise as
production costs fall, industry experts warn.
"The remuneration costs for work cannot fall below certain
levels," said Franceschini. 
($1 = 0.9081 euros)

 (Additional reporting by Silvia Ognibene in Florence
Writing by Keith Weir, editing by Lisa Jucca)
 ((Emilio.parodi@thomsonreuters.com))