WWD.com/business-news/business-features/made-in-italy-the-intangible-quality-6787259/
government-trade
government-trade

Made in Italy: The Intangible Quality

Makers strive to protect what “Made in Italy” represents to the rest of the world.

View Slideshow

What’s in a label? How significant is the expression “Made in Italy” — tagged on the softest Missoni loom-knit sweater, a handcrafted intrecciato Bottega Veneta bag in woven leather, an embroidered Valentino gown or a laser-cut Fendi fur — and what lies behind these self-explanatory terms?

It’s a simple declaration but one that is often abused and that comprises social, geographic, political and economic elements.

“In the last few years, in coincidence with one of the worst crises since World War II, and the consequent dramatic change of consumer patterns, some words — like ‘heritage,’ ‘Made in Italy,’ ‘authenticity’— have probably been overused, by many entrepreneurs, in any sector,” said Patrizio di Marco, Gucci’s president and chief executive officer. “And when you overuse a word or a concept, it is easy to lose its real meaning and essence.

“For Gucci, ‘Made in Italy’ is not a slogan. We are the only luxury brand of our size to produce everything in Italy, with the only exception being watches. It’s part of our DNA, a mission, a cultural approach, a social responsibility toward the people and the territory.”

Gucci employs approximately 45,000 people in Italy, and 7,000 of them work in the leather-goods district around Florence, mainly grouped in small family businesses that have been working for the company for generations — an asset Gucci has invested in for 91 years, building a strong and local supply chain.

RELATED STORY: The European Union’s Labeling Quandary >>

Armando Branchini, deputy chairman of Milan consultancy InterCorporate, said that Italy is the country that has the biggest historical production structure in Europe, which is one of the reasons groups such as LVMH Moët Hennessy Louis Vuitton and Chanel have set up their own manufacturing plants here.

“In the Seventies, Italian entrepreneurs decided to trade up and partner with designers rather than delocalizing, while others, such as in France and England, chose to move production to the Maghreb region and Hong Kong, respectively,” explained Branchini.

The analyst underscored the strength of Italy’s pipeline, which runs from mills and tanneries to the finished product. “This pipeline is unique and fundamental and allows innovation [to develop] more quickly. There is synchronicity throughout, and everyone is informed. Even those working in the early phases of the pipeline keep an ear to the ground and an eye on the market, so that milliners, for example, know what’s selling and what’s not, what is a trend and what isn’t.”

According to Fashion Economic Trends, a study distributed by Italy’s Chamber of Fashion, in 2013 exports of textiles, clothing, leather goods and shoes are expected to grow 2.2 percent to 44.3 billion euros, or $60 billion at current exchange, while fashion industry revenues are expected to drop 3.5 percent to 58.2 billion euros, or $78.5 billion. The decline is attributable to crimped consumer spending in Italy and a difficult economy in Europe.

The overall economy has taken a toll on companies throughout the country, particularly smaller firms. According to Cerved Group, which evaluates companies’ solvency, 6,500 firms in Italy filed for bankruptcy in the first half of 2012 and 14.3 percent of them were based in the Marche.

Besides the visible and tangible elements of Italian goods appreciated by customers, Versace ceo Gian Giacomo Ferraris put the accent on service — which he said can be guaranteed only if a product is made here.

“Versace customers expect our products to be complex, not minimal, with a combination of fabrics and colors — that is a given. But we also have to reach our clients in time, we need to service clients with maximum flexibility,” noted Ferraris. “It’s a mathematical relation, and the synthesis of these theories is that after the restructuring of our manufacturing platform in Novara, our [timely] deliveries to stores rose to 96 percent last year from 83 percent back in 2009,” said Ferraris, who has been restructuring the group since then. “We now have a network that matches know-how, service and quality. Timing is essential.”

Massimo Ferretti, executive chairman of Aeffe SpA, which controls the Alberta Ferretti, Moschino and Pollini brands and produces and distributes collections for Cacharel and Cédric Charlier, concurred, saying that Made in Italy provides “service that is fundamental, in terms of quality and speed, and it’s not easily reproduced. It’s an added value. You can’t reproduce the execution or the fit for a certain kind of product anywhere else in the world.”

Ferretti said he’s stepping up the group’s production in Italy, which already accounts for a “very high percentage” of Aeffe’s overall manufacturing.

RELATED STORY: Italy’s Production Districts >>

Bottega Veneta president and ceo Marco Bizzarri said, “Made in Italy is the very reason the brand exists. The way artisans interpret an idea, from father to son, for more than 30 years — this can’t be copied and can’t be replicated elsewhere in the same way as here in Vicenza,” where it is based.

Bizzarri underscored the loyalty of the artisans, a loyalty that Bottega Veneta has fueled with, for example, the creation of Manifattura Veneta Pelletterie — a joint venture it controls with a 51 percent stake and formed in May 2011 in Altavilla Vicentina, near Vicenza — and of Alto Vicentino Pelletterie, a company founded in April 2012 in Malo, less than 20 miles from Vicenza. The two firms employ about 140 individuals specialized in cutting and assembling bags and suitcases.

Other Italian production powerhouses include Ittierre SpA, which, under new owner Antonio Bianchi, has been growing its portfolio with new licenses for brands including Aquascutum, Pierre Balmain, Karl Lagerfeld, Tommy Hilfiger and Jean Paul Gaultier, and Tuscany-based Gibò SpA, which last year acquired the license for Jean Paul Gaultier’s women’s top line and produces the Jil Sander Navy line and collections for brands including Rochas, Michael Kors, Paul Smith and Roberto Cavalli. In the Veneto region, there is Diesel parent Only the Brave Srl, which also owns Staff International. The company produces for brands including Viktor & Rolf and Maison Martin Margiela.

Caruso chief executive Umberto Angeloni underscored that it is “not enough to say that a product is made in Italy, it must also be made for Italians and appeal to them. It must represent the Italian taste and style. We sell the Italian lifestyle.”

Caruso, based in Soragna, Italy, counts 600 employees and produces 100,000 pieces per year in-house. Angeloni, previously head of Brioni, has long been a staunch advocate of production in Italy.

“It’s the savoir faire, a superior manufacturing technique that has a halo effect on the product. Some may think that the brand is a guarantee, but it is an illusion to believe that you can obtain the same results by simply moving machines and technicians outside Italy. Made in Italy is not repeatable — not in the niche segment,” he said, pointing to an increased return to Italy of a number of brands after years of delocalized manufacturing. “Rushing for profit at a low cost has become synonymous with greed, exploitation and injustice.”

Admittedly, consumers are increasingly attentive to intangible values, such as sustainability, safety regulations and labor rights.

“I like to think that our products are made without causing damage to humanity and respecting our workers’ moral and economic dignity,” said Brunello Cucinelli, who is investing more than 20 million euros, or $26.8 million, to double the size of the company’s manufacturing plant in Solomeo, Italy. The facility now stands at 226,800 square feet and counts more than 800 employees. Cucinelli’s company went public last year, and the entrepreneur has always associated his luxury brand with Italian craftsmanship and exclusivity — an added asset during the road show, begun a year before the initial public offering, when Cucinelli invited analysts and investors from China, India and South America to travel to Solomeo, a medieval village the designer bought and restored.

“Nobody ever asks us if we produce outside Italy, and this makes me happy,” said Cucinelli.

Tod’s chief Diego Della Valle has been called an ambassador of Italian heritage and craftsmanship. Two years ago he partnered with Milan’s prestigious La Scala theater to promote its values globally. He also is supporting the restoration of the Colosseum through a sponsorship of 25 million euros, or $33.6 million. Della Valle today is investing between 15 and 20 million euros ($20.1 million to $26.8 million) on the expansion of the Tod’s Group plant in Sant’Elpidio a Mare, most likely aimed at the production of goods under his company’s Hogan brand.

Della Valle, who believes that customers have a right to know where products are made, said that making all Tod’s products in Italy “has proven to be one of the greatest strengths” of his company, distinguishing the brands and drawing customers “who truly appreciate Italian craftsmanship. The philosophy behind our products is what drives Tod’s to ensure that every piece receives the same level of research in its development and attention to detail in its manufacture,” from the cutting of the leather to the hand-stitching, a “quality that contributes to the beauty and durability of the styles.”

Customers also ask to be told the story behind the brand.

The Salvatore Ferragamo label is steeped in heritage and history, which harks back to the founder’s early and successful connection with Hollywood in the Twenties and is associated with highly skilled Italian craftsmanship. The Florence-based firm listed on the Milan Stock Exchange in June 2011, and those qualities were all relevant during the company’s road show. Chairman Ferruccio Ferragamo said potential investors appreciated the fact that the group’s production is Italian but “did not smile as much, as they often remarked on how this meant low margins. This may be true in the short term, but it pays off in the long run.”

Ferragamo’s numbers seem to support this. The firm has been expanding globally, closing 2012 with sales of 1.15 billion euros, or $1.47 billion, up 17 percent compared with the previous year, and its shares are on an upward trajectory.

“‘Made in Italy’ is like a second brand and stands for craftsmanship, whimsy and detail-oriented creativity,” he concluded.

Gianluca Brozzetti, ceo of the Roberto Cavalli Group, said production in Italy must be preserved as customers from outside the country increasingly appreciate the values associated with it. However, Brozzetti cautioned against shortcuts or indiscriminate use of the Made in Italy label. “It’s not a given that allows [a brand] to sell at a certain price. Customers want and demand originality and authenticity, and they ask for information,” he said.

Of note is the fact that Chinese entrepreneurs, for example, are trying to capitalize on the Made in Italy label in the Tuscan city of Prato, known for its textiles. While Chinese over the years have flocked to the town as workers, either employed by Italian companies or as outside suppliers, they are now buying up Italian firms and producing locally to sell in China with a Made in Italy tag. “These collections, however, are mainly positioned in the low-end to midtier range, and unbranded. They don’t dent the higher-end range of designer products in any way,” remarked Branchini.

“Is Made in Italy the only way for any luxury brand to survive?” wonders Gucci’s di Marco. “No, it depends on your legacy. If yours is authentic and legitimate, your customers will reward you and will be loyal to your products because Italian artisanal craftsmanship is still highly valued by consumers.”

While Prada boasts heritage and quality and clearly supports Italian production, ceo Patrizio Bertelli offers a personal take on the issue, promoting the brand as a guarantee for the product. But he also celebrates other countries’ crafts — for example, knitwear made in Peru or shoes made with woven leather that are produced in India.

“At Prada, we want to enhance our uniqueness that lies in design, research, production know-how, taste, culture, communication, new distribution concepts and continuous innovation. There is a strong relation between our product and its consumers in the way of approaching a lifestyle: We want to anticipate, welcome and meet the new lifestyles that are emerging in an increasingly complex and globalized society.

“Therefore, we have to invest a lot in the research and in the [intangible] aspects of each product,” said Bertelli. “The delocalization of some productions cannot and must not be seen as a major controversy: Everybody understands that some luxury products…can only be made in Italy, but it is also true that good quality can also originate in other countries with a strong craftsmanship tradition and manufacturing potential, to be able to compete against increasingly fierce competition that is, in many cases, already producing in these countries. Of course, in this case, the county of production must be clearly indicated on the product.

“Made in Italy is all about insight, design heritage, creativity, culture and also tradition,” he added. “Who can take these things away from us?”

View Slideshow