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Playing to Their Strengths: Execs Tout Made in Italy Craftsmanship

Italian executives are capitalizing on their historic advantages in manufacturing and supply-chain management.

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Stefano Sassi

Davide Maestri

Giorgio Armani's silver jumpsuit, all made in Italy.

Giorgio Armani's silver jumpsuit, all made in Italy.

Luca Bellumore

Working with skins at Gucci.

Working with skins at Gucci.

Kuba Dabrowski

Italian fashion executives often have divergent views of the fashion world as they fiercely battle to maintain their market niche against their local competitors as well as those from overseas.

But there is one topic on which they are in complete unison: Made in Italy craftsmanship. Their remarks, filled with pride and pleasure in the unique skills of Italian artisans and the pipeline that stretches from raw materials to finished goods, are quasi lyrical.

“If a company doesn’t have the skills to create a prototype with its own imprint, it’s like wanting to play music without the right instrument,” said Stefano Sassi, chief executive officer of Valentino Fashion Group SpA.

Executives say the Made in Italy campaign has clout around the world, a strength that Italian executives are set on fostering at all costs. But how is the Italian industry reacting to the resurgence of Made in America production and to the recent New York Fashion Manufacturing Initiative, which seeks to raise funds for existing factories and acquire innovative equipment and advanced technology? Do Italians see a potential challenge to the Made in Italy label looming?

Perhaps not just yet. The reasons, they say, are based in the long-standing tradition of Italian manufacturing.

While chastising politicians who turn a blind eye to the needs of the industry, Francesco Pesci, ceo of luxury men’s wear brand Brioni, was “not worried” by potential competition from the U.S., as he said the region lacks the “strength” of Italy’s pipeline, which ranges from textiles to shoes and accessories.

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“It’s not a primary sector for Americans, and they realistically can’t compete with our artisans and their know-how because of the history they have,” said Pesci, expressing more concern over possible competition from France or the U.K. “Americans were never our competitors in this sense, but they have now realized that the advantages of outsourcing have diminished as economic progress advances in those areas considered production havens for their low costs.”

Also, with the 2009 crisis, “Americans rediscovered the value of work in manufacturing, versus the financial world’s multiplication of bread and fish,” said Pesci. “The manufacturing chain brings a longer-term and more measured wealth that is ethically and socially more acceptable.”

He underscored that Made in Italy “cannot be a marketing label,” and that it should be associated with a certain lifestyle and “a more human dimension.”

Pesci was more concerned with the potential buyout of key elements of the production chain in Italy. While the acquisition of Italian brands by foreign groups is widely reported on — and Brioni itself is part of the French luxury group Kering — attention should also be paid to the “silent” purchase of vital production hubs like those found in the Biella textile district. While France is widely seen as a strategic partner, Pesci said Italy’s know-how should be preserved.

“Italians are individualists — but it’s easy to say that it’s only the entrepreneur’s fault [that fashion groups have not emerged here]. Politics should be involved, too. Italy doesn’t have a program of acquisitions to continue the supply chain,” explained Pesci, who is “sharing this discussion with Kering.” The executive pointed out that a company like Brioni “needs to be sure” it can continue to buy certain fabrics in the long term, for example.

An industry source who spoke on condition of anonymity said the LVMH Moët Hennessy Louis Vuitton acquisition of Loro Piana was a sensitive issue, as the Quarona, Italy-based company is not only a producer, but also “a buyer of raw materials, one that has the power to control and defend [the market] from the fluctuation of prices.” The source pointed to LVMH’s potential arm-wrestling in favor of its own stable of brands in terms of raw materials.

Armando Branchini, deputy chairman of Milan consultancy InterCorporate, said “re-insourcing” is part of the second phase of globalization and the operations of national support.

“The first phase was that of outsourcing and relocating, as companies were looking for the lowest cost per product unit to become cost leaders,” said Branchini, citing economist Michael Porter’s strategies to achieve and maintain competitive advantage.

RELATED STORY: The Industry’s Standard Bearers >>

Today, the second phase is characterized by a production that has become closer to the consumer, who demands consistency and a link with the territory, finding this more reassuring, according to Branchini. “News of Apple producing in California sent shares way up, for example. There is more attention to social responsibility and solidarity, as customers want to know that a product was made locally where working conditions were respected and without any exploitation,” said Branchini. In terms of a possible American rivalry, Branchini, who is also vice chairman of luxury goods association Fondazione Altagamma, said: “We are not worried, we are pleased with the project, but it mainly touches products that are not in competition with ours.”

While there is no denying the power of the American government or the deep pockets of industry entrepreneurs versus a country that is only now seeing the first signs of an economic recovery, Italian fashion brands have also been investing in technology and machinery. Case in point is Versace, which has been restructuring its manufacturing plant in Novara, Italy, since 2009 to boost in-house manufacturing and raise the quality bar.

“For example, we had a small production in Switzerland for Versace Collection for men’s that has been brought back to Italy,” said Gian Giacomo Ferraris, ceo of Versace SpA. Ferraris said he did not see any challenges from the U.S. in the short term, given Italy’s “very efficient network.”

Patrizio di Marco, Gucci president and ceo, said “innovation” was at the core of the house since the beginning, citing as an example the introduction of bamboo in the Forties, when more traditional raw materials were in short supply due to World War II. Today, Gucci’s reputation continues to rest on a combination of artisanal craftsmanship, creativity, innovation, research and development, said di Marco.

“We nurture these values tirelessly through the close collaboration that exists between our creative director [Frida Giannini], her design team, our artisans and our loyal suppliers.

“As for the Made in Italy label, I think it is in very safe hands, built on centuries of craft and savoir faire, handed down from generation to generation that cannot be simply replicated elsewhere by industrial processes. Made in Italy has a significance and value in the minds of knowledgeable consumers around the world that is perhaps only comparable with Switzerland’s reputation for the craft of watchmaking,” he said.

To be sure, most Italian companies that produce everything in Italy have developed their own pipeline. “Industrial integration is fundamental, as the emphasis is on quality and know-how,” said Valentino’s Sassi. The Rome-based company counts ventures with shoe and handbag suppliers, for example. “Without this, it’s difficult to control sourcing, production quality and research and innovate, so that style and production are in line with each other.”

The destiny of some production companies is guaranteed by big groups, but it is true Italy also has a universe of small- and medium-size firms.

“As we grow, we can give guarantees to our workers, we can provide employment and help smaller companies,” observed Sassi. The executive did not see many similarities between Italy and the U.S., which has a history of outsourcing. “The U.S. is based on a different type of economy. Manufacturing is less relevant in that industrial structure and has a lesser impact nationally, compared to Italy, where manufacturing has a strategic relevance,” he said.

“For me, Made in Italy means beautiful, well-made and conceived in Italy, from start to finish,” said Giorgio Armani. A spokesman for the house said the group is “unusual insofar as it owns all the industrial companies responsible for the production of its collections, in close collaboration with the style office in Milan. This optimizes management of the entire production process, right from the design phase, ensuring consistently high-quality standards” that are in sync with the firm’s basic principles.

“It is also significant that, at a time when many designers are moving production abroad, to the contrary, the Armani group has focused all its efforts in Italy, so as to breathe new life into the luxury sector,” the spokesman added. “Not to mention its significant investments on accessories, reflecting the group’s increasing interest in this sector.”

Italian entrepreneurs are very much aware of the value of know-how and continue to invest in Made in Italy, without expecting any help from the government, according to Massimo Ferretti, chairman of Aeffe SpA, which controls the Alberta Ferretti, Moschino and Pollini brands and produces and distributes collections for Cédric Charlier and Emanuel Ungaro. “Creativity can be international, there is no passport, but the pipeline offers a very strong competitive advantage,” said Ferretti. “I am appreciative that the U.S. is working on developing their production, but Italians are the undisputed leaders in the pipeline, from the raw materials to printing. It’s a fast system, which makes the difference,” given the speedy pace of the fashion industry.

Gianluca Brozzetti, ceo of the Roberto Cavalli group, concurred, saying that he understands how Americans would be working on bringing back and enhancing their own manufacturing.

“It’s a precious asset, and also a marketing tool. I’m sure that a consumer in the U.S. would rather buy something made locally than in Vietnam, say,” remarked Brozzetti, expressing reservations on whether the Made in America label would have the same resonance in France or Italy or be able to attract consumers more than goods produced in either of those two countries.

As for the credit crunch in Italy, Brozzetti believes companies known for their “excellence” always secure the funds needed.

Michele Norsa, ceo of Salvatore Ferragamo, said the Made in Italy label should be better communicated to Italian shoppers themselves, as he believes this asset is not top-of-mind locally as much as it is outside national borders.

“It’s something to be proud of,” he said. Likewise, he urged his peers to believe in “aggregating” to be more competitive. “We have historically failed at joining forces, compared with France or the U.K., for example.”

The executive was unfazed about competition from the U.S., as barring sports and denim, America doesn’t have a specific manufacturing tradition in ready-to-wear or accessories.

Tomaso Trussardi, ceo of TRS Evolution, the Trussardi group company that produces the brand’s first and second lines of clothing and accessories, said there was “no doubt that there has been a boom in recent years of the Made in USA movement, with the international success of U.S. brands and new business models, but this must not be a concern for Italian companies. On the contrary, it encourages us to intelligently invest to expand production processes and support Made in Italy excellence and our heritage.”

He noted there is a link between Italian fashion and the concept of luxury. “The use of the finest raw materials, superb tailoring and sartorial approach, and an extreme focus on detail are key characteristics of Italian-made products that are also a part of Trussardi’s DNA. To safeguard them, targeted investments in production processes are fundamental.

People who do not recognize Italian values might consider 100 percent Italian production and the artisan crafting by hand of leather goods a great cost. However, for Trussardi, there is no other way to produce our garments, and this added value is perceived by the market and consumers. The production of superb handbags, clothes and accessories is our own personal contribution to safeguarding Made in Italy excellence.”

ON MODELS: MAKEUP BY ELENA PIVETTA FOR GREENAPPLE; HAIR BY DOMENIC DI CAMPO; STYLED BY ALESSANDRA TURRA

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