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Patrizio Bertelli Urges Lower Employee Tax

Prada chief tells luxury conference politicians must make changes to awaken "stalled" market.

MILAN — Patrizio Bertelli wants Italian politicians to get their act together.

This story first appeared in the June 14, 2013 issue of WWD.  Subscribe Today.

The Prada chief executive officer on Thursday called on the government to institute a number of measures, including a 10 percent tax cut.

Insisting the Italian luxury goods industry is in “excellent health,” Bertelli added, “The real problem is the relaunch of the economy. The cost of work is high, but at the same time salaries are too low. We can’t raise salaries but we are conscious employees don’t have enough spending power.”

Addressing the problems of youth unemployment, Bertelli said, “Politicians only talk about this now but there is no global vision. You have to accompany young people into the workforce, but there are not enough companies that can afford to do this and not enough work opportunities for young people. If we cannot add young people, there are no foundations for development.”

In a forceful speech, the businessman said that only companies that export 50 percent of their production can survive in Italy, given that the market “is  stalled.”

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Bertelli touched on subjects ranging from the need to avoid an increase of value-added tax, the high cost of bureaucracy and the lack of infrastructure that hurts tourism to cutting the number of holidays in order to meet the needs of production.

Bertelli quoted an Italian politician, left-wing Fausto Bertinotti, who has said “Let’s all work, let’s all work less.”

“He must have never worked in a factory or in fashion. If you [have] a good, expert tailor, you can’t just cut him in half,” smirked Bertelli, barely catching his breath in a freewheeling speech, and clearly affirming his desire to “make statements” during his slot. “Six weeks are an ‘enormous’ amount of holidays. At Prada we reduced them by one week. There is growing demand for our products, our employees want to work, why should we source to outside laboratories when we can do it in-house? Our employees want to work more hours because between bonuses and extras, they make more money,” said Bertelli at the fifth Luxury Summit organized here by Il Sole 24 Ore.

Bertelli didn’t mince words with the press either. He accused a number of reporters of “ignorance” and “wrong attitude,” singling out and naming one from the Italian daily La Repubblica, who claimed Italian firms that are owned by foreign conglomerates or listed outside Italy, such as Prada itself, whose shares trade in Hong Kong, “are no longer considered Italian and no longer mentioned in researches. “Is this a joke? Italian reporters are only considering firms listed in Milan. We need more serious journalism. Have they ever considered that if we all locked our doors to the French, for example, they would lose 60 percent of their products? Between Gucci and Prada, we employ 60,000 people, of which 7,000 directly,” said Bertelli feistily.

He turned his attention back to politicians, lamenting the costs of bureaucracy. “It would be a disaster to raise the VAT. They should touch the costs of bureaucracy and not put their hands in the pockets of Italians. Bureaucracy is inefficient, it disperses resources. The industry produces results and bureaucracy throws them out of the window,” he said, returning to the cost of work. “It’s an unjust ratio. Young people see the gross salary and what they would actually earn and it turns them off from working in the industry. It would work if the state offered the right services.” Asked how many young people he had employed in the past year, Bertelli said 150, all below age 30. “The average age of our employees is 36 and 60 percent are women,” he said.

Concluding his censure of the political world, he lamented the lack of interest in supporting and developing tourism. “I don’t understand — maybe [politicians] are deaf and blind, and, with all due respect to Spain, we are positioned eighth after that country,” he marveled. “How can we promote tourism if our airports are not adequate? Yes, tourists come to Italy, but they are what remains of the big flows that travel through Frankfurt, London and Paris. It’s a touch-and-go form of tourism.” Bertelli revealed that, in his new role as vice president of the Chamber of Fashion, he sent personal letters to restaurateurs in Milan asking them to remain open on Sundays during the shows. “How can some locales close during such relevant events?” he questioned.

Speaking after Bertelli, Stefano Sassi, ceo of Valentino Fashion Group and a new member of the presidency committee of the Chamber of Fashion, responded to a question related to the association’s efforts to return luster to Milan. Sassi said there are no plans to show in the Italian fashion capital because Valentino has shown in Paris for 40 years.

“This is a brand message, it’s part of its history,” said Sassi, viewing Valentino more in sync with the French luxury sensibility rather than Italy’s ready-to-wear. “I work with the Camera della Moda so that we are all untied, we have a common interest, and Valentino wants to actively participate, hold events in Milan, for example. But each brand is specific, there should be more flexibility. Is it better to show in Italy but have everything produced outside the country or to produce here and show in Paris? What is more important?”

Sassi said Valentino has seen a 25 percent gain in sales in the January-May period and that the group expects that same increase for the full year. “Direct retail sales grew 40 percent in the first five months of the year,” said the executive, who credits creative designers Maria Grazia Chiuri and Pierpaolo Piccioli.

With the help of the new owners and a medium-long-term strategy, Valentino is accelerating its investments in retail. “Visibility in distribution counts and we are catching up with our competitors,” said Sassi, citing the new 20,000-square-foot flagship on New York’s Fifth Avenue due to open next year. “In the 2009-2010 period, we invested 9 million euros [$12 million at current exchange] in retail, and in 2013 we expect to invest 100 million euros [$133.1 million].”