A Milan court has placed Italian cashmere purveyor Loro Piana, a twinkling star in LVMH Moët Hennessy Louis Vuitton’s “quiet luxury” firmament, under a year of judicial administration after it allegedly failed to prevent a supplier’s subcontractors from exploiting migrant workers in factories where working hours surpassed the legal eight-hour daily minimum and wages undercut accepted thresholds.
The preliminary ruling by the Milan Tribunal marks the fifth time prosecutors have peeled back the hallowed reputations of some of Italy’s most valuable brands to reveal sweatshop-like conditions typically found in more disreputable parts of the global South. Other boldface names that have been implicated in recent years include a Giorgio Armani Group-owned firm, a Christian Dior subsidiary and a Valentino unit.
Related Stories
According to the ruling, the violations at two Chinese-owned workshops with no actual manufacturing capacity were “negligently fueled by Loro Piana,” which it said chose not to properly verify working conditions in pursuit of greater profits. The court said that the lack of due diligence checks persisted despite the widely reported missteps of Loro Piana’s fellow high-end compatriots and the signing of a non-legally binding memorandum of understanding in May to tackle what appear to be systemic issues in the “made in Italy” supply chain.
Loro Piana, which has adopted LVMH’s supplier code of conduct that requires business partners to commit to fair pay practices and legal work hours, said in a statement that it was only made aware of the existence of the subcontractors in May following investigations by military police from the Milan labor protection unit, after which it cut ties with the offending supplier “within 24 hours.”
It was during the same month that the Carabinieri arrested the owner of a Chinese workshop that produced Loro Piana-branded cashmere jackets in the northwestern suburbs of Milan. One of his workers had accused him of physical assault, causing injuries requiring more than a month of medical treatment, for demanding 10,000 euros ($11,700) in owed wages. Further inspection of the factory found that its 10 Chinese employees, five of whom were undocumented immigrants, were made to toil up to 90 hours a week, seven days a week, for 4 euros ($4.70) an hour. Italy doesn’t have a national minimum wage, but trade unions consider 7 to 9 euros ($8 to $10.50) to be an adequate benchmark.
The Carabinieri broadened its investigation to two intermediary companies across three Chinese workshops, also in the Milan area, identifying 21 workers, of whom 10 lacked proper registration and were working covertly. Instead of appropriate housing, many slept on the production floor or in illegally established rooms inside the workshops, it said.
While the owners of the contracting and subcontracting companies are under investigation by Milan prosecutors for stoking sweatshop-like conditions, Loro Piana itself faces no criminal investigation. The administration can be lifted before the year runs out, as was the case with Armani and Dior, if the company adjusts its supply chain practices to the court’s satisfaction.
“Loro Piana firmly condemns any illegal practices and reaffirms its unwavering commitment to upholding human rights and compliance with all applicable regulations throughout its supply chain,” the brand said. “Loro Piana is committed to ensuring that all its suppliers comply with the maison’s highest quality and ethical standards in line with its code of conduct. In this perspective, Loro Piana has been constantly reviewing and will continue to strengthen its control and audit activities.“
The owner of an intermediary company told prosecutors that she had, in recent years, been producing 6,000-7,000 jackets per year for Loro Piana at an agreed cost of 118 euros ($138) apiece for orders exceeding 100 items and 128 euros ($149) for those under 100 items. A women’s cashmere-and-silk-blended jacket on the brand’s website retails for more than $4,000. A men’s topper made from the “Gift of Kings” wool, a type of merino, costs $11,500. In its statement, Loro Piana said that the reported figures “are not representative” of the amounts it paid to its supplier, nor do they consider the “full value of all the elements,” including raw materials and fabrics.
The 100-year-old brand has previously come under scrutiny for allegedly not fairly compensating Indigenous workers who harvest the rare fur of the vicuña—a wild form of alpaca—in Peru, where prices for the commodity have been steadily falling, according to a Bloomberg investigation last year. At the time, Loro Piana pushed back at what it said was an unfair and inaccurate depiction of its “genuine and longstanding engagement” with the vicuña community.
The Carabinieri said in a statement they have shuttered two of the factories—a third turned out to be a shell company with no production capacity—and imposed a collective fine of more than 240,000 euros ($280,000). LVMH, the world’s largest luxury group, paid 2 billion euros ($2.3 billion) for 80 percent of Loro Piana in 2013. Kendall Roy, a character from the HBO TV series “Succession,” famously paired a $500-plus Loro Piana baseball cap with his custom suits and Gucci sneakers, driving the brand into the wider public consciousness and sparking thousands of fashion trend pieces.
Whether this imbroglio will further diminish the label’s stature among the well-heeled remains to be seen, particularly amid a broader luxury slowdown. “Loro Piana expresses its full willingness to cooperate with the relevant authorities on this matter and intends to provide the utmost support for any further investigations,” it said.
