Fifth high-end label to be placed under judicial administration in Italy due to investigations into labor exploitation within its supply chains, LVMH-owned cashmere brand, Loro Piana will undergo court monitoring for one year, a period that could be shortened if the company aligns its practices with legal requirements.
The investigation into Loro Piana Spa originated in May when Carabinieri police from Milan's labor protection unit arrested a Chinese workshop owner and shut down his factory in Milan's northwestern suburbs. The arrest followed a worker's report of being beaten and injured after demanding €10,000 in unpaid wages. Police discovered the workshop produced Loro Piana-branded cashmere jackets, with 10 Chinese laborers, including five illegal immigrants, forced to work up to 90 hours a week, seven days a week, for just €4 an hour, and slept illegally within the factory premises.
The Court of Milan found that Loro Piana ‘culpably failed’ to adequately oversee its suppliers in pursuit of higher profits. The company had subcontracted its production through two front firms that lacked actual manufacturing capacity, instead funneling work to Chinese-owned workshops in Italy. While the owners of the contracting and subcontracting companies face criminal investigation for exploiting workers and employing undocumented individuals, Loro Piana Spa itself is not under criminal probe.
Prosecutors in the case asserted, the violation of rules among fashion companies in Italy represents a ‘generalized and consolidated manufacturing method.’ As cited by the Court of Milan, past investigations indicate, the complete outsourcing of industrial production processes is aimed exclusively at reducing labor costs with a view to maximizing profits at the lowest possible production cost.
Italy is a global hub for luxury goods manufacturing, with thousands of small producers accounting for 50-55 per cent of worldwide luxury production. Despite a recent accord signed in May between Italy's fashion brands and authorities to combat worker exploitation, the court ruling on Loro Piana stated that this specific production chain continued to operate until now, despite widespread reports of previous similar cases involving brands like Valentino, Dior (also LVMH), Armani, and Alviero Martini. Carabinieri police confirmed inspecting two intermediary companies and three Chinese workshops in the Milan area, identifying 21 workers, including 10 working off the books and seven illegal immigrants.
