"Italian haute couture leaves workers in Romania on the street", 25 September 2024

...Until a year and a half ago, [Linda] worked in a factory that produced footwear for major luxury brands, in particular Gucci, Christian Dior and Tod's. Today that factory no longer exists: it closed due to lack of orders, sending home all 152 workers who, like Linda, worked there full-time.

...Here, in the Carpathian mountains, stood the atelier of the Selezione company. For the past fifteen years, Linda...has worked for them, sewing leather shoes for clients willing to pay her several hundred euros...

Yet, despite high productivity, in January 2023 she was fired, along with 77 colleagues. "They told us so, without warning. From one day to the next I was unemployed"...

...“They told us they had to reduce the staff because orders had decreased. And so they laid off half of us. Then in December, the factory closed down.”

La Selezione is one of the hundreds of companies that have sprung up like mushrooms in the last thirty years in Romania as suppliers of Made in Italy. Benefiting from low labor costs and a certain know-how in the sector, major luxury brands outsourced production to that country, relying on suppliers who took care of almost the entire process. "They sent us the cut leathers and we sent the ready-made shoe, except for the sole, which was added in Italy," says Violeta Radu, co-founder of the Selection. According to the law, two essential processes are enough for the product to be indicated as "made in Italy". So, usually for shoes the skins are cut and the sole is glued in Italy, the rest is done elsewhere...

Then the contraction began. "Today factories are closing one after the other," explains Daniel Năstase, president of Uniconf, the union that also represents workers in the fashion industry...today he watches the sector collapse, condemned to "a slow and painful death", as he repeats more than once. No one is able to provide precise data, because the companies may maintain their own office and are formally open, and because the workers left at home often do not access any form of subsidy. But Linda herself indicates that in Brașov alone, at least five plants have closed in recent years.

What is the reason for this decline? According to Năstase, the big luxury brands are less and less interested in producing in Romania because the conditions have become less advantageous. In particular, the increase in the minimum wage, which has been adjusted several times in recent years and in July was raised to 3,700 lei (740 euros gross) makes the country less competitive than others internationally. The comparison of the numbers is dismaying, if we consider the very low monthly salary compared to European standards and the price at which the items are sold to end consumers. Yet, it is a fact: Romania is no longer competitive.

"It's all a system based on the exploitation of workers," says Năstase without half measures. "Let's be clear: I think it is legitimate for brands to come here to make profits. But I believe that there are red lines not to be crossed, which is that of respect for rights". The trade unionist points out that the wages of workers in the sector are very low, around 450 euros net per month, which is particularly unfair, when compared to the cost of living. "Today in Romania it is difficult to lead a dignified existence with a salary below 1,100 euros."...

"It is good to unhinge a narrative based on two completely false assumptions: the first is that since production is done in Europe, it is done ethically; the second is that the luxury sector, which makes enormous profits, pays adequately for the work," says Laura Stefanut, president of Haine curate (Clean Clothes)...

"The truth is that the luxury sector has the same behaviors as the fast fashion brands that produce in Southeast Asia. It wants to maximize profits while minimizing protections for workers."...

...Violeta Radu, founder of the Selection, is furious against the brands that have made her dream of a lifetime fade..."We have always been loyal and helpful. We have met their requests, even when they asked us for very quick orders. Then they progressively lowered the purchase prices and effectively threw us out of the market"...

"They are like termites. They strip a place and then move somewhere else, without having any consideration for the relationships built over the years". Beyond the red-hot tones, the entrepreneur tells how the groups she supplied began to offer her unacceptable purchase prices and, above all, not to guarantee any continuity in orders. "But do you think it is possible that, after a relationship that lasted ten or fifteen years, he abandons me like this?", she says disconsolately. Radu shows a text message he sent to Luca Della Valle, director of operations of the footwear division for Tod's. "To throw us out you give us a price at which it is impossible to go on," he complains in the message. Answer: "Unfortunately your costs, and therefore your needs to work are far above our standards, and production planning, not me, has decided to make elsewhere the pairs that you have declared you cannot produce". Contacted for a reply, Mr. Della Valle did not want to comment...

...The fashion industry can rely on verbal agreements, timely orders and no form of guarantee for suppliers. Brands are used to changing business strategy and doing what they did with the Selection, that is, tearing up supply agreements in a brutal way. This is what Gucci's sustainability officer admitted in response to a letter sent by the leaders of the international Clean Clothes campaign, who asked for compensation for the workers who were left home. "It is imperative to underline that the structure of the luxury supply chain is inherently flexible. All suppliers are selected and managed in consideration of the company's strategy. Consequently, in compliance with the legal framework in force and the principles of good faith, suppliers can vary according to the strategic directions of the company"...

Gucci, like Christian Dior and Tod's, does not consider itself in the least responsible for the dismissal of the workers of the Selection. Nor have the brands indicated what changes in corporate strategy led to the termination of relations with Selezione. According to Romanian law, employees fired for reasons independent of their conduct can obtain compensation negotiated with the unions and equal to at least two months' salary, which can increase based on seniority. "Brands must ensure that all fired workers receive adequate economic treatment, so as to compensate them for the sudden loss of their jobs," says Deborah Lucchetti, national coordinator for Italy of the Clean Clothes campaign. "They should also guarantee stable and productive industrial relations in Romania to prevent cases like Selezione's." None of the three groups has agreed to pay compensation to the fired workers. Christian Dior is the only one to have responded to our requests for clarification: "We conducted an internal investigation. The audit confirmed that Dior’s Italian supplier, in relation to the Romanian company Selezione, complied with local regulations, reaffirming our commitment to ensuring ethical and legal practices throughout our supply chain.” No response was received from Gucci, the flagship brand of the Kering group, which underlines on its website how social and environmental sustainability are guiding principles of its actions.

Given these considerations, a question arises spontaneously: is the increase in the minimum wage of a few dozen euros really leading to the dismantling of a subcontracting chain for products that are sold at a price enormously higher than that paid to suppliers?

“The truth is that brands think that it is no longer convenient to work in Romania for a series of reasons: the increasing costs of labor, those of transportation and the possible problems at customs, where a particularly zealous official could object to the production of Made in Italy products made in Romania and block the load,” says a technician who has been in the sector for years, working between the two countries. “From this point of view, it is better to produce directly in Italy, which is what many are doing”...

"In general, the whole sector is in crisis. It's something we say quietly, because the big brands don't want it to be known. But in some cases, there are warehouses full of items. And this could also be one of the reasons for the decline in some orders in countries such as Romania," says an industry operator who works for several brands.

Many have therefore begun to reflect on reshoring, the return of production in our country and no longer making Made in Italy abroad. However, this does not mean that they guarantee better agreements...several industry insiders say that in many cases the conditions set by brands are disadvantageous. "They cut prices as much as possible and in fact prevent workers from being paid fairly," says an entrepreneur who has worked in the tannery for decades and who recently abandoned a well-known brand because he was unable to supply it at the asking price...

If the mechanisms implemented by luxury brands resemble those of fast fashion, the same cannot be said for the prices at which they sell their items. "The ratio between what is paid to us suppliers and that of retail sales is normally one to ten. If they buy from me for forty, they will sell for four hundred," says one of the operators...

Among the entrepreneurs interviewed for this survey, in Italy and Romania, a feeling prevails that oscillates between anger towards the big brands and concern for an increasingly uncertain future...

[Translation via Microsoft Edge]