On Tuesday, Louis Vuitton, the flagship brand of the French luxury goods giant LVMH Group, said that the company is expanding its production of leather goods and handbags, and plans to open three new factories this year and next year.
According to Louis Vuitton, the first new factory will be completed and put into use in July this year. The second and third homes will be completed early next year and later in the year.
Valérie Dubois, head of the plant at Louis Vuitton, said: “After 15 years ago, Louis Vuitton’s handbag took four weeks from production to delivery, but now it takes only two weeks, but our goal is to reduce the time to one week.”
In January this year, LVMH Group released key financial data for fiscal year 2017. Because of the recovery in demand in the Chinese market, the Group's total sales increased 13% year-on-year to 42.6 billion euros, and net profit reached 5.13 billion euros.
At the analyst meeting of the annual performance report, Bernard Arnault, Chairman and CEO of LVMH’s Board of Directors, stated: “Louis Vuitton’s turnover could have been higher, but it was constrained by the following two factors: First, the lack of productivity; Louis Vuitton has a huge demand for some specific styles of merchandise, but we are more willing to ensure the diversity of our products. At present, Louis Vuitton's top merchandise is growing very well."
Some analysts expect Louis Vuitton to have annual sales of at least 8 billion euros in fiscal year 2017. Leather goods such as purses and handbags brought the highest profits to the LVMH Group, and Louis Vuitton’s leather goods accounted for the vast majority of the French market.
Strengthen supply chain relations.
Louis Vuitton stated that by the beginning of 2019, the company will have 16 French leather factories and a logistics center. In addition, Louis Vuitton also has several factories in other parts of the world, including two factories in California to meet the needs of the U.S. market. The company also plans to establish a new factory in Texas. In addition, Louis Vuitton has four factories in Catalonia, Spain, mainly producing small leather goods and accessories.
In recent years, Louis Vuitton has sought to integrate proprietary technologies and reduce the reliance on external suppliers. In Portugal and Romania, there is a factory specializing in the production of accessories to produce luggage handles and other components. (According to LVMH Group's introduction, even the largest external leather supplier only accounts for 25% of Loius Vuitton leather supplies.)
In recent years, Louis Vuitton has acquired Les Tanneries Roux, one of the few French tanneries specializing in calfskins, and Heng Long, a crocodile leather tannery in Singapore. At the same time, the brand is also strengthening its ties with cattle owners. Louis Vuitton often invites tanners to visit brand stores and allows them to communicate directly with creative people. Emmanuel Mathieu, industry director of Louis Vuitton, said: “This is critical to the sustainable development of the brand in the future.”
Louis Vuitton plans to review more than 90% of leather suppliers by 2020 and achieve at least 70% of suppliers meeting the requirements of Leather Working Group. At the same time, the farm provider of Louis Vuitton will also accept such an audit.
Training high quality craftsmen
Strengthening productivity requires strengthening the links between supply chain links, but another key factor is to increase the overall skills of the artisans.
Louis Vuitton will recruit 500 employees for two of its new factories in western France. The goal is to reach 4,000 leather specialists to meet the growing demand for production.
Emmanuel Mathieu said: “These leather craftsmen have been professionally trained to handle any step of the production process of any leather goods model. Only 10% of applicants can eventually enter the factory, and the selected standards include: hands-on capabilities, adaptability and teamwork capabilities. The age limit for new recruits is 55. We have also attracted a large number of Millennials."
Louis Vuitton has about 50 to 60 classic handbag models, including: Speedy and Capucines, and about 10 to 15 catwalk models. Each year these handbags are delivered four times. The average time from the verification model to the store shelves takes about three months. This process is even longer for special orders. Emmanuel Mathieu introduced: “For grandma's green crocodile leather or tie-dye crocodile leather for Capucines handbags, you have to flip the leather out of it and check it in a little bit, which takes a long time. The recently launched Jeff Koons series, It took about a year to develop."
On average, training a new employee takes about six months, but this is a continuous learning process. Staff and trainees also receive professional training from the supervisors of Louis Vuitton leather craft schools.
Emmanuel Mathieu introduced: “We are like long-distance runners who need to keep running and have the ability to fight difficulties. We need to be close to the market to ensure that our products are marketable. When a series of products fails to perform well, we need to stop immediately.”
When asked about Louis Vuitton’s new men’s creative director, Virgil Abloh, in the brand's leather supply chain, Emmanuel Mathieu stated: “Our craftsmen can handle a variety of men’s and women’s products. Not all of them know Virgil Abloh. Even when someone first arrived, they didn't know about Marc Jacobs and Nicolas Ghesquière. It would be a challenge, but working together as a team, we can always find a solution."
According to Emmanuel Mathieu, Louis Vuitton is also developing a "future machine" that can work like a craftsman, and these machines will be able to switch production modes according to the materials and specifications of each style of handbag.
Optimizing the work environment for craftsmen is also one of the main concerns of Louis Vuitton. He introduced that the number of artisans in each studio is limited to 250 people, focusing on factories in rural areas and ergonomics of natural lighting and facilities. Emmanuel Mathieu believes that all production machines should serve artisans.
In addition, Louis Vuitton's craftsmen also have an internal social networking site, Yammer, where they can exchange skills.