Dior handbags are coming under the microscope amid a probe by prosecutors in Milan, who are investigating the supply chains of more than a dozen big-name – but largely unnamed – fashion brands. A Milan court has appointed a commissioner to oversee the operations of Dior Manufactures SRL, an LVMH-owned maker of Dior-branded handbags, after an investigation into four of its suppliers in and around Milan “uncovered illegal working conditions for staff,” Reuters reported. The publication noted that on-site inspections and corresponding checks have prompted allegations of exploitation by prosecutors, who claims that laborers “were employed for extended hours, working often into the night and during holidays,” with others sleeping at work, lacking “regular contracts,” and illegally immigrating into Italy.
The result, according to reports, are designer goods, including handbags, that were manufactured and supplied to Dior for “as little as 53 euros ($57),” which the LVMH-owned brand then offered up to consumers for 2,600 euros ($2,814) or more, per Reuters, which noted that the Milan prosecutors’ probe is focused exclusively on the Dior subsidiaries/suppliers and thus, the company’s parent, LVMH, is not under investigation.
The Dior-directed headlines come just a couple of months after Armani came within the crosshairs of prosecutors in Italy. An Italian court revealed in April that it was tied up in a labor matter after at least one of Armani’s suppliers was alleged to have relied upon subcontractors that flouted national labor laws. In a court order released in early April, the Court of Milan stated that one of Armani’s suppliers, Manifatture Lombarde, “used subcontractors in the Milan area that employed undocumented migrants for the production of Armani bags, leather goods, and other accessories,” subjecting these individuals to “particularly disadvantageous working conditions,” including requirements that they work a greater number of hours than the company officially declared and the payment of wages of between €2 and €3 ($3.25) per hour.
“In a ruling dated April 3, the court appointed a consultant for one year to work alongside managers [at Giorgio Armani Operations] to improve relations with suppliers,” the AFP reported.
The court orders in the Armani case and the matter involving Dior come amid a years-long effort by the Milan public prosecutors’ office to investigate the outsourcing of production by large groups in fashion and other industries to subcontractors that allegedly exploit workers.
Speaking about the labor-related probes, Fabio Roia, the president of Milan’s court system, told Reuters, “We’ve noticed companies don’t invest enough in their control systems. It is, first and foremost, a problem of culture, like tax evasion.” More than that, he noted that “business owners unfortunately don’t normally question why certain goods or services cost so little. They simply seize the chance to maximise profit. You’d think ultra-low prices would ring alarm bells. If someone offered me a Rolex watch costing 50 euros, I’d be wondering where it comes from.”
THE BIGGER PICTURE: The increasingly expansive efforts by Milan prosecutors shed light on rising regulatory attention to the workings of fashion/luxury brands’ supply chains. While fast fashion companies have traditionally been at the center of labor and manufacturing-related disputes, the cases centering on Armani and Dior demonstrate that companies in both the mass-market and high-fashion levels, alike, face difficulties when it comes to keeping tabs on their complex and often murky supply chains.
Such rising attention from authorities in this realm is likely to increase further in coming years in light of ESG-centric calls for increased transparency about companies’ value chains, including from entities like the European Parliament, which has made it clear that it aims to bring about heightened “sustainability” and transparency in connection with the products offered up in the apparel and textile segment.
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