By Matthew Dalton | Photographs by Justin Clemons for The Wall Street Journal
ALVARADO, Texas -- Louis Vuitton, the global luxury brand, was
born on the cobblestones of Paris. Its future is taking shape in
places like the grasslands of northeast Texas.
Where cattle graze, Louis Vuitton has built a
100,000-square-foot factory to make its monogrammed canvas and
leather handbags for the American market.
Unlike Louis Vuitton products from France, the Texas bags won't
be produced by "petites mains," the French artisans at the center
of the brand's history and mystique. Instead, Louis Vuitton is
recruiting and training employees locally, no experience needed.
Candidates passing drug and manual-dexterity tests can join the
line with starting hourly pay of $13.
The gold-and-brown bags, priced at $1,200 and up, will be tagged
"Made in the USA."
Louis Vuitton is positioning itself for a world in which
consumer tastes and global trade are in upheaval. That means
testing one of the luxury industry's core tenets -- that a luxury
product must be made where it was conceived. While competitors such
as Gucci, Hermès and Chanel have kept most production in Italy and
France, Louis Vuitton is increasingly letting industrial logic and
geopolitics govern supply-chain decisions.
"It is an art form to maintain your company values and standards
when you start expanding outside your home country," says Louis
Vuitton Chief Executive Michael Burke. "Most companies fail at
that."
In opening the plant a year before President Trump faces voters
again, the firm is stepping into an unfamiliar spotlight. On
Thursday, LVMH's billionaire controlling shareholder, Bernard
Arnault, will host Mr. Trump at the plant for a ribbon-cutting
ceremony highlighting the president's trade agenda of pushing
corporations to move production to the U.S.
Located 40 miles southwest of Dallas in Johnson County, where
Mr. Trump won 70% of the vote, the plant is expected to employ 500,
up from its current staff of 150. Louis Vuitton expects to build a
second workshop on the property, adding another 500 workers. It
began selling Texas-made bags from temporary facilities there in
2017.
The Texas factory gives Louis Vuitton a hedge against the risk
of trade disputes between the U.S. and European Union. The Trump
administration has placed tariffs on a range of EU products as it
seeks to rewrite the rules of global trade.
Luxury handbags have been spared thus far, but they were
collateral damage in trans-Atlantic trade disputes in the 1990s.
Since then, U.S. sales have helped power the brand's owner, LVMH
Moët Hennessy Louis Vuitton SE, to record revenues. LVMH doesn't
break out Louis Vuitton's sales. Analysts estimate its annual
revenue at more than $12 billion. Sales at Louis Vuitton's stores
are up double digits this year, Mr. Burke says.
Luxury mystique
Brands across the industry have long promoted their old-world
craftsmanship to justify high prices. Hermès, maker of handbags
costing more than $10,000, produces exclusively in France, where
one worker oversees a single bag.
Louis Vuitton's strategy is to sell luxury goods to the masses
without lowering prices. It must stay on top of trends in far-flung
markets, where consumers increasingly demand customized products.
That raises pressure to streamline manufacturing and build an agile
supply chain. Eight of its 24 manufacturing facilities are outside
France.
It divides bag construction into steps, each performed by small
teams of workers. Some teams select and cut leather. Others attach
linings or sew together pieces of leather or canvas that form the
body.
"It's not like what you hear, this fiction -- the same motions,
on the same bag, for an entire life" of the worker, says Louis
Vuitton's Mr. Burke. "That's really a romantic myth."
Some Louis Vuitton customers prefer Made in France to Made in
the USA, says Lori Matthews, a collector of Louis Vuitton bags who
says she owns 15 to 20 bags from the brand. They think the French
models are better constructed, she says, but she doesn't believe
it. "People look at these bags, practically under a microscope,"
she says of collectors. "Every stitch and every seam."
At times, Louis Vuitton's Texas foray has pushed the boundaries
of what separates the making of luxury goods from any other
product. Two years ago, it set up temporary workshops to train
employees and start production. Some early hires recall working
through sweltering heat without air conditioning, surrounded by a
chain-link fence. "It was literally a sweatshop," says Amy Wynn, a
Louis Vuitton worker in Texas until she says she was fired in
August for poor performance, which she disputes. "It was brutally
hot."
A company executive acknowledges there wasn't air conditioning
but says the company brought in fans, declining to comment on Ms.
Wynn's tenure.
Another employee, fired in March -- she says she was told it was
"for safety concerns" -- filed a complaint with the Texas Workplace
Commission alleging the lack of air conditioning and other working
conditions were a form of discrimination against the Hispanic and
female workforce. Louis Vuitton declined to comment on the pending
complaint.
"We're typically not known for unsanitary conditions," Mr. Burke
says.
The company brought in Sébastien Bernard-Granger to oversee
manufacturing in Texas and ensure the facilities, including the new
plant, met French standards. Working conditions improved, some of
the former employees say, as the brand moved into the permanent
plant.
'Market of one'
Founded in 1854, Louis Vuitton licensed its name to a U.S.
manufacturer in the 1970s, later opening workshops in Spain,
Romania and Portugal, and another in California in 2011. The
far-flung operations let it adapt production to market demand.
Inside the workshops, employees rotate through different steps of
production and different models, allowing managers to redirect
teams quickly to better selling models. That flexibility also
allows it to make small batches of uniquely designed handbags,
often based on individual consumers' demands.
"We are moving from a sort of mass market," says Antonio
Belloni, LVMH's managing director, "to a market of one."
In January 2017, after meeting Mr. Trump at Trump Tower
following the election, Mr. Arnault stepped out of the elevators
with Mr. Trump and said Louis Vuitton might build a factory in the
Carolinas or Texas.
"And maybe in the Midwest," Mr. Trump suggested.
Louis Vuitton started negotiating with officials in North
Carolina and in Johnson County, where it was eyeing a 260-acre
ranch that kept zebras and other wild animals. The nearest town,
sparsely populated, has at least five churches lining the highway
and a store named Crazy Gun Dealer.
Louis Vuitton chose Johnson County because of its central
location in the U.S., direct flights between Dallas and Paris, and
direct access to the Port of Houston, where the brand will bring in
raw materials, Mr. Burke says. It is also receiving tax incentives
and a state pledge to resurface a road to the highway.
It sold most of the animals to zoos, keeping 14 heifers and
adding a bull named Michael.
Workers need only a few weeks' training before starting on a
production line. Cindy Keele knew little about Louis Vuitton when
she heard it was hiring. Having worked 20 years as a
building-services-company administrator, she wanted away from the
desk and figured her hobby of making leather saddles and cowboy
vests might prove useful.
After 10 months at Louis Vuitton, she helps assemble the Palm
Springs bag, which retails at $2,000 and up. "I needed something
where I was up and moving," she says.
The Texas workshop has Louis Vuitton considering a shake-up of
its traditional supply chains, Mr. Burke says. For now, it plans to
ship in raw materials from European suppliers, but would like to
start buying U.S. leather. The challenge, he says, will be to
persuade Texas ranchers to stop using barbed-wire fences that scar
the cattle: "That typically makes it impossible for us to use the
hides."
He would also like to introduce products made exclusively at the
ranch: "I don't exclude us in the future making boots in
Texas."
Write to Matthew Dalton at Matthew.Dalton@wsj.com
(END) Dow Jones Newswires
October 17, 2019 13:25 ET (17:25 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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