Italy has carved out a reputation for quality and accepted its high labour costs

Italy has carved out a reputation for quality and accepted its high labour costs

After a period of decline the Italian clothing and textile industry is again winning plaudits by playing its trump card: 'Made in Italy'. Joe Ayling reports on the significance of 'Made in' labels to Italy, and how a stable of luxury brands has conserved the country's reputation for quality.

Although EU proposals to make country of origin labelling compulsory were put on ice this week, most major European retailers already do this as a matter of course, while origin labelling rules already exist in the US. For Italy, the tag means it can sell its fabrics and garments backed by a reputation for quality and craftsmanship.

However, the date of 30 September 2013 - when the European Commission is to present a study on the feasibility of an origin labelling scheme - cannot come soon enough for Italian producers.

Leading Italian luxury brands such as Loro Piana, Ermenegildo Zegna, Gucci, Salvatore Ferragamo and Prada are flag bearers for the Made in Italy label, with demand continuing to defy the downturn. Indeed, sales of luxury goods are poised to rise by 8% this year after reaching record levels in 2010, according to a new report from corporate advisor Bain & Company.

Industry rebirth
Speaking at Istanbul Fashion Apparel Conference in Turkey last week, Paolo Zegna, the president of the Ermenegildo Zegna Group, says the Italian textile and apparel industry has been forced to reinvent itself following mass factory closures and redundancies in the sector over the past five years.

"What has happened to a flourishing industry in Italy in the last five years was a big stroke to the country. After the major stroke that was caused by the entrance of China into the developed world, the Italian industry has been able to get up, find its own new way to recover. Today, we may be smaller but we are stronger with a potentially stronger future."

Pier Luigi Loro Piana, joint chief executive officer of Loro Piana, tells just-style it would "not be practical or convenient" for the company to source outside of Italy. Loro Piana, which has 135 directly operated stores worldwide, sells high end 'Made in Italy' clothing and fabrics.

Piana says: "At the beginning of 2000, globalisation appeared as a big enemy for our [Italy's] economy, and particularly for manufacturing companies. Although we remain an exporting country, we had some real restraint caused by producing in Italy versus emerging countries.

"We had extremely high labour cost, expensive energy, strict rules and over-complicated administrative procedures and laws. We still have those problems, but on the other hand we have some advantages, including know-how, tradition, and quality consciousness.

"We knew that Italy could lose low added-value mass and medium production versus new competitors, which could produce big quantities for low prices. The so-called luxury market grew and started to expand steadily, giving us a good opportunity."

Exporting Made in Italy
Zegna explained that Italy's overall textile exports rose 10.4% during 2010, meaning that international brands are willing to pay the premium for Made in Italy goods too.

Don Baum, senior vice president of global manufacturing at Polo Ralph Lauren, told Istanbul Fashion Apparel Conference that consistency of performance and execution determine where the company sources - with Italy covering ticking both boxes. 

"We source plenty of product in Italy, we understand the value that we get there and we pay a lot for it," he says. "Italy has done a great job on working on what they stand for. The country is focused on quality and craftsmanship, and Made in Italy really means something.

"I also know that when I go there the vendors have a passion for what they do. They really love making what they make, they love working on the cuts, and asking what else they can do and offer. They are very entrepreneurial and very dedicated to thinking about what's next."

Italy's clothing and textile industry has gone back to its roots to find a niche right on the doorstep. And while EU regulations on 'Made in' labels can only help carry this message, most Italian brands are keen to show off their wares regardless.