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A challenging global economic scenario is slowing down production and impacting the region's pipeline, as signaled by Gucci turning to a temporary government-funded redundancy pay for three of its industrial platforms.

MILAN — Eyes are on Italy’s Tuscany region, a key leather goods manufacturing hub and a fundamental cornerstone in the production pipeline for most international luxury brands.

Conglomerates from LVMH Moët Hennessy Louis Vuitton to Kering have been investing in protecting the supply chain in the region, and developing their own production chain over the years. However, a challenging global economic scenario affecting the luxury industry is slowing down production, impacting even a company such as Gucci.

The company has been forced to turn to the “cassa integrazione,” an extraordinary and temporary government-funded redundancy pay, in relation to three industrial platforms, the GT in Scandicci, the GPA in Figline Valdarno and the Garpe di Piancastagnaio, all in Tuscany. Together, the three count around 1,000 employees.

These companies have been working directly for the production of Gucci collections for as far back as three generations. Through the redundancy pay, the goal is to maintain the production functioning, although at a reduced rate.

The last time Gucci introduced the measure was during the COVID-19 pandemic.

According to the Tuscan Federmoda branch of CNA, the national confederation of artisans and small and medium sized companies, which comprises 620,000 entrepreneurs that employ 1.2 million people — in the first half of the year, 304 small and medium-sized companies have shut down in the region, 182 of them in the leather goods sector.

Claudia Sequi, president of leather goods association Assopellettieri, told WWD at the Mipel trade show in September that the numbers relating to the first five months of 2024 processed by the Confindustria Accessori Moda Study Center speak of a 9.4 percent drop in exports and that redundancy payments have surged 138.5 percent in the leather supply chain, and 1,832 fewer employees were employed between January and June.

“We need immediate political support, starting with extending redundancy funds and enabling banks to provide easier access to credit,” Sequi said, urging the government to take action. “Loan rates are high; still, companies must invest to move forward. Our supply chain is unique worldwide, we must protect it.”

As reported, the sector’s associations are rallying together seeking more government support. Following the fifth meeting of the so-called Table of Fashion held in the presence of the country’s minister of enterprises and of Made in Italy Adolfo Urso in August, Camera della Moda, associations Confindustria Moda and Sistema Moda Italia underscored the challenges impacting its future.

The government has announced it would support the rescheduling of debt, a tax break on research and development, promotion outside the country and more social welfare measures. Urso also reiterated his ministry’s goal is to implement a Made in Italy law, which would emphasize and add value to the natural and recycled fibers supply chain and provide incentives to the sector.

Carlo Capasa, chairman of Italy’s Chamber of Fashion, reporting a 5 percent decrease in revenues in the first six months of the year compared to the same period in 2023, said it was “necessary to provide the correct support to the Italian industry and especially to small and medium-size companies.”

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