Dior Facing the Heat Due to Allegations of Labor Exploitation

A recent Italian Police raid uncovered that Dior uses suppliers who were exploiting workers to produce its expensive luxury bags. A full investigation is now underway by the Milan prosecutors, 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 and The Fashion Law).

An investigation has uncovered that third party suppliers were exploiting workers under poor conditions to produce the bags for a fraction of the retail price. The Reuters publication noted that recent on-site inspections and related checks have sparked claims of exploitation by prosecutors, who claim that laborers “were employed for extended hours, working often into the night and during holidays,” while some individuals were sleeping where they worked and lacked “regular contracts,” and two entered Italy illegally (Reuters). Milan prosecutors also found that Dior handbags made by Chinese-owned subcontractors for ~53 euros were sold by Dior for ~2,600+ euros.

This incident occurred just a few months after Armani faced legal scrutiny in Italy. In April, an Italian court disclosed a labor issue involving at least one of Armani’s suppliers who allegedly used subcontractors violating national labor laws. According to a court order from Milan, the Armani supplier, Manifatture Lombarde, “used subcontractors in the Milan area that employed undocumented migrants for the production of Armani bags, leather goods, and other accessories.” These individuals were subjected to unfavorable 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 euro ($3.25) per hour,” (The Fashion Law). The AFP reported, “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.”

LVMH nor Armani, the parent companies, are under investigation in this case, “while the suppliers targeted by the probe face accusations of worker exploitation, copies of the court decisions seen by Reuters showed,” (Reuters).

According to Italian law, brands that outsource production are required to conduct thorough checks on their suppliers (Reuters). While Italian magistrates previously focused on mistreating suppliers in worker exploitation cases, Milan prosecutors now use a law provision meant for Mob-infiltrated companies, which involves placing such companies under court administration with special commissioners appointed to manage them (Reuters).

Milan prosecutors are intensifying efforts to regulate fashion/luxury brands’ supply chains due to concerns over poor working conditions. Companies like Armani and Dior face challenges in monitoring complex supply chains, reflecting a broader trend of regulatory focus on transparency and sustainability in the fashion industry.

Real Authentication is following the details of this investigation closely. Stay tuned for further updates.

Sources:
– Reuters
– The Fashion Law

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