Luxury groups cling on to craftsmen in crisis
today Jun 10, 2009
PARIS (Reuters) - Luxury goods groups admit they are reluctant to lay off key craftsmen in the economic downturn and some are turning to hiring and salary freezes as the makers of leather goods, jewelry, watches and cars await a recovery.
Lotus ring by Van Cleef & Arpels
French giant Hermes (HRMS.PA), jeweler Van Cleef & Arpels, Swiss watchmaker Parmigiani Fleurier and Rolls-Royce cars are all focusing on trying to control their biggest cost -- labor -- but are mindful skilled workers often need years to train.
"We currently have a hiring freeze, except for craftsmen and new store employees," Hermes Chief Executive Patrick Thomas told the Reuters Global Luxury Summit in Paris this week.
He added that the Paris-based group will take on 50 to 100 new leather craftsmen this year to meet the still strong demand for its handbags, while it will recruit staff for the eight new stores the group aims to open this year.
Hermes currently employs around 2,000 leather craftsmen throughout France and says its leather goods business -- which makes up 40 percent of group sales -- is the strongest growing part of its overall business in the current downturn.
Van Cleef & Arpels, which sits with larger jewelry house Cartier within Swiss-based luxury goods group Richemont (CFR.VX), says it has been through many crises in its 103-year history and is already getting ready for the rebound.
"There will be no salary increase in 2009 for all employees worldwide, and we have had a hiring freeze since October 2008," said Stanislas de Quercize, chief executive of the Paris-based jeweller.
"When there is a crisis, love will always come back," he said. His jewelry range starts at 800 euros ($1,110) and has designs of roses without thorns and animals without claws.
Family-owned Swiss watchmaker Parmigiani Fleurier admits its biggest cost is labor in producing its prestige watches, which on average cost 50,000 Swiss francs ($45,790) but can be as high as 1.5 million. Customers include the Sultan of Oman.
Chief Executive Jean-Marc Jacot admits his biggest problem is production costs but adds the main danger is to cut staff numbers when it can take three to four years to create a team that can make the 4,000 watches it plans to produce this year.
And emphasising the difficulty in recruiting new staff to join his 600-strong Swiss-based craftsmen team, he said: "The young generation are not keen to work with their hands. They prefer to work with the laptop!"
In the British luxury car market, Rolls-Royce, owned by Germany's BMW (BMWG.DE), has not cut the number of its craftsmen since laying off temporary staff last November as it gears up to unveil its new 'Ghost' car model this September.
Rolls-Royce cars Chief Executive Tom Purves said he has been able to maintain craftsmen numbers since November as it prepares to launch the new model alongside its existing Phantom.
"Since then, we've kept everybody on because we know we need them with the Ghost coming, and also because we know they are highly skilled and highly qualified and it is much better for us to retain them than not," Purves said.
Rolls-Royce trains up staff through its apprenticeship schemes to work in its trim and wood shops to provide the polished wood interiors for the world's most famous luxury cars.
($1=1.092 Swiss Franc)
(By David Jones. Additional reporting by Marie-Louise Gumuchian in London)
(Editing by James Regan)
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