Why Louis Vuitton is disappointed with his Texas factory
European governments must urgently reduce tensions with the United States around President Donald Trump’s duties, and if no solution is found, the screw will be on Brussels. « European countries should try to manage these negotiations, not leave them on the bureaucrats. » This was stated on Thursday at the annual shareholder meeting of the giant luxury goods group Bernard Arno CEO of LVMH.
In January, the richest man in France said he was planning a shift in some of the US, praised Trump for stimulating economic growth and entrepreneurship and the memory of « wind of optimism » after attending his inauguration.
Trump then shook the markets and sparked a global trade tension that LVMH’s business will suffer from. US duties could include 20% on European fashion and leather products and 31% for watches made in Switzerland if applied in full. So far, he stopped for 90 days, the heaviest rates, but retained the total of 10%.
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Since then, investor concerns about the possible economic damage from Trump’s trade policy has reduced LVMH shares by 36%, reducing the group’s market capitalization by more than € 100 billion ($ 114 billion). The sector rival Hermes ahead of LVMH briefly as the most valuable company in France this week. About half of LVMH’s shares are owned by the Arno family.
Made in the US?
In order to try to reduce the effects of US duties, Arno repeated on Thursday that he would consider moving more production in the United States, where the group makes 25% of its annual sales. « I have already heard of several companies that are considering moving more production there, but it cannot be said that this is a mistake for the companies. This would be a mistake by Brussels, » he said.
In fact, the European Commission said Washington has not yet set out its negotiation position. There are also no US official comments on EU negotiations.
Analysts said any movement to the US would probably be limited by scale and would not do much to mitigate tariff risks.
In addition to three Louis Vuitton sites and some Tiffany LVMH jewelry production sites has a small production capacity in the United States. Much of the group’s business comes from the sale of luxury leather products made in France, champagne and spirits.
The example of the problems in outdoor production with the Fanfari facility in Texas is instructive. The site is constantly ranked among the worst performing Louis Vuitton worldwide, Reuters reported.
Six years after Bernard Arno and Donald Trump cut the enterprise’s tape in provincial Texas, a Reuters investigation revealed significant disadvantages last summer that emphasizes the obstacles that LVMH faces while trying to build its production base in the United States.
Shortly afterwards, the site in Alvarado (about 60 km south of Fort Worth), Johnson County, faces many problems limiting production, 11 former Louis Vuitton officials told Reuters. « It was more difficult than we thought it would be, it’s true, » said Ludovik Pisar, Louis Vuitton’s industrial director, in an interview with Reuters.
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- The main problem is the lack of qualified leather employees capable of producing brand quality standards, the three former workers told Reuters. « It took them years to start making simple pockets of the Neverfull bag, » said a source familiar with the factory.
- Errors made during the cutting, preparation and assembly process have led to the loss of as many as 40 percent of the skins, adds a former employee with detailed knowledge of the factory’s work. Throughout the industry, typical levels of leather waste are usually 20 percent, said a high -ranking source from the industry.
- Several former employees who talked to Reuters described a high voltage work environment. To increase production numbers, controlling routinely closed their eyes to defect covering methods and in some cases encouraged such behavior, four former officials told Reuters.
Pisar admitted that there were such cases in the past, but said the problem was resolved. « This dates from 2018 and a specific manager that is no longer part of the company, » he said.
Poor made bags, which are considered unusable for sale, are cut into place and transported into combustion trucks, two of the sources familiar with the company’s supply chain said.
A former manufacturing manager who often travels to the site said Louis Vuitton uses the Texas plant, mostly for less sophisticated bags, producing its most expensive products elsewhere. Pusar, industrial director of Louis Vuitton, said the company was « patient » with the « young factory ». « Every bag that comes out of it must be a Louis Vuitton bag, we make sure it matches the exactly the same quality, » he said. « I do not know of any problems that suggest that the quality coming from Texas is different from that coming from Europe. »
The two manufacturer’s production facilities are built on a terrain near livestock pastures and a gas well. Louis Vuitton baptizes the Roshambean object in a tribute to Jean-Baptiste Donasien de Vimio, Count de Roshambo – The French general who participated in the War of Independence.
Here are components and entire models of Louis Vuitton bags, such as Felice and Metis bags – with « Made in the US » labels and prices around $ 1500 and $ 3000 in high -end boutiques.
| Vuitton says his handbags – usually made in French, Spanish or Italian leather studios by craftsmen known as Petites Mains – are assembled by a process they have been refined since the mid -19th century. After cutting canvas and leather with the help of handmade tools and laser cutting machines, they sew pieces using industrial sewing machines. |
- Workers at the Texas facility, which includes special floors for cutting and assembling individual parts, as well as a warehouse, initially received $ 13 per hour.
- By 2024, the main pay for the position of a skin worker at the plant was $ 17 per hour according to two people who recently applied for positions.
- The minimum wage in Texas is $ 7.25 per hour.
« We were under a lot of pressure to meet the daily norms, » a former worker told Reuters who left the factory at the end of 2019. Another described how he concealed imperfections in a particularly difficult part of Vendome Opera bag. Still others said he saw people melt material to hide holes or other imperfections in the seam.
« Some people have chosen to leave us because it is true that it is a job that requires a lot of knowledge, » explains Damien Verbridge, an international production director of Louis Vuitton. Three former workers said they had gone between two and five weeks of training. A current Louis Vuitton employee in France has said that receiving just a few weeks of training is not uncommon, as most learning happens on the production line controlled by more experienced craftsmen.
Verbrig said that teaching in Texas is « exactly the same program we have in all our workshops. » These are six weeks on the training line, where new craftsmen do nothing but learn basic operations and skills before they continue to study on the production line. There, he said, they are « accompanied and constantly mentored by trainers. »
| LVMH has received multiple tax breaks and incentives from Johnson County, including a 10-year 75 % reduction in property tax, which promises the company to save about $ 29 million. |
In his letter of application for a 2017 tax relief, quoted by Reuters, LVMH stated that he was striving to hire 500 people in the first five years of the plan. At the bar cut ceremony in 2019, Arno said: « We will create approximately 1000 highly qualified jobs here in Roshambo in the next five years. » However, three former employees said the number of staff was just under 300 workers in February 2025, a confirmed number by Verbridge.
Pusar confirmed from the mayor’s office and said that Louis Vuitton intends to reform his operations in California and transfer more qualified craftsmen to Texas – so far with limited success.
