Prada focuses generational transition on Italian artisans
Prada CEO Andrea Guerra, who was brought in last year as part of the generational change in family-run Prada's management, said at an unveiling of the expanded plant Tuesday that the company is investing 60 million euros ($65 million) in production this year.
At Torgiano, Prada has added 30 new jobs this year, alongside 65 last year, bringing the workforce to some 220 employees, mostly women, to create knitwear for the Prada and Miu Miu brands, a key category for the group. The site had just 39 employees when Prada bought it in 2001.
"For many years, Torgiano was a small, important place, linked to the Umbrian knitwear tradition,'' mostly dedicated to product research and development, Guerra said. "In the last six or seven years, with the extraordinary growth in knitwear, we decided to create an all-around industrial hub," adding production to a reinforced R&D center.
The innocuous low-slung plant, identified by a simple, small Prada nameplate near the gate, is at the heart of a network that includes dozens of smaller companies that together create some 30,000 pieces of knitwear a month for the global luxury group. They include red crocheted Miu Miu culottes to soft gray Prada cardigans that have become a trademark.
Guerra described the Milan-based fashion group's manufacturing footprint in central Italy as a "network of intelligent relationships and craftsmanship merged with a constant capacity to bring innovation to the market."
Prada's investments to exert greater control over its supply chain stand out against the backdrop of a recent investigation that revealed sweatshop conditions in Chinese-owned factories producing luxury goods for other Italian brands in the Lombardy region, where the Italian fashion capital Milan is located. The production arm of Giorgio Armani has been put under receivership as part of an ongoing supply chain probe.
Prada has focused on what it calls vertical integration of its supply chain — working with smaller companies, some with just a handful of craftspeople, that provide specific, sometimes unique, skills. For its knitwear operation, Prada works with some 60 smaller companies that it refers to as "partners" or "collaborators."
"Contractors, subcontractors, that is not something tied to this world. There are production phases that are assigned to our collaborators, our partners,'' Guerra said, adding: "The way I work inside, and the way I work outside needs to be the same."
Lorenzo Bertelli, marketing director and head of corporate social responsibility who is slated to take over the company from his parents Patrizio Bertelli and Miuccia Prada, said a strong governance is the key to avoiding "such incidents." He credited his father with starting Prada on the road to integrating its supply chain in the 1990s.
Audits of suppliers, which have so far been voluntary, will become mandatory in 2025 under the Corporate Sustainability Reporting legislation, aimed at controlling abuses, said Stefania Saviolo, a fashion and luxury expert at Milan's Bocconi University. Publicly quoted companies like Prada, which are used to a level of transparency and reporting, will likely have an easier time than others, she said.
Integrating the supply chain doesn't just mean that a major player buys up smaller companies, she said, but they may invest in specific machinery, or help them secure bank financing. "It is not ownership, it is a longer transaction along the model of partnership,'' Saviolo said, adding that such relationships also provide a sense of security to the smaller companies more vulnerable to market crashes.
Noting that the luxury and fashion industries have long relied on third-party manufacturing, Bernstein global luxury goods analyst Luca Solca said the kind of investments by Prada to integrate manufacturing processes in-house "is a sort of catch-up with best-in-class-players in the industry."
A key part of Prada's investments are aimed at securing know-how into the next generation, a transition the company has been preparing also in its management and creative roles.
Finding new workers with both experience and passion is difficult, even in a region where knitwear is part of the local tradition, said Lorenzo Teodori, who runs the Torgiano plant.
To fill that gap, Prada runs an internal academy as needed at its 23 Italian production sites to train young craftspeople. The next one in Torgiano starts in the fall, with experienced workers training the next generation.
"Through the Prada Academy, we have seen how this dialogue is still alive and successful,'' Bertelli said. "We need it to train the future technicians of tomorrow, who in turn will be the teachers in the future. It is a fundamental cycle for our group."