Why Louis Vuitton chose this ranch south of Fort Worth for a factory

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  1. #1 Oct 16, 2019
    Last edited by a moderator: Oct 18, 2019
    Johnson County might not be known for high fashion, but that hasn’t stopped Paris-based luxury retailer Louis Vuitton from selecting the rural area south of Fort Worth for its third U.S. manufacturing plan
    A large ranch just outside of Keene, about 28 miles south of downtown Fort Worth, has been purchased by Louis Vuitton for construction of a leather goods workshop to make luggage and purses. The facility is expected to be under construction by early next year and open by 2019, eventually employing up to 500 people, officials said.

    Johnson County Judge Roger Harmon, who helped approve a package of government incentives to bring Louis Vuitton to the area, said the selection of a rural Texas site shouldn’t really be a surprise, based on how the upscale retailer plies its craft.
    “Most of their manufacturing plants are in more isolated places,” Harmon said. “They call their employees artisans, and they like an area with a lot of serenity to it. They’re going to put a lot of glass in the building, so the workers will have a view of the land. It’s still going to stay a working ranch. They have exotic game now.”

    Louis Vuitton operates 17 workshops worldwide, including two in California. Most of the workshops are in Europe, a company official said.

    The Texas workshop probably will have fewer than 100 employees in the first year, with a gradual expansion to about 500 employees over several years, the official said.

    Louis Vuitton will receive a 45 percent property tax abatement in its first year and, once the company has 500 employees, will receive a 75 percent abatement for 10 years, Harmon said.

    Also, a $1.1 million state grant will be used to improve roadways near the plant, officials said.

    Construction of the Louis Vuitton plant is expected to cost about $20 million.

    Some area residents have raised concerns about how the plant might upset their rural lifestyle.
    But Harmon said it’s his understanding that much of the plant will be built on the backside of a hill at the roughly 250-acre Rockin’ Z Ranch, which means passersby on County Road 316 near Alvarado Lake might hardly notice the facility is there.
    Keene is a city of about 6,300 residents that was settled in the 1850s, and later became known for its large population of Seventh-Day Adventists.
    For years, residents of the city battled myths about their lifestyle. For example, it is not against the law to host a barbecue or mow a lawn on Saturday. Also, although the conservative religion discourages eating meat, restaurants in the area are free to serve whatever they want.
    Louis Vuitton is part of LVMH, a global conglomerate of companies that produce luxury goods. LVMH is headquartered in Paris. Other subsidiaries include Dom Perignon, Sephora and TAG Heuer.
    Louis Vuitton also is opening a store at The Shops at Clearfork, a high-end retail area in west Fort Worth that held its grand opening last month.

    Read more here: https://www.star-telegram.com/news/business/article179950681.html#storylink=cpy
  2. It is really interesting and I've been wondering the same thing. I have heard (but I'm not certain) that the laws for working hours in France are strict, so perhaps they can get more hours of labor per employee in the US and at the same time fulfill US demand more efficiently.
  3. The creation of US factories has nothing to do with evading French labor laws (which are indeed very strict). It’s all about serving the North American market as seamlessly as possible by cutting down on time and costs associated with exporting and importing finished products. The added bonus of a US factory in rural Texas? A huge tax incentive.
  4. Fabuleux is right I am from Texas but have been living in California for the past sixteen years. Texas offers huge tax incentives for companies who move there, Plus land is cheap and the cost of housing and the cost of living is half of what it is on the west coast.
  5. #5 Oct 17, 2019
    Last edited by a moderator: Oct 17, 2019
    More info - pasting entire article except for pics in case link requires login:
    Why Your Next Louis Vuitton Bag May Hail From Texas
    The global luxury brand, born in Paris, has found a home on the range to make handbags for a world of picky consumers and trade wars
    By Matthew Dalton | Photographs by Justin Clemons for The Wall Street Journal
    Oct. 17, 2019 1:10 pm ET

    ALVARADO, Texas—Louis Vuitton, the global luxury brand, was born on the cobblestones of Paris. Its future is taking shape in places like the grasslands of northeast Texas.

    Where cattle graze, Louis Vuitton has built a 100,000-square-foot factory to make its monogrammed canvas and leather handbags for the American market.

    Unlike Louis Vuitton products from France, the Texas bags won’t be produced by “petites mains,” the French artisans at the center of the brand’s history and mystique. Instead, Louis Vuitton is recruiting and training employees locally, no experience needed. Candidates passing drug and manual-dexterity tests can join the line with starting hourly pay of $13.

    The gold-and-brown bags, priced at $1,200 and up, will be tagged “Made in the USA.”

    Louis Vuitton is positioning itself for a world in which consumer tastes and global trade are in upheaval. That means testing one of the luxury industry’s core tenets—that a luxury product must be made where it was conceived. While competitors such as Gucci, Hermès and Chanel have kept most production in Italy and France, Louis Vuitton is increasingly letting industrial logic and geopolitics govern supply-chain decisions.

    “It is an art form to maintain your company values and standards when you start expanding outside your home country,” says Louis Vuitton Chief Executive Michael Burke. “Most companies fail at that.”

    Located 40 miles southwest of Dallas in Johnson County, X, the plant is expected to employ 500, up from its current staff of 150. Louis Vuitton expects to build a second workshop on the property, adding another 500 workers. It began selling Texas-made bags from temporary facilities there. X Since then,
    U.S. sales have helped power the brand’s owner, LVMH Moët Hennessy Louis Vuitton SE, to record revenues. LVMH doesn’t break out Louis Vuitton’s sales. Analysts estimate its annual revenue at more than $12 billion. Sales at Louis Vuitton’s stores are up double digits this year, Mr. Burke says.

    Luxury mystique
    Brands across the industry have long promoted their old-world craftsmanship to justify high prices. Hermès, maker of handbags costing more than $10,000, produces exclusively in France, where one worker oversees a single bag.

    Louis Vuitton’s strategy is to sell luxury goods to the masses without lowering prices. It must stay on top of trends in far-flung markets, where consumers increasingly demand customized products. That raises pressure to streamline manufacturing and build an agile supply chain. Eight of its 24 manufacturing facilities are outside France.

    It divides bag construction into steps, each performed by small teams of workers. Some teams select and cut leather. Others attach linings or sew together pieces of leather or canvas that form the body.

    “It’s not like what you hear, this fiction—the same motions, on the same bag, for an entire life” of the worker, says Louis Vuitton’s Mr. Burke. “That’s really a romantic myth.”

    Some Louis Vuitton customers prefer Made in France to Made in the USA, says Lori Matthews, a collector of Louis Vuitton bags who says she owns 15 to 20 bags from the brand. They think the French models are better constructed, she says, but she doesn’t believe it. “People look at these bags, practically under a microscope,” she says of collectors. “Every stitch and every seam.”

    At times, Louis Vuitton’s Texas foray has pushed the boundaries of what separates the making of luxury goods from any other product. Two years ago, it set up temporary workshops to train employees and start production. Some early hires recall working through sweltering heat without air conditioning, surrounded by a chain-link fence. “It was literally a sweatshop,” says Amy Wynn, a Louis Vuitton worker in Texas until she says she was fired in August for poor performance, which she disputes. “It was brutally hot.”

    A company executive acknowledges there wasn’t air conditioning but says the company brought in fans, declining to comment on Ms. Wynn’s tenure.

    Another employee, fired in March—she says she was told it was “for safety concerns”—filed a complaint with the Texas Workplace Commission alleging the lack of air conditioning and other working conditions were a form of discrimination against the Hispanic and female workforce. Louis Vuitton declined to comment on the pending complaint.

    “We’re typically not known for unsanitary conditions,” Mr. Burke says.

    The company brought in Sébastien Bernard-Granger to oversee manufacturing in Texas and ensure the facilities, including the new plant, met French standards. Working conditions improved, some of the former employees say, as the brand moved into the permanent plant.

    ‘Market of one’
    Founded in 1854, Louis Vuitton licensed its name to a U.S. manufacturer in the 1970s, later opening workshops in Spain, Romania and Portugal, and another in California in 2011. The far-flung operations let it adapt production to market demand. Inside the workshops, employees rotate through different steps of production and different models, allowing managers to redirect teams quickly to better selling models. That flexibility also allows it to make small batches of uniquely designed handbags, often based on individual consumers’ demands.

    “We are moving from a sort of mass market,” says Antonio Belloni, LVMH’s managing director, “to a market of one.”

    In January 2017, after meeting Mr. Trump at Trump Tower following the election, Mr. Arnault stepped out of the elevators with Mr. Trump and said Louis Vuitton might build a factory in the Carolinas or Texas.

    “And maybe in the Midwest,” Mr. Trump suggested.

    Louis Vuitton started negotiating with officials in North Carolina and in Johnson County, where it was eyeing a 260-acre ranch that kept zebras and other wild animals. The nearest town, sparsely populated, has at least five churches lining the highway and a store named Crazy Gun Dealer.

    Louis Vuitton chose Johnson County because of its central location in the U.S., direct flights between Dallas and Paris, and direct access to the Port of Houston, where the brand will bring in raw materials, Mr. Burke says. It is also receiving tax incentives and a state pledge to resurface a road to the highway.

    It sold most of the animals to zoos, keeping 14 heifers and adding a bull named Michael.

    Workers need only a few weeks’ training before starting on a production line. Cindy Keele knew little about Louis Vuitton when she heard it was hiring. Having worked 20 years as a building-services-company administrator, she wanted away from the desk and figured her hobby of making leather saddles and cowboy vests might prove useful.

    After 10 months at Louis Vuitton, she helps assemble the Palm Springs bag, which retails at $2,000 and up. “I needed something where I was up and moving,” she says.

    The Texas workshop has Louis Vuitton considering a shake-up of its traditional supply chains, Mr. Burke says. For now, it plans to ship in raw materials from European suppliers, but would like to start buying U.S. leather. The challenge, he says, will be to persuade Texas ranchers to stop using barbed-wire fences that scar the cattle: “That typically makes it impossible for us to use the hides.”

    He would also like to introduce products made exclusively at the ranch: “I don’t exclude us in the future making boots in Texas.”

    Write to Matthew Dalton at Matthew.Dalton@wsj.com
  6. FYI, I'm the Lori Matthews quoted in that article. :smile:
  7. That's really cool! :smile:
  8. #8 Oct 17, 2019
    Last edited by a moderator: Oct 17, 2019

    The tax incentives receiving by Texas government, the flight between Dallas and Paris, and the availability of raw materials needed, is all the contributing reasoning why LV will built a factory out their. But I’m sure the incentives are the biggest reasoning alone. They will save money.
    uhpharm01, DrTr, Liberté and 3 others like this.
  9. Happy to learn of this, sounds like a win-win for both parties, plus I love to buy Made in USA goods.
  10. Ah as a fellow OG, I was thinking it might be!! :smile:
  11. So can the us and Canada prices come down a little please????
  12. Lol I wouldn’t count on it!
  13. I just read the WSJ and was like, hey I know that name. Very cool.
    lorihmatthews likes this.
  14. Don't think so, bags are already made in the USA right now and that has no difference on prices.
    Sunshine mama and MooMooVT like this.
  15. Hey look at that all machine stitched, no hand made bags for miles.
    Kansashalo, anabg and lorihmatthews like this.