Safilo, Luxottica's Italian plants cut production, jobs - unions

The Italian eyewear companies Safilo Group SpA and Luxottica Group SpA have reduced production and/or cut jobs at some of their Italian plants, due to a slowdown in demand and seasonal factors, a union representative told Thomson Financial News.

Giuseppe Colferai, provincial secretary of the FILTEA-CGIL union at Belluno, an industrial zone specialised in the manufacturing of eyewear, said that Safilo started this week temporarily layoffs at its Longarone plant that focuses on metal components.

He noted that metal is currently less sought after in the production of eyewear than plastic because of a fashion trend. But, the plant's production is also being hit by the economic slowdown in the United States and poor weather conditions, which affects the sale of sunglasses.

Safilo is the world's second largest eyewear group. The U.S. market is estimated to represent more than 30 percent of the company's revenues.

Colferai added that production at all of Safilo's Italian plants will dramatically decline at the end of June, with plants working at reduced capacity

due to a shift to the autumn/winter collections as well as initial work on next year's spring/summer collection.

This will led to temporarily layoffs at all sites, he said.

In Italy, manufacturers can use the so-called 'cassa integrazione' that enables them to temporarily lay off workers, who are then paid by a special fund.

Colferai indicated that workers will receive 80 percent of their wages while in 'cassa integrazione'.

Temporary layoffs are common in June because of the collection shift, he said.

However in July, the Longarone site will continue using the 'cassa integrazione' fund and reduce production on Fridays because of the special situation regarding metal components, he added.

Turning to Luxottica, the world's leading eyewear group, Colferai said that the group is not renewing 40 temporary jobs at its plant at Rovereto, Italy.

The union expects the group will cut another 200 jobs at its plants at Pederobba and Agordo.

Colferai added that in recent months the group has already cut about 100 jobs at its Pederobba plant, which produces sports eyewear, and a similar number at its main Italian plant of Agordo.

Like Safilo, Luxottica is suffering from the drop in global consumption, but overall the 'situation still remains calm,' he said.

He described Luxottica as a 'war machine' that can rely on its large retail network to sell its production.

Luxottica has a global network of more than 6,200 stores.

Safilo has also launched plans to boost its retail business to at least 20 percent of total sales in 2012 from 6 percent in 2007 by increasing the store network to between 700 and 800 from about 270 currently.

In a study released on June 10, the Italian fashion association Altagamma said that the global performance of the luxury goods sector indicates a weaker outlook this year for the industry compared with 2007.

It also indicated that the most successful companies are those that have developed a retail business, as well as boosting efficiency thanks to the management of working capital and store inventories.