Luxury's hidden Indian supply chain

MUMBAI, India — At the top of a staircase covered in dirt and sequins, several dozen Indian artisans hunched over yards of fabric, using needles to embroider garments for the world’s most powerful fashion brands.

They sewed without health benefits in a multiroom factory with caged windows and no emergency exit, where they earned a few dollars a day completing subcontracted orders for international designers. When night fell, some slept on the floor.

They were not working for a factory employed by fast fashion brands: companies whose business model is premised on producing trendy clothing as cheaply as possible and whose supply chain issues came under scrutiny in 2013. That was when the deadliest garment industry disaster in history, the Rana Plaza factory collapse, killed more than 1,100 Bangladeshi workers.

Their products were destined for Dior and Saint Laurent, among other luxury names.

Unknown to most consumers, the expensive, glittering brands of runways in Paris and Milan also indirectly employ thousands of workers in the developing world. In Mumbai, scores of ateliers and export houses act as middlemen between the brands and highly skilled artisans, while also providing services like design, sampling and garment production.

As with fast fashion retailers, many luxury brands do not own all of their own production facilities, and instead contract with independent factories to make their garments or embroider them. And like fast fashion, they too have woken up to potential dangers with that system.

In 2016, a group of luxury houses introduced the Utthan pact, an ambitious and secretive compliance project aimed at ensuring factory safety in Mumbai and elevating Indian embroiderers. Among the signatories were Kering (owner of labels including Gucci and Saint Laurent); LVMH Louis Vuitton Moët Hennessy (owner of Fendi and Christian Dior); and two British fashion houses, Burberry and Mulberry. The pact had an initial three-year timeline but was not legally binding.

Yet during visits to several Mumbai factories, and in more than three dozen interviews with artisans, factory managers and designers, The New York Times found that embroiderers still completed orders at unregulated facilities that did not meet Indian factory safety laws. Many workers still do not have any employment benefits or protections, while seasonal demands for thousands of hours of overtime would coincide with the latest fashion weeks in Europe.

Several factory owners said that membership in the pact meant investing in the costly compliance standards outlined by the Utthan pact, while brands simultaneously drove down what they would pay for orders.

“Given the product prices, there is a sense that the luxury brands must be doing it right, and that makes them immune to public scrutiny,” said Michael Posner, a professor of ethics and finance at the Stern School of Business at New York University. “But despite the price tags for luxury brand goods, the conditions in factories across their supply chains can be just as bad as those found in factories producing for fast fashion retailers.”

When contacted for comment, luxury brands that were Utthan signatories largely highlighted the broader improvements made by the implementation of the pact, rather than focusing on continuing issues and accusations.

“We recognize that the situation of some workers at the subcontracting level is still very far from satisfying today, and we are genuinely determined to strengthen the program with our fellow stakeholders, to speed up progress and to further improve the situation,” a Kering spokesman said in a statement.

A spokesman for LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury goods company, said in an emailed statement: “We take the allegations raised through your questions very seriously but are unable to comment without further details and a thorough investigation.”

A Different Kind of Special Relationship

Since the 1980s, luxury brands have quietly outsourced much of their embroidery work to India. The country is one of the world’s largest garment exporters, with a textiles market worth $150 to $250 billion, according to the India Brand Equity Foundation, a trust established by the Indian government’s commerce ministry.

India’s embroiderers, known by the Urdu word “karigar,” which means “artisan,” are among the best in the world. Formalized during Mughal rule, which spanned two centuries from the mid-1500s, karigars have passed their art form across generations.

Today they are largely Muslim men who migrated from rural India to Mumbai, where they are paid meager sums to work up to 17 hours a day, many in overcrowded slums. Few have access to education or public services, yet their work has value with fashion companies abroad.

Western designers have brought some of their most important embroidery work to India in recent years, including Alessandro Michele’s exuberant collections for Gucci, emblazoned with tigers and butterflies; Dior’s embellished saddle bags; and red carpet looks for Lady Gaga, Lupita Nyong’o and Jennifer Lopez, whose 2019 jungle print Versace dress was embroidered in Mumbai.

By 2019, India’s embroidery exports exceeded $230 million, a nearly 500% increase from two decades ago, according to the government’s commerce ministry.

But as scrutiny of supply chains grew after the Rana Plaza disaster, luxury brands became nervous about their ties to India, a country known for weak worker protections, where building collapses and factory fires regularly kill and maim garment workers, and Utthan, which takes its name from a Sanskrit word that roughly translates to “upliftment,” was established. At least seven Indian export houses — middlemen between local embroidery factories and international brands — also joined.

The project proposed sweeping changes to Mumbai’s factories by standardizing wages and improving workplace safety.

However, unlike with many luxury initiatives, including sustainability and ethical business practices, the brands did not publicize their involvement in Utthan. They did not mention it in their annual reports or corporate and social responsibility platforms, and some discouraged auditors from speaking about it. At least two signatories said they were asked to sign nondisclosure agreements.

The Utthan Pact

Managed by Impactt, a consultancy in London, the agreement delineated targets for Indian export houses, which typically have their own factories. But when deadlines are tight and the work orders exceed what their factories can produce, the export houses subcontract. They take embroidery work to small businesses like those visited by The Times, where wages are frequently paid in cash and facilities fail to meet safety codes.

According to a 2016 publication from Impactt that laid out Utthan’s requirements, within three years, every Indian subcontractor employed by signatories would be required to show progress in providing health and pension benefits to artisans. All factories would need fire extinguishers, a separate room for workers to sleep in and for bigger facilities at least two signposted exits.

To meet India’s labor laws, the Utthan pact also called for a maximum six-day week for artisans, a workday of no more than 11 hours — in line with the legal limit — and reduced overtime.

The state of Maharashtra, which includes Mumbai, has not stipulated a minimum wage for hand embroiderers. Instead, exporters typically use the government’s category for “highly skilled” workers (about $175 per month, excluding benefits). Utthan sets a salary of about $225, including benefits.

In the same publication that detailed these initiatives, Impactt said it would assess factories at least once a year.

To incentivize factories, the luxury signatories committed to working only with Utthan-compliant companies by the end of the second year.

“The endemic challenges in the sector clearly required substantial, long-term engagement,” Rosey Hurst, the founder of Impactt, said in an email, adding that Utthan was intended as a collaboration between brands and exporters.

But not every brand signed — Valentino and Versace place orders with the same export houses but do not work with Utthan — and not every export house thought it was a good deal, seeing it as a public relations exercise intended to shield luxury brands from liability.

Valentino declined to comment. In an emailed statement, Versace said it was “dedicated to conducting its operations on principles of ethical business practice and recognition of the dignity of workers.” The company added that if suppliers were found to be violating its code of conduct but “committed” to improving the situation, then it would generally continue to work with those suppliers as long as they were “honest and transparent.”

Holes in the Fabric

Maximiliano Modesti, the founder of Les Ateliers 2M, a Mumbai embroidery firm that works with Chanel, Hermès and Isabel Marant, said he was approached about joining Utthan in 2014, when the project was being developed.

Modesti passed. He thought the salaries were too low, and said that he paid his embroiderers up to 50% more than Utthan’s wages. And he thought it was strange that the pact called for adhering to India’s work hour limits, while it also acknowledged that those rules could be flexible when luxury brands needed pieces embroidered at the last minute.

Brands’ demands spike ahead of seasonal fashion weeks. While many workers actively seek extra work to earn more money, artisans said overtime beyond the Indian government’s limits is common, as is the use of subcontractors.

“The exporters are crushed by the luxury brands,” Modesti said. “The brands say, ‘You need to be cheaper. You need to be more competitive. You might lose orders next season.’”

But some export house managers that did join Utthan said they felt compelled to sign on because the project stipulated that many luxury brands would work only with compliant companies.

Further down the supply chain, where working conditions are worse, managers at several subcontracting factories said many of the project’s goals were still to be met.

The Times recently visited six subcontractors that collectively employ as many as a few hundred karigars, depending on orders. Managers at these facilities spoke on the condition of anonymity because they feared that clients could retaliate by pulling their business.

Three years after Utthan was introduced, the managers said few of their artisans received health benefits or a pension, and working hours regularly exceeded India’s legal limits. Every factory The Times visited lacked at least a few safety features mandated by Utthan and India’s Factories Act, which lays out the government’s requirements.

One manager said he was encouraged to lie to Utthan auditors. He said an exporter instructed him to temporarily move his artisans to a compliant factory when Impactt representatives visited.

The compliant factory was well ventilated and prohibitively expensive for the manager to rent, costing nearly $2,000 a month. The factory he managed was an attic-like space on the top floor of a residential building in a neighborhood packed with crumbling apartments.

“I was told not to tell anybody,” the manager said, as he showed The Times recent invoices for Gucci and Christian Dior, including one embroidery order for 15 black tulle dresses, which he said took 6,000 hours of labor to complete.

Another subcontractor manager said he spent about $30,000 moving to a factory that met Utthan’s terms, with an understanding that he would receive more business to offset costs. But maintenance fees at the new factory were expensive, the manager said, so he raised his fees. Then orders dried up.

“I was not getting business,” he said, as artisans around him worked on samples for Christian Dior. “They started giving orders to people who did the work for cheaper sums.”

Last year, the manager moved back to his previous factory, where, he said, some artisans sleep on-site and the six-room facility lacks an emergency exit. His superiors were initially upset, he said, but business picked up after he lowered his prices.

The Cost of Speaking Up

Utthan vowed to empower India’s karigars, but in interviews with more than a dozen artisans, many said it did not yet protect them. The artisans said managers took advantage of their lack of formal education and lack of union representation to withhold information about the worth of their embroidery.

“We are being exploited everywhere,” said Abdullah Khan, an artisan with more than 20 years of experience.

Last summer, Khan and about a dozen other artisans pushed for raises at the export house where they worked, an Utthan signatory that completes orders for Saint Laurent. Though Khan did not know it at the time, the factory’s artisans were being paid about 13% less than what Utthan required, according to a salary slip reviewed by The Times.

Managers tried to fire the group of artisans after they approached Sachin Gole, a union leader in Mumbai with the Maharashtra Navnirman Sena, a political party. Khan said that their salaries were docked for every minute spent communicating with the union and that they were moved into another room at the factory. This was done, he said, so they could not interact with karigars who chose not to protest.

“The situation is very bad,” Gole said. “If artisans fight for their rights, they are terminated.”

In a phone interview, the factory’s manager denied that he had mistreated artisans and referred specific questions to Impactt, which said a labor dispute was under investigation.

Khan said a Utthan auditor was sympathetic when artisans told the auditor about the wage issues, but told him he could only speak to the factory’s manager. Eventually, the local government’s labor commission helped negotiate a severance package for karigars who wanted to leave, including Khan. The factory’s wages were ultimately increased, though they remained about 5% below Utthan’s benchmark, according to a fall salary slip.

For weeks, Khan said, factories would not hire him because he had sought out a union. He later found a job at a subcontractor that executes orders for one of the Indian exporters that helped create Utthan. But the past few months have exhausted Khan, who choked up as he sat for an interview on the floor of his small apartment.

“We are just trying to survive,” he said, as his 4-year-old son ran over and hugged him.

Trying to Do Better

Hurst of Impactt said that about half of the 2,810 artisans working for Utthan signatories were covered by employment benefits, and that Impactt was working on increasing that number. She said Impactt was investigating one case in which auditors were deceived.

“While we have seen some considerable improvements in health and safety and are making progress in pay and hours, we fully acknowledge there is still more work to do,” she said.

Burberry said that it worked with only two Indian exporters, with guarantees that they used in-house artisans as opposed to subcontractors for the orders it placed, and that they would continue supporting the pact. Mulberry said it had left the pact in March 2018 because of reprioritization of its business activities to leather goods.

The truth is, said Posner of New York University, “voluntary pacts between brands alone do not guarantee very much.”

Kering, which reported revenues of 15.9 billion euros in 2019, said 1,500 artisans had benefited from Utthan, and that 70% of embroidery products for Kering brands were now made by artisans on permanent contracts with benefits and a salary significantly above the minimum wage.

However, two weeks after The Times approached Kering with its reporting in Mumbai, the company said it planned to establish its own workshop in India to internalize “a significant part of the hand embroidery work” for its brands. A spokesman said the company would also continue to support the Utthan pact and work with external suppliers, and that compliance with the Utthan program would become a requirement for all suppliers in 2020.

Pankaj Attarde, a veteran embroidery consultant in Mumbai, said it was time the world knew the plight of India’s artisans and their extraordinary contribution to fashion.

“We need to bring transparency and fairness into the system if this industry is going to survive,” he said. “If compliance is about improving the lives of workers, why is Utthan secretive?”

©2019 New York Times News Service