PARIS — Hermès cut the equine-embossed ribbon on its newest leather goods factory on Friday, just days after its market cap soared past the 200 billion-euro mark.
“We’ve had good results this year,” chief executive officer Axel Dumas acknowledged during the symbolic cutting ceremony, slightly underplaying the stellar sales numbers. “This development allows us to open another leather workshop to create local jobs that export goods to the four corners of the world.”
The in-demand Kelly model will be the focus of its production, as well as being the only workshop outside of Paris that produces saddles. The new facility in Louviers, Normandy, sits two hours outside of the French capital.
Guillaume de Seynes, executive vice president, manufacturing division and equity investments, said the production of the popular Kelly depends on several factors and couldn’t quantify how many bags the Louviers facility will add to the tight supply.
“We never think about additional quantity, we think about the additional number of hours and then of course these hours can be used on five different models,” he told WWD. Each bag takes between 15 and 18 hours to make. All artisans first train on the Kelly model, as it brings together several complex processes, and can go on to specialize in other bags.
As the “quiet luxury” craze gets buzzier, Hermès continues to focus on its craftsmanship. The method of making a handbag is the same as it was 50 years ago, he said, limiting production to two or three bags per worker per week. It’s the opposite of fast fashion since a customer may have to wait months for a bag.
The company has been accused of artificially restricting supply, particularly on its most popular models, which Dumas denied during a call with analysts in February. “We are trying to produce as many as we can,” he said at the time.
De Seynes added that Hermès is hiring hundreds of people per year, but that it takes 18 months of training before an artisan hits the factory floor. “We are trying to increase the production, but we want to maintain the approach to quality that is for us absolutely essential,” he said. There are around 4,700 artisans in leather goods production at its various facilities in France, he added.
While other luxury goods companies have acknowledged issues with recruiting and hiring enough workers to fulfill demand, De Seynes said Hermès’ combination of training, education and commitment to hiring from all age ranges somewhat insulates them from hiring issues. However he acknowledged that “in some activities — not leather — we really have to convince people that we can be attractive.”
At Louviers, the new facility will employ 260 artisans in its airy 66,700-square-foot facility.
Iwan Baan/Courtesy of Hermès
Designed by French Lebanese architect Lina Ghotmeh, the factory sits as a series of arches and wide windows to bring in light. The space is anchored by artwork from sculptor Emmanuel Saulnier. His structure of intertwined steel beams is meant to invoke sewing needles, a nod to craft. (The original iteration made out of glass shattered upon installation, depicted in a short film about the construction shown during the opening.)
Inside, artisans were on hand to show off their skills in cutting, sewing and finishing the bags, while rows of Kellys sat at a quality control station ready to be examined.
The factory sits on four hectares previously occupied by Philips, which had remained a brown site slated for environmental cleanup before it could be repurposed.
The new factory was constructed of 500,000 locally made bricks, and uses geothermal energy. It is also topped with 25,000 square feet of solar panels. The company says it’s “energy-positive,” meaning it puts more kilowatts back into the power grid than it uses.
The Louviers facility was built to be carbon-neutral, while the company is also working to decarbonize its existing plants by moving to wood or natural gas, said Olivier Fournier, executive vice president, corporate development and social affairs.
Fournier told WWD that the company is starting out with a lower carbon footprint than the other luxury groups due to its craftsmanship model. Hermès produces 78 percent of its products in France, and 65 percent are in made within its own workshops. Most other facilities are in close countries, with watches in Switzerland, for example.
“This gives us very good traceability because we have strong vertical integration regarding raw materials,” Fournier said. Again, most are sourced from France, with some coming from nearby nations, such as the Netherlands. Hermès keeps tight reigns on its supply chain. “It’s not a question of quantities, it’s a question of quality,” he said.
Though the company produces the majority of its goods in France, it is not untouched by global supply chain problems, de Seynes said. “In the case of silk, for example, [due to] the turmoil of the war and inflation, the time frame for investing in new capacities has been extended,” he said.
The company is finishing an extension of its silk facility in Lyon, which is now slated for opening in July. It is also expanding watchmaking capacity in Switzerland, while continuing to invest in tanneries and increase leather goods production. “We are looking at the process of increasing future capacities in every field — which is a good problem, but it is a problem,” De Seynes said of demand continuing to outpace supply.
“2022 was above all expectations,” he added. “There was growth in every division, so we need to invest in every activity and try to increase capacity.”
Producing more enamel is also in the cards. The tableware division “is doing extremely well, so we need to increase the facilities and invest in that activity,” he said. To that end, they are modernizing an existing site, the location of which has not been announced.
There are four other leather factories in the works, with two expected to open later this year and two additional facilities rolling out over the next two years.