German fashion house Hugo Boss is expanding its production capacity closer to its home base in Europe, in order to reduce its dependence on Southeast Asia after last year’s global logistics crisis.
That crisis has also severely disrupted Hugo Boss’ supply chain, the Financial Times writes. It leaves the company with “unbelievable challenges” such as shortages, delays and higher shipping costs, according to CEO Daniel Grieder. Therefore, the German company has already started expanding its factory in Izmir, Turkey. Hugo Boss wants to recruit around a thousand additional workers, which would increase the workforce by a third.
The factory in Izmir, which dates back to 1999, is already Hugo Boss’ largest production site and has been used mainly for formal wear. The company has European production sites in Germany, Poland and Italy, which account for about a fifth of the company’s clothing production (when together with Turkey). Another 30 % of its clothing comes from suppliers in or close to Europe. According to Hugo Boss, this proportion will further increase in the coming years.
Closer to the end consumer
By relocating production, Grieder wants to become less dependent on Southeast Asia. “Our future strategy is to produce even more garments close to those markets where they will be sold”, he said. In the past year, the fashion company has already allocated production of jumpers, womenswear and other garments to Izmir. Grieder said having their own factory close to Europe would have been “a massive competitive advantage” in recent months.
The company is also looking at moving some of its production to “city factories” in western countries and will begin trialling the final production of jeans and denim in a small factory in Los Angeles in the first quarter of 2022.