The slowdown on the international market is impacting jobs in the Italian eyewear industry. Major players such as De Rigo, Marcolin and Allison have managed to maintain their domestic workforce so far, but Luxottica and Safilo have resorted to relatively drastic measures as a result of falling margins and turnover in the first months of the year. As previously reported, the industry's two majors saw their net earnings drop by 19.2 percent and by 36.5 percent, respectively, in the first quarter of this year.
Italy has a system whereby workers can be laid off and get 80 percent of their normal wages from the government for limited periods of time when demand is slow, and Safilo has now applied for 100 workers per week to be laid off completely up until the end of July. Safilo has used this program in previous years at times when production dropped more sharply than normal, and considers it to be part of the normal business pattern.
Safilo started temporary layoffs at its Longarone plant, which employs a total of 1,400 people, during the second week of June. Temporary layoffs are common in June in the eyewear industry in connection with the change in the collection, but Safilo will continue using the ?cassa integrazione? fund in July, while reducing production hours on Fridays because of the special situation regarding metal components. According to union officials, the Longarone factory is suffering from a shift in demand from metal to plastic frames, from the economic slowdown in the USA and from poor weather conditions in Italy and other parts of Europe, which have affected sales of sunglasses. They fear that other Italian factories will implement similar measures.
Production at all of Safilo's Italian plants will dramatically decline nonetheless at the end of June as production lines are modified for the new collections. This will lead to temporarily layoffs at all sites, the union said.
Union officials say that about 10 million frames are produced annually in Italy by Safilo, mainly for upmarket brands. They have asked the company to renegotiate an agreement reached in 2005 that set minimum production levels in Italy in view of the opening of a new Chinese manufacturing facility that is scheduled to be operative at the end of 2008 and reach full speed in 2012. They want to ensure that the Chinese plant does not affect these negotiated levels.
The measures taken by Luxottica are different. They consist of the non-renewal of fixed-term contracts. Twenty workers employed at the Rovereto factory are due to leave by the end of July and another 20 are scheduled to leave by the end of October. Union officials are proposing that Luxottica keep some of the workers at their current wages but with training contracts that bear lower social contributions.
The group claims that the only site concerned is the Rovereto plant in the Trentino area. Given that the group has a workforce of around 8,000 in Italy and that no other cuts have been announced, the overall impact is going to be limited. However, union officials put the number of job cuts at over 200, claiming that the 40 job losses in the Trentino area are the latest in a series of dismissals at plants in other cities.
Union officials expect that the group will cut another 200 jobs at Luxottica's Italian plants at Pederobba, which produces sports eyewear, and Agordo, the group's largest production site. In recent months the group cut about 100 jobs at Pederobba and a similar number at Agordo.
The job cuts at Luxottica are part of a broader streamlining of the group's business, in view of a more challenging economic environment. Luxottica's North American retail division announced 65 job cuts at its corporate headquarters in Mason, Ohio. The redundancies represent about 4 percent of support staff and do not involve any high-level managers.
The negative trend in Italian eyewear production began to take its toll on smaller firms last year. Between 2006 and 2007 the number of small manufacturing companies dropped from 114 to 107, while the number of craftsmen working as independent entrepreneurs shrank from 411 to 373. However, the impact on the related jobs was insignificant because the majority of those hit found jobs with the larger eyewear producers.