Six years ago, LVMH billionaire CEO Bernard Arnault and U.S. President Donald Trump cut the ribbon on a factory in rural Texas that would produce designer handbags for one of the world’s best-known luxury brands.
But since its high-profile opening, the factory has faced a series of problems that have limited production, 11 former LVMH employees told Reuters. The factory has been one of LVMH’s worst performing plants worldwide, underperforming “significantly” compared with other plants, according to three former LVMH employees and a senior industry insider, citing internal rankings shared with employees.
The problems at the plant, which have not been previously reported, highlight the challenges facing LVMH as it tries to build a production base in the United States to avoid Trump’s threatened tariffs on European-made goods.
“It’s true that it was harder to scale up than we thought,” Ludovic Pauchard, Louis Vuitton’s industrial director, said in an interview with Reuters on Friday in response to detailed questions about the findings.
The factory, located on a 250-acre ranch in Texas, had been struggling because of a shortage of skilled leather workers who could meet the brand’s quality standards, three former workers told Reuters. “It took them years to get to the point where they could start making the easy pockets for the Neverfull handbag,” said a source familiar with factory operations, referring to the classic Louis Vuitton shoulder tote.
Mistakes in cutting, preparation and assembly led to up to 40 percent of leather being wasted, said a former employee familiar with the factory’s operations. A senior industry insider said typical waste rates for leather goods industrywide are usually 20 percent.
Several former employees who spoke to Reuters described a high-pressure environment at the time. Four former employees told Reuters that supervisors often turned a blind eye to methods of covering up defects in order to increase production, and sometimes even encouraged the practice.
Pauchard acknowledged that similar situations had occurred in the past, but said the problems had been resolved. “It dates back to 2018, when a manager was no longer with the company,” he said.
Poor-quality bags deemed unfit for sale are shredded on site and trucked away for incineration, two sources with knowledge of the company’s supply chain said.
A former production supervisor who frequently visited the factory said Louis Vuitton primarily used the Texas plant to make less complex bag styles, while its most expensive products were made elsewhere.
Pauchard, Louis Vuitton’s industrial director, said the company was “patient” with the “young factory.”
“Any bag that leaves here has to be a Louis Vuitton bag, and we make sure it’s completely consistent quality,” he said. “I didn’t see anything that indicated a difference in quality between a bag from Texas and one from Europe.”