Italy’s Denim Sector Is at a Standstill, But its People Remain Hopeful

In Italy, it’s people over business as COVID-19 wreaks havoc on the country’s livelihood.

As the U.S. begins to see store closures and shelter-in-place policies roll out across the country, Italy is deep into its coronavirus nightmare. The country’s famous shopping galleries and piazzas are empty. Travel and sporting events are cancelled; its social and hospitable nature dimmed as residents are ordered stay indoors.

And Italy’s premium denim sector is at a standstill.

“We’re in an absolute emergency situation,” said Paolo Gnutti, PG Denim founder and CEO. “It’s really hard to predict the future scenario. Today the only thing that is very important is everyone to stay safe and alive—ourselves, our family members and the neighbors next door.”

For more than a month, parts of Italy’s Lombardy region—home to denim players like Berto, Candiani Denim, Hub 1922, Tonello and more—have been under lockdown as the country became the European epic center of the COVID-19 pandemic.

As the coronavirus spread, the rest of the country has been placed under further restrictions. On Sat. March 21, Italian prime minister Giuseppe Conte issued a mandate to shut down all nonessential manufacturing activities in the country—including businesses in the denim supply chain—until April 3.

The decision came down the day after Italy saw its highest day-to-day-rise in the number of deaths of people infected with the coronavirus, despite regions of the country being on lockdown since Feb. 21.

Some companies have diversified their production but others, Gnutti said, are on “standby” awaiting to resume their normal operations whenever that may be. “The worldwide scenario of our industry has completely changed right now,” he said.

Business has been far from “normal” for weeks for chemical company Rudolf Group. Fearing shortage and delivery issues, Alberto De Conti, head of the company’s fashion division, Rudolf Hub 1922, said customers from around the world have been rushing orders to secure sufficient stocks.

“This is putting quite a lot of pressure on our logistics and it is very similar to the supermarket craze we watch on television,” he said. “Because of this rush, we expect the second half of the year to be slower.”

Blue of a Kind, the Milanese denim brand that makes premium jeans out of upcycled fabrics, is feeling the pressure that any startup focused on year-over-year growth is currently experiencing.

“This is crucial for all companies at our stage,” said Fabrizio Consoli, Blue of a Kind founder and general manager. Some of the brand’s wholesale customers are changing their orders. As a result, Consoli has made the decision to hold back on deliveries until retailers have a clearer idea of how things will unfold.

“Coronavirus is casting a shadow on the future of the entire fashion ecosystem, in which we are a still a small player,” Consoli said. “But I believe the level of innovation and the inner value of our brand will play a role in this difficult moment in time.”

Safety first

“Made in Italy” garment finishing technology firm Tonello anticipates that the virus and the economic aftershocks that comes with it will have an effect on future orders. However, Alice Tonello, marketing and R&D manager for Tonello, said for the time being, the company’s priorities are completing commitments it has undertaken and guaranteeing their employees all the necessary safety measures.

“This situation is getting unpleasant implications on the business end, but we’re focused on the people and in managing the situation,” she said.

Prior to the government’s decision to shut down of all non-essential manufacturing, Tonello’s production continued to run as usual without delays, albeit with all the necessary security measures like employees maintaining a safe distance and constantly disinfecting surfaces and devices. Meanwhile, all departments not strictly linked to Tonello’s production have adopted a “smart working” strategy and are continuing their work activities from home.

With its headquarters in Germany, De Conti said Rudolf Group is working at full speed, but the HUB 1922 office outside of Milan—where many of the company’s denim-focused innovations are born—is following the instructions, restrictions and measures issued by the Italian government.

The team, De Conti said, is relying on technology to stay connected with clients, though roadblocks remain.

“Not being able to interact with our customers is definitely the biggest issue,” he said. “In fact, despite the significant help of technology, our business remains a very visual and tactile one, especially in the early phases of development. Grounded flights and closed airports are…a problem.”

PG Denim has also adapted to a smart working strategy. The fabric developer is staying connected with suppliers and clients mainly by phone, Gnutti said, and testing new finishes and trends by emailing clients photos. But it is not a pleasant work-from-home scenario. “The situation is not easy at all—it’s close to [being] catastrophic,” he said. “This is not how we should work, but we are forced to work like this in order to survive.”

As a one-man show, Alessio Berto, owner of the pattern and consultancy studio The Tailor Pattern Support in Veneto, Italy, said he can manage all the safety restrictions put in place by the government. “The laptop allows me to make patterns from anywhere and the email does the rest,” he said.

However, his workshops and his ongoing partnership with I-Skool, Isko’s educational design program, are in a holding pattern until businesses and schools can return to their normal operations.

“Certainly everything will slow down, but we all cannot stop,” Berto said. “The important thing is that when we recover, that there is collaboration and open-mindedness by everyone. Then, great things will happen.”

New definition of normal

A return to normalcy is a long ways away.

Tonello anticipates a “significant slowdown” in the denim industry and a re-evaluation of supply chains.

“In my opinion, this will lead to a reorganization in production, towards flexibility and swiftness, which in turn could lead to more nearshoring,” Tonello said. “We hope that in the recovery, people, consumers, and all of us, will have a positive momentum to start again with new ideas and greater values. It’s in moments like these that we figure out what are the core values of business and, of course, life.”

Blue of a Kind stands by its decision to manufacture in Italy. It is now clearer than ever to Consoli that the longer and wider-spread the supply chain, the more challenging it is to manage in unpredictable circumstances like COVID-19.

But no form of planning can mitigate the hurdles that he says lie ahead of the denim industry. “Unfortunately, it is already pretty clear that the entire fashion industry will be badly hit by the coronavirus epidemic and that its consequences will be suffered for a long time,” he said. “In fact, I expect we will see a reduction in receptivity from the market in the future.”

On the consumer side, fashion and other non-primary goods will likely be exposed to a contraction in demand, Consoli said, while on the B2B side, most of the impact will be suffered as a chain reaction of shops having been closed for months and inventories piling up in warehouses.

When the dark cloud that looms over Italy’s industries finally dissipates, Gnutti said the industry is going to encounter a new and challenging definition of normal. “The world economy will pay a very high price,” he said. “We still have no idea of the repercussions but surely this season in the textile world will be most entirely lost.”

Fresh outlook

The outbreak has forced companies to hit pause—and not just in the literal sense.

From a business perspective, De Conti said the biggest takeaway from the pandemic is that the supply chain is stronger together. “Single countries cannot survive easily on their own and global, mutual support is required,” he said. “Hopefully, as soon as this nightmare is over, there can be more empathy and understanding throughout the value chain rather than just cost pressure.”

People need to “reflect on what we have, what we really need and what is superfluous,” Gnutti said.

Now, Gnutti added, is the time to think about what it means to produce with care and responsibility instead of prioritizing quantity and price. He expects Italy will come out of this pandemic with a newfound love for local independent businesses, domestic manufacturing and quality over quantity.

“I really hope everybody will get out from this situation safe and sound and stronger than before,” he said.

Consoli’s silver lining in the situation? Time.

“This forced time mostly working alone from home has been an incredible opportunity for long-term planning,” he said. Companies are being forced to think proactively about the future, he said, rather than be reactive as day-to-day business typically imposes.

Though the next year of business may see fewer collaborations, De Conti remains hopeful the denim sector will maintain the pace at which it was innovating—and perhaps come out with greater ideas.

“I hope that now we are forced to step back and detach from most of the noise and some of the distractions, it can be a creative moment in time,” he said. “A sort of new intellectual Renaissance during which new perspectives can be developed.”

De Conti also expects companies to re-evaluate some of the prior procedures of how they do business. “This crisis brings up that remote interactions can definitely be efficient, are fast and definitely cheaper than…flying,” he said. “I am sure that some of the new ways of working will extend well beyond the crisis.”

Be human

In a country where more than 7,000 people have died from COVID-19 and countless acts of heroism and compassion from healthcare workers, business owners and neighbors spark goodwill, the lessons learned extend well beyond the factory floor.

Camaraderie, collaboration, sharing and greater sensitivity are among the qualities that Tonello said she hopes to see more of after life returns to a sense of normalcy.

“It will certainly be a great lesson for everyone, both economic and professional and I hope human,” Berto added. “I have always thought that globalization, on the one hand, gives, but on the other, takes. I don’t know what the consequences will be, but I am positive and I try to carry on as always.”

And the need to check in with friends and colleagues from around the world is greater than before. “This is not a life lesson for only the denim industry,” Gnutti said. “The reality is that from now on we can take nothing for granted any more as we were used to doing before.”

Gnutti urged the industry to put the digital tools that everyone has in the palm of their hands to use. “Let’s stay in touch online,” he said. “The denim community needs to support each other—psychologically and for [business].”