Hugo Boss to expand production in İzmir
German clothing company Hugo Boss has decided to increase the scale of production in the Aegean province of İzmir by a third in a bid to shorten its supply chains, CEO Daniel Grieder told Financial Times.
Hugo Boss is expanding production capacity closer to its base in Europe to reduce its dependence on south-east Asia at a time when global supply chains are under severe pressure, said the report.
Grieder, who is aiming to double sales to 4 billion a year by 2025, told the Financial Times that supply chain disruptions were creating “unbelievable challenges” for Hugo Boss and its rivals, with supply shortages, delays and higher shipping costs.
Grieder said that the company wanted to hire almost 1,000 more workers in İzmir, increasing staff by a third. It was also planning to invest more in machinery and tools at the site.
Hugo Boss CEO has earmarked 500 million euros for investments in stores over the next five years and is planning to increase the marketing budget by 100 million euros a year until 2025.
Established in 1999, the İzmir factory is already the largest single Hugo Boss production site and has traditionally been used mainly to make formal wear. The company also has sites in Germany, Poland and Italy, which combined with Turkey account for about 20 percent of its clothing production. Another 30 percent of its garments are sourced from suppliers in or close to Europe.
Much of the industry relies heavily on production in south-east Asia, where labour costs are far lower.
“Our future strategy is to produce even more garments close to those markets where they will be sold,” he said.