To move production closer to its base in Europe and reduce dependence on Southeast Asia at a time when global supply chains are under severe pressure, German clothing house Hugo Boss is set to expand its factory capacity in Turkey.
The company, which operates a huge factory in western Turkey’s Izmir, will expand its capacity, Chief Executive Daniel Grieder told the Financial Times (FT), who described the challenges, such as supply shortages, delays and higher shipping costs created by the supply chain disruptions as "unbelievable."
The company which is aiming to double sales to 4 billion euros ($4.5 billion) a year by 2025 will employ 1,000 more workers in the Izmir factory, increasing staff by a third, while also planning to invest more in machinery and tools at the site.
The industry veteran said that the supply shift dubbed by himself as a "huge switch" would be permanent.
"Our future strategy is to produce even more garments close to those markets where they will be sold," he was cited as saying. Grieder said a proprietary factory close to Europe had been "a massive competitive advantage" in recent months.
Established in 1999, the Turkish factory is already the largest single Hugo Boss production site.
The fashion house also has sites in Germany, Poland and Italy, which combined with Turkey account for some 20% of its clothing production.
Suppliers in Europe or close to the continent also supply another 30% of the brand’s garments, which it set to rise further in the upcoming period as currently the sector heavily depends on producing in Southeast Asia where the costs of labor are lower.
Grieder, meanwhile, further added that he would broaden the brand’s product portfolio and offer more casual and leisurewear in addition to its flagship range of business clothes, pledging 500 million euros for investments in stores over the next five years with plans to increase the marketing budget by 100 million euros a year until 2025.
Previously, similar statements on shifting or expanding production in Turkey were made by other European companies such as Benetton, Ikea and Camper.