Global Economics

Limoges Porcelain: Fragile Times


Recession, the strong euro, and changing tastes have devastated France's china makers. But new deals could help, including a New York shop opening Nov. 4

Limoges, the cradle of French porcelain production, has been supplying fine china to some of the world's most elegant tables since the days of Louis XVI and Marie Antoinette. But now, this storied industry is looking dangerously fragile.

The global recession has sent exports of French porcelain plunging, from $171 million in 2007 to only $121 million during the 12 months ended Aug. 31. "We lost 30% of our business in 2008," says Lionel Delaygue, chief executive of Royal Limoges, whose 212-year-old porcelain factory is the city's oldest. Royal Limoges has laid off 15 of 65 employees, while Bernardaud, another renowned porcelain house, has trimmed about 15% of its staff.

"There have been rough times over the years, but nothing close to what we're experiencing now," says Brigitte Picard, sales manager for J.L. Coquet, another Limoges producer. So far, Coquet has avoided layoffs. But, Picard says, "every day is another struggle to keep everyone employed."

Luxury Product

With Limoges dinnerware costing $85 and up for a single plate, it's no surprise that demand has slumped during hard times. "It's a luxury product that many people don't want to splurge on in the middle of a recession," says Guy Bourgeois, president of the Paris-based Confédération des Arts de la Table, a tableware trade association.

But recession is only the latest problem to hit Limoges, a city of 130,000 in the Limousin region about 240 miles southwest of Paris. The strength of the euro over the past few years has dented exports to the U.S., long the No. 1 importer of Limoges tableware. "The devaluation of the dollar against the euro has really punished our business," says Picard.

An even bigger problem is a long-term shift in tastes, with more and more customers opting for simpler, less-expensive tableware rather than the exquisite china for which Limoges is famous. Even the French now buy tableware from China and other less-expensive locales. "These days, people are buying cheap goods at chain stores like Ikea," Bourgeois says. The same trend also spelled bad news for legendary British porcelain-and-crystal maker Waterford Wedgwood, which filed for bankruptcy in January of this year and said it would move all its remaining production to Indonesia.

It has been a long and painful decline for Limoges, where porcelain production boomed during the 18th and 19th centuries, thanks to the local availability of kaolin, a form of white clay that gives porcelain its durability and luster. At its peak in the early 20th century, Limoges manufacturing employed 15,000 people. Today, the figure is only 1,500.

Mayfair and Madison Avenue

Some Limoges producers are pushing to reverse the tide. Haviland, founded in 1842 by an American expatriate, David Haviland, fell on hard times and was bought in 2005 by Prosper Amouyal, a French-Algerian businessman. Amouyal's private family holding company, Financière Saint-Germain, also owns nearly a 50% stake in legendary French crystal maker Lalique, a unit of Switzerland's Art & Fragrance (3AF.DE). Earlier this year, Lalique and Haviland teamed up to open a store in London's swank Mayfair district. A similar boutique, the first of its kind in the U.S., is scheduled to open Nov. 4 on New York's Madison Avenue. More are planned in other major U.S. cities, including Chicago and Miami.

Maz Zouhairi, who heads Haviland's and Lalique's U.S. operations, says the stores will appeal to customers by "focusing on service and pampering, on what they expect from the luxury sector." Until now, Haviland has been sold mainly in department stores.

Another Limoges producer trying to burnish its luxury credentials is Royal Limoges, which recently signed Japanese fashion house Kenzo—a unit of France luxury giant LVMH (LVMH.PA)—to design a dinnerware collection. "A piece of Limoges porcelain is not an object for everyday use," Royal Limoges CEO Delaygue says. "It's a poetic, sensual piece of art that has a history and savoir-faire behind it." Now if only more people were willing to pay for it.

Leona Liu is a reporter in BusinessWeek's Paris bureau.

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