Luxottica Group, S.p.A. (LUX)

INCREASING INDUSTRIAL OUTPUT

Growing demand in 2007 led the Group to step up last year’s already high levels of capacity. The Italian plants turned out 1.25 million pieces more than in 2006. This increase in production entailed the hiring of around 1,120 people directly by Luxottica S.r.l.

At the same time, extensions were made to facilities at Agordo and Rovereto (not completed yet), new production lines were installed and the new paint shop at Pederobba was enlarged.

The Italian plants continued to focus on luxury brands and premium products in general, leaving the Group’s Chinese facilities to produce other brands.

Increasing output also involved the ongoing process of renewing the entire system of supply forecasting and production planning and monitoring. Programming at Agordo was converted to weekly (as already the case at Pederobba and Sedico), as this can drastically reduce forecasting errors and thereby lowers warehouse obsolescence rates.

Output was also increased as a result of a reduction in lost working hours, partly due to the numerous initiatives to raise awareness of the problem of absenteeism amongst employees.

Events were also organized in a number of plants for employees’ families, with very positive reactions from the trade unions.

Despite these efforts, the Group still needed to take on temporary labor to cover production peaks in 2007. An agreement with the trade unions also made it possible to introduce “flexible days” in order to scale working days to actual production requirements (agreement dated December 22, 2006 renewing Luxottica’s supplementary contract until 2009).