Published on July 25, 2017
Looking Beyond the Horizon: A Case Study of PVH’s Commitment in Ethiopia’s Hawassa Industrial Park. The story of how the PVH Corp. (referred to throughout this document as PVH) came to lead a group of its top suppliers to build factories and a fabric mill in Ethiopia’s Hawassa Industrial Park (HIP) is the study of a strong collaboration between a private company looking to optimize its business model and a government aiming to transform its economy through global strategic repositioning. The success of this story hinges upon the intersection of their goals and a shared vision of development that includes a strong commitment to social and environmental goals. PVH was motivated to invest in Ethiopia to respond to shifts in the global apparel sector, its growing desire to retool its business model and to address its concerns about compliance withsocial and environmental standards in its traditional sourcing locations. PVH had decided to rethink its business model and to look beyond the horizon towards a new region in which to locate its manufacturing base. To have better oversight and enforcement, PVH moved to adopt a fully integrated vertical supply chain, including direct investment in one of the manufacturing facilities.
In selecting the location for its new vertically integrated and socially responsible supply chain, PVH looked for ample suitable land on which its supply chain partners could grow cotton, and sustainable sources of energy with competitive electricity rates for the production of yarn and fabric. The company required the country’s government to be committed to ensuring that relevant laws (worker rights, fire safety, building safety, etc.) would be enforced and that their manufacturers would meet international quality and production standards. Finally, PVH wanted to be an early-mover in this new sourcing market.