Have you ever heard of Krefeld Invest? Probably not and if you Google it, you won't be able to see much. Krefeld Invest is the Family Office of the Hermès clan worth over $213 billion and no, not one person has that wealth. It is spread amongst 100 heirs.
So what are three lessons we can learn from Hermès besides an obsessive control of quality and limited production (that some argue inflates valuation artificially)?
1. Manufacturing jobs.
While the 100 heirs are all enormous beneficiaries of this power-house luxury brand, the workers are also. All Hermès workers received a bonus of around $5,000 last year. The workers who make Hermès products earn between $77,000 and $110,00 per year which showcases how manufacturing jobs can indeed deliver higher paying jobs. But this is only possible because:
a. Their products are very expensive. It's highly doubtful any of this would be possible with lower-priced merchandise.
b. The worker's earnings are also a direct reflection of the extremely high skills required to perform the work to make products of the quality that command the pricing many are willing to pay.
2. The Great $125 Trillion Quarter-Century Generational Wealth Transfer.
Often we think of super-rich families as a single person or a family of parents plus 3-4 kids. Hermès showcases how this family's wealth impacts 100 heirs. It also reminds us that some of the greatest wealth creation in the future will be inheritance, whether a billion or $100,000. Which will make many in the younger generations of today, far, far wealthier than the Boomers' and Gen-X-ers whose wealth advantage has been scorned for years as unfair. Maybe wealth later in life when more knowledgeable about managing wealth is better? The rebalancing of wealth distribution amongst the wealthy has already begun and will continue aggressively for the next 25 years. Expect higher priced homes to head higher? I also expect the trend of luxury home buyers being much older to continue.
3. Extreme Wealth Disparity
While the workers of Hermès received a $5,000 bonus, the heirs received an average of $55 million in dividends each. Approx 11,000X more than their workers (still better than no bonus), but....
