Levi Strauss & Co's decision to move virtually all its remaining US production to cheaper factories overseas reflects a sobering reality in the fashion industry -- not even a company behind one of America's best known brands can afford to have clothes made in the USA.
The San Francisco-based company said Monday it will close six US plants and lay off 3,600 employees, or 22 percent of its work force after concluding foreign contractors gave it a better chance to reverse a sales slide that began in 1997.
"This is a painful but necessary business decision," said Levi's CEO Philip Marineau. ``There is no question that we must move away from owned-and-operated plants in the US to remain competitive in our industry.''
Labor leaders described Levi's move as a depressing sign of the times that proves the US government isn't doing enough to prevent domestic manufacturers from being undercut by rivals with plants in countries with lower labor costs.
"When Levi's aren't being made in the United States, it says a lot about manufacturing trends that have become a threat to the US economy," said Greg Denier, a spokesman for the United Food and Commercial Workers Union, which represents workers at two of the plants targeted for closure.
San Francisco-based Levi's took another step down the path of other major clothing makers that have lowered prices and boosted profits by farming out production to Latin America and Asia. After it completes the latest closures, Levi's will have shut 29 US factories since the company's sales started crumbling in 1997. The plants to be closed between June and October are in San Francisco; Blue Ridge, Georgia.; Powell, Tennessee; and the Texas cities of Brownsville, San Benito and El Paso.
The purge will leave Levi's with just two US plants, both in San Antonio -- a striking retrenchment for a 149-year-old company that used its blue denim jeans popularized by California gold miners to create one of America's best-known brands.
About 3,300 workers will lose their jobs at the six factories. The company also plans to jettison 300 of the 530 workers at one of the remaining San Antonio plants. The cuts come from a worldwide payroll of about 16,600 workers.
Levi's also will lay off about 645 European workers later this month after it closes two Scotland plants, Butler said.
"It's a sad day," said Bruce Raynor, president of the Union of Needletrades Industrial and Textile Employees that represents workers at four factories. ``It's going to be difficult for a lot of these workers to find new jobs.''
Even as its sales sagged, Levi's maintained wages ranging from US$9 to US$14 per hour at its US plants, Raynor said. That commitment put Levi's at a competitive disadvantage with rivals like the Gap, Guess and Ralph Lauren that use foreign contractors that frequently pay workers less than US$1 per hour.
Levi's workers in San Francisco and Tennessee will receive US$2,200 "transition allowances" along with severance pay.
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