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1/11/2004

Levi closes its last two U.S. plants

The Associated Press

SAN ANTONIO — Levi Strauss & Co., the California Gold Rush outfitter whose trademark blue jeans have been an American clothing staple for generations, on Thursday closed its last two sewing plants in the United States.

The financially troubled company has been steadily shifting production to overseas contractors for several years to cut costs and invigorate drooping sales in the ultracompetitive apparel market.

About 800 workers at the 26-year-old San Antonio plants have lost their jobs in the move, which was announced in September. Jeff Beckman, a Levi Strauss spokesman, said the 150-year-old company was making a delayed but ultimately unavoidable business decision.

“We tried to do our best to maintain manufacturing in the United States, but we have to be competitive to survive as a company,” he said.

Sewing in San Antonio finished up around Thanksgiving and last month it ceased the laundering work done to give jeans their various finishes. More than 4 million pairs of jeans were once made here each year by workers earning, on average, $10 to $12 per hour.

This spring, San Francisco-based Levi’s will complete the shift to contract production by shuttering its three remaining company-owned plants in Canada.

Privately held Levi Strauss has weathered seven straight years of declining sales after its revenue peak of $7.1 billion in 1996.

In 2002, the company reported sales of $4.1 billion, and Beckman said the yet-to-be-released number for 2003 would be 2 percent to 3 percent lower than that.

The company has seen its global work force shrink from more than 37,000 in 1996 to about 12,000 last month, roughly half of them in the United States, said spokeswoman Kari Otto Seymore.

Along with headquarters staff, Levi’s will continue to base its design and sales employees in the United States, along with a number of distribution centers.

Its identity will also stay in the USA.

“We’re still an American brand, but we’re also a brand and a company whose products have been adopted by consumers around the world,” Beckman said. “We have to operate as a global company.”

Walter Loeb, a retail analyst in New York, says the profitability of moving production to China and elsewhere is worth more than a symbolic presence in the United States, where Levi’s had made jeans since the 1870s.

“Investors are not very sentimental these days,” he said.

Loeb said even with far cheaper overseas labor costs, management faces a big challenge in restoring the company’s once-snug fit with consumers.

“There was a time when Levi’s was the fashion garment of the day,” he said. “The exclusivity of the Levi’s brand is no longer as important to customers.”

Levi’s closed six U.S. manufacturing plants in April 2002 in a move that cost 3,600 jobs. Only the San Antonio facilities were spared, though several hundred jobs were lost here.

In the early 1980s, the company had 63 manufacturing plants in the United States, Seymore said.

A third plant in San Antonio was closed without notice in 1990, costing Viola Casares and about 1,100 workers — many of them Mexican-American women with limited jobs skills.

“For me right now, I feel like I’m in mourning,” said Casares, who co-founded a group that used boycotts and picketing to protest the 1990 closure. “We used to be like a family. It’s hard to believe that it’s final.”

She said those out of work will have trouble finding jobs with wages as good as Levi’s.