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Levi to lay off 5,900
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February 22, 1999: 12:20 p.m. ET
Jeans maker to close 11 plants in North America, lay off 30% of work force
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NEW YORK (CNNfn) - Levi Strauss Americas, a division of Levi Strauss & Co., said Monday it will close 11 of its 22 manufacturing plants in North America and lay off about 5,900 people, or 30 percent of its work force.
Levi Strauss has a total of 19,900 employees in the United States and Canada.
The San Francisco-based apparel maker said plants will be closed in Texas, Tennessee, Georgia, Arkansas, Virginia, North Carolina and Ontario, Canada.
The company will close 8 plants immediately and three more in June or July.
John Ermatinger, president of Levi Strauss Americas, said the company is shifting a large portion of manufacturing for the U.S. and Canadian markets to contractors throughout the world. "These steps are crucial if we are to remain competitive," he said.
Levi Strauss currently does 60 percent of its manufacturing overseas.
Last week, Levi Strauss said sales for fiscal 1998 had dropped 13 percent to $6 billion, largely due to soft sales of its flagship Levi's jeans.
The privately held company, which doesn't release corporate earnings data, said sales were down in all three of its geographic regions. The Americas were down 15.2 percent to $3.9 billion, while Asia Pacific showed the largest proportional decline, dropping 21.1 percent to $369 million.
Levi Strauss said employees will receive up to three weeks severance pay per year of service; extended medical coverage; an enhanced early retirement program; and a flexible allowance of up to $6,000 for training, education and business start-up expenses.
"This is a tough decision," Ermatinger said, "because we recognize the disruption it will create for many of the employees and communities that have contributed so much to our company's success over the years."
"Race to the bottom"
The closure decisions were negotiated with the Union of Needletrades, Industrial and Textile Employees, and the United Food and Commercial Workers, which represent a majority of the plants.
UNITE issued a statement Monday expressing regret over the company's decision.
"We expressed a strong desire to keep plants open," said UNITE Secretary-Treasurer Bruce Raynor.
"The fact is, most garment manufacturing is geared toward a race to the bottom," Raynor said. "Most of the companies that compete directly with Levi Strauss either haven't manufactured garments here for years or have never manufactured in North America…Clearly, Levi Strauss & Co. is under enormous pressure, but we are saddened by their decision to join the race to the bottom."
Monday's announcement follows a round of cutbacks the company announced in late 1997. 
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Levi Strauss
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