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Levi to Shut 2 Texas Plants, Fire 991 Workers

CALIFORNIA / News and Insight on Business in the Golden
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Apparel: Some work will move south of the border. Firm seeks to reduce capacity, cut costs to remain competitive.

September 29, 1998|From Reuters

SAN FRANCISCO — Levi Strauss & Co., the maker of Levi's blue jeans, said Monday that it will close two more U.S. plants, shift some work south of the border and lay off 991 workers as part of a push to stay competitive by reducing its domestic manufacturing capacity.

Levi Strauss, the world's largest brand-name apparel manufacturer, said the two facilities are finishing centers in Amarillo and El Paso, Texas, where garments are sent to be tweaked after they are made in separate sewing plants.

The announcement of the job cuts came almost 11 months after privately owned, San Francisco-based Levi Strauss, which also makes Dockers and Slates pants, said it would close 11 U.S. sewing plants and lay off 6,395 workers.

Company spokesman Clarence Grebey said the new closures, due to take effect by the end of this year, will cut 9% from the company's current U.S. work force of 11,100.

Levi said the finishing centers had to be closed because they had been operating below full capacity as a result of the decision to close the sewing plants.

But in contrast to the previous round of closures, when Levi Strauss said U.S. jobs wouldn't be replaced by cheaper foreign labor, the company said Monday that some of the work done at the two finishing centers will be moved south of the border.

Grebey explained that the company currently ships garments made in Latin America to its Texas finishing centers to be worked on, but he said this was a "costly and time-consuming process" and that Levi Strauss will use independent contractors in Latin America and the United States to do the work instead.

"When these facilities do close at the end of the year, some of the work they do will return to various contractor facilities in Latin America . . . but we will also continue to use finishing contractors in the United States," Grebey said.

Grebey said the planned closures are part of a shift in the company's long-term growth strategy, and he would not rule out the possibility of more closures or job cuts.

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