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Levi, an American Icon, to Shut Last Plants in U.S.

September 26, 2003|Leslie Earnest | Times Staff Writer

The company, though it expressed concern about the jobs lost, said the final plant closures were just a continuation of Levi's shift in direction that began in the late 1990s, when the company decided to transform itself from a domestic manufacturer into a company focused on product design, sales and marketing. The San Antonio plant was producing less than 5% of the product needed for the U.S. market, company spokeswoman Linda Butler said.

"It's a painful business decision that is made, but it's made to be competitive and ensure the long-term success for the company," Butler said. "We are and have been for years a global company with a long history and deep American roots. And we still do. We still employ many people in the U.S." Currently, Levi has more than 5,000 workers in the U.S..

Levi has struggled for years to reverse a sales slide that began when the company's jeans lost favor among fashion-conscious younger shoppers, who buy most of the denim sold. Ultimately, the company found its products sandwiched between lower-cost alternatives sold by Sears, Roebuck & Co. and J.C. Penney Co. and high-priced options from trend-setting designers such as Tommy Hilfiger Corp. and Calvin Klein. Even more expensive choices sprang up, including brands such as Diesel and Seven that sell for more than $100.

The problem intensified as mass merchandisers, such as Target Corp. and Wal-Mart Stores Inc., began grabbing a huge chunk of the jeans market.

Levi struck back this summer, when it began selling a lower-priced Levi Strauss Signature brand in Wal-Mart stores. Today, Levi sells jeans ranging in price from $20 to $220 and still remains one of the top jeans brands among American youth.

Although the company has continued to struggle with intense competition and downward pressure on prices, it recently said it expected improved sales and profit for its fiscal third quarter, which ended Aug. 24.

Still, Levi, which is controlled by the family of founder Levi Strauss, is weighed down by $2.37 billion in debt and faces an Internal Revenue Service probe of some tax issues.

. Levi's American roots have been an important part of its marketing in the past, said Stephen Walker, president of Headmint Inc., a New York marketing firm. Walker, formerly with the London-based advertising agency Bartle Bogle & Hegarty, helped plan Levi's European marketing campaign in the mid-to-late 1980s, when the brand was flagging there. He worked on the brand for four or five years, creating ads that capitalized on Levi's image as an American icon.

The same agency is now creating similar ads for Levi in the U.S., he said.

"They're using advertising and marketing to perpetuate the myth that they're buying this authentic, classic American piece of clothing," Walker said. "Ultimately, the question probably will become, 'How much does the consumer care that the reality and the image are no longer aligned in any way?' "

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