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Tuesday, November 4, 1997

Levi Strauss closing 11 plants, laying off thousands

By MARTHA IRVINE Associated Press Writer

SAN FRANCISCO (AP) - With demand for its jeans on the decline, Levi Strauss & Co. said Monday it will close 11 plants in four states and lay off nearly 6,400 employees.

The world's largest brand-name apparel maker said the job cuts will reduce its total manufacturing workforce in the United States and Canada by 34 percent - about the same percentage that Levi's was overproducing for the U.S. market.

"In the 1960s, '70s and 80s, we were chasing demand and couldn't produce fast enough," company spokesman Gavin Power said. "It's not like that anymore."

This is the second time this year that the privately held company has cut its workforce. In February, the company slashed 1,000 jobs in an effort to cut $80 million in costs.

"It's like a battleship that's taking on water," said Alan Millstein, editor and publisher of Fashion and Network Report, an industry newsletter. "Through the '90s they've been battling."

That's due in large part to rising competition in the jeans market. Not only have high-end designers like Ralph Lauren and Tommy Hilfiger cut into sales, but consumers also favor less expensive private-label jeans available at retailing giants such as Sears, Roebuck & Co.

"A lot of people can buy jeans for less than Levi's is offering them at and get the same quality," said Kurt Barnard, a retail consultant and president of Barnard's Retail Trend Report.

The plants that will be shuttered include one each in Fayetteville and Harrison, Ark., Albuquerque and Roswell, N.M., and Centerville, Tenn. A sewing plant and finishing center in Knoxville, Tenn., will be closed as well four plants in Texas, one in San Angelo and three in El Paso.

Sewers at Levi's 1,800-employee finishing plant in Knoxville, were told to turn off their machines Monday morning as a voice over the public address system said, "We have some devastating news ..."

"It was hard even sitting at your machine today," said Willie DeLaney, who has worked at the plant for a dozen years.

The privately-held company will spend $200 million in severance and other employee benefits. Workers affected by the job cuts will get eight months' paid notice and up to three weeks severance pay for every year of service.

U.S. Labor Secretary Alexis Herman also said that federal officials would assist laid-off workers with job search assistance and retraining. In addition, the Levi Strauss Foundation plans to spend $8 million in grants to communities involved.

Officials at the San Francisco-based company, which had $7.1 billion in sale in 1996, said the plant closures will be completed by the end of next summer.

But they remained adamant that they will not be creating manufacturing jobs in Mexico or Southeast Asia, where the company already has plants.

"It's a U.S. capacity problem," Power said. "None of these jobs are moving overseas."

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