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Levi to shut North American plants
San Francisco, Sept 26: Struggling blue jeans maker Levi Strauss & Co said on Thursday, it would close its remaining North American plants, leaving nearly 2,000 employees out of work and completing its long exit from the US manufacturing business.
San Francisco, Sept 26: Struggling blue jeans maker Levi Strauss & Co said on Thursday, it would close its remaining North American plants, leaving nearly 2,000 employees out of work and completing its long exit from the US manufacturing business.
The job cuts and plant closures are part of the latest restructuring at the 150-year-old company, which has fallen on hard times as both cheaper discount brands and pricey designer labels, have cut deeply into its market.
Earlier this month, Levi Straus, said it would cut 650 jobs and seek waivers from its lenders, while it sought new financing and tried to better compete with lower-price apparel makers.
The company, like many apparel companies, has found it much cheaper to send its production overseas. After it closes its remaining North American plants -- in San Antonio in Texas, Edmonton in Alberta, and Stoney Creek in Ontario -- it will out-source manufacturing to plants all around the world, many concentrated in Latin America.
"We're in a highly competitive industry where few apparel brands own and operate manufacturing facilities in North America," Levi Strauss Chief Executive Officer Phil Marineau said in a statement.
"In order to remain competitive, we need to focus our resources on product design and development, sales and marketing and our retail customer relationships."
Keeping costs down is high on the agenda at Levi Strauss at its struggles under a high debt load and seeks to expand its presence into the discount apparel market.
The legendary jeans maker recently launched a lower-priced product in Wal-Mart Stores Inc and many analysts say Levi's future could ride on the success of that program.
But any possible turnaround may take time at Levi Strauss, where sales have fallen steadily every year since 1996, when they peaked at $7.1 billion, largely on the success of the Dockers brand. Revenues this year are expected to total $4.1 billion, about unchanged from last year.
Analysts note the company has had the unfortunate timing of attempting a turnaround in a weak retail market. In addition, the company's staggering debt, expected to top $2.1 billion this year, is an added burden that puts pressure on it to improve its operations.
Although, the plant closures announced Thursday are significant for marking the company's complete exit from American manufacturing, its US production presence has been nominal for some time. A Levi Strauss spokesman stressed that the remaining US sewing and finishing plant about to close represents less than five percent of the products it sells in the US today. Bureau Report
The job cuts and plant closures are part of the latest restructuring at the 150-year-old company, which has fallen on hard times as both cheaper discount brands and pricey designer labels, have cut deeply into its market.
Earlier this month, Levi Straus, said it would cut 650 jobs and seek waivers from its lenders, while it sought new financing and tried to better compete with lower-price apparel makers.
The company, like many apparel companies, has found it much cheaper to send its production overseas. After it closes its remaining North American plants -- in San Antonio in Texas, Edmonton in Alberta, and Stoney Creek in Ontario -- it will out-source manufacturing to plants all around the world, many concentrated in Latin America.
"We're in a highly competitive industry where few apparel brands own and operate manufacturing facilities in North America," Levi Strauss Chief Executive Officer Phil Marineau said in a statement.
"In order to remain competitive, we need to focus our resources on product design and development, sales and marketing and our retail customer relationships."
Keeping costs down is high on the agenda at Levi Strauss at its struggles under a high debt load and seeks to expand its presence into the discount apparel market.
The legendary jeans maker recently launched a lower-priced product in Wal-Mart Stores Inc and many analysts say Levi's future could ride on the success of that program.
But any possible turnaround may take time at Levi Strauss, where sales have fallen steadily every year since 1996, when they peaked at $7.1 billion, largely on the success of the Dockers brand. Revenues this year are expected to total $4.1 billion, about unchanged from last year.
Analysts note the company has had the unfortunate timing of attempting a turnaround in a weak retail market. In addition, the company's staggering debt, expected to top $2.1 billion this year, is an added burden that puts pressure on it to improve its operations.
Although, the plant closures announced Thursday are significant for marking the company's complete exit from American manufacturing, its US production presence has been nominal for some time. A Levi Strauss spokesman stressed that the remaining US sewing and finishing plant about to close represents less than five percent of the products it sells in the US today. Bureau Report