Levi Strauss, the privately held 150-year-old maker of jeans and more, is closing down its last two sewing plants in America. (We pause now for a 21-button salute.)
Call it an inevitable result of free markets or call it a crying shame. Either way, due to difficulties competing with clothing stitched overseas at a fraction of the cost, the denim icon has struggled in recent years. A recent article by Dave Marino-Nachison pointed out some other problems, including sub-optimal distribution methods that ignored discount chains such as Wal-Mart (NYSE: WMT ) for too long.
Levi's has also been criticized for neglecting its brand, allowing it to fall from that top shelf of American icon brands that boasts the likes of Coca-Cola (NYSE: KO ) , Ford (NYSE: F ) , and McDonald's (NYSE: MCD ) .
Levi Strauss's revenues peaked in 1996, at $7.1 billion, but that plunged to $4.1 billion by 2002 and is projected to come in even lower in 2003. Twenty years ago, Levi's 63 plants across the U.S. cranked out millions of pairs of jeans annually. Soon, the company will abandon the continent altogether, once three remaining Canadian plants are closed. Who's getting the business? China, and other nations with less expensive labor.
Levi's struggles are far from over. But if the company is to survive, the shift to overseas production is probably sensible. American shoppers might like to see a "Made in America" label on their jeans, but they're probably not eager to spend twice as much for that label. Levi's also needs to work on boosting the image of its Levi's and Docker's brands, while paying down debt and getting costs under control.
In a related story, Levi's scored a legal victory when it was dismissed from a lawsuit that tied some 20 clothing retailers to alleged sweatshop abuses. Levi's refused to participate in a $20 million settlement which solicited payments from retailers who also claimed no wrongdoing. The settlers included Target (NYSE: TGT ) , Abercrombie & Fitch (NYSE: ANF ) and Nordstrom (NYSE: JWN ) .
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