Levi set to shut 11 plants Generous severance planned for 6,395 facing layoffs


NEW YORK -- Levi Strauss and Co. announced a drastic cutback yesterday to eliminate a third of its American manufacturing jobs. But in an extraordinary gesture of largess, the jeans maker coupled the bad news with a generous severance package that included extended benefits and even cash rewards for employees who find other work.

The retrenchment, which will close 11 factories in four states, reflected some of the same global cost pressures that have led other domestic manufacturers making mass-market products to reduce their reliance on American workers.

At the same time, the privately owned San Francisco company seemed to go out of its way to show that it was trying to cushion the blow on the affected communities. It also injected a measure of egalitarianism into the severance plan by giving the lowliest paid worker some of the same help that other companies had historically reserved for severed executives and other high-salaried people.

Levi said it would spend $200 million on the 6,395 affected workers, or an average of $31,274 each, for employees whose salaries range from the legal minimum of $5.15 an hour to about $12 an hour, or $25,000 a year at the high end of the pay scale.

"We're doing this because we believe it is the right thing to do for our employees," said Gordan Shank, president of Levi Strauss Americas.

"Our employees have served us for a long time and this decision is not because of them, but a decision we had to make because of circumstances. We wanted to make sure that we provided them with an appropriate level of support to help them [in the] transition" to new work.

The workers will be paid for the next eight months, but will not have to report for duty once goods now on the factory floors are finished, Shank said.

In addition, workers will collect three weeks of pay for each year worked. They will get company-paid health benefits for 18 months, incentives to take early retirement and up to $6,000 each for education, moving or job training.

Unlike most severance packages, which require workers to stay to the last day to collect, workers are eligible even if they find a new job tomorrow, Shank said.

Indeed, workers will get a $500 bonus check as soon as they find new work.

The Levi Strauss Foundation will make $8 million in grants over the next three years to the eight communities where the plants are situated, Shank said.

The severance packages were negotiated with the Union of Needletrades, Industrial and Textile Employees, known as Unite, and the United Food and Commercial Workers Union.

In February, Levi Strauss eliminated 1,000 white-collar jobs, 350 through layoffs, to reduce overhead by $80 million annually.

Pub Date: 11/04/97

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