Levi Strauss set to shut down RP plant

Levi Strauss & Co., one of the world’s top and oldest jeans maker, announced it is shutting down its plant in the Philippines effective Aug. 1, 2008.  The closing will affect 257 employees.  

Ramon Martelino, Levi Strauss Philippines country manager, said the closure of the cut-and-sew apparel plant will allow the group to focus on its core competency of marketing its branded products in Asia and in line with the group’s overall global strategy to further grow its business in the region.  

“Levi Strauss & Co. regards the Philippines as a key market here in Asia Pacific. This move reaffirms our marketing presence as we remain committed to bringing premium quality, branded Levi’s® and Dockers® products as well as innovative marketing programs to both our customers and consumers,” Martelino noted.  

The plant was established in 1972 to produce Levi’s® jeans for the local and Asian markets.   

Industry observers said Levi’s has been struggling to arrest declining sales for the past decade due to its inability to keep up with fickle fashion tastes and match the lower prices of rivals. 

As sales dropped, Levi’s had closed some of its US factories to give it more pricing flexibility and ease its financial pain as less revenue trickled into the company.  

Martelino said that with the closure of the plant, Levi Strauss Philippines will just outsource its products from  selected contractors in Asia.  

He said Levi Strauss Philippines will continue to have a significant presence in the country through its commercial business, retailing branded apparel in major cities through a large franchised retail distribution network. 

“This has been a very difficult decision for us. We have examined comprehensively all other options, including cost containment and improving the efficiency and productivity of this plant as first options. Unfortunately, such measures cannot overcome the significantly lower costs of outsourcing,” Martelino explained.  

Martelino, however, pointed out that the group’s decision had nothing to do with the slowdown in the US economy.  He also said that the local business has been growing but did not say by how much.