Globalization at Levi Strauss
Blue jeans are a legendary component of American culture. They were created in the United States in 1873, when Levi Strauss patented the riveted denim jeans that proved so successful among customers that they launched an entire industry. Yet, the one company that has perhaps been most synonymous with blue jeans—Levi Strauss—doesn’t actually make its blue jeans in the United States.
In the late 1990s and early part of this decade, Levi Strauss undertook a substantial shift in the location of its manufacturing operations. In 1997, Levi Strauss closed 11 plants and laid off 7,400 employees to cut excess production. In 1999, Levi’s announced a large-scale layoff of almost 6,000 jobs and the closing of more factories in Georgia, North Carolina, Virginia, Texas, Tennessee and Arkansas in an effort to move production to foreign facilities. Over time, the layoffs and the closing continued.
Once a mainstay of U.S. manufacturing, plants in areas such as San Antonio, San Francisco, El Paso, and Brownsville, were closed, and by 2004, Levi Strauss had shut its domestic operations and moved production facilities to foreign countries such as Mexico and China. Costs were a major factor for this decision. What might cost $6.67 to make in the United States costs about $3.00 in Mexico and $1.50 in China. While Levi Strauss was reluctant to move these jobs, it faced a competitive market operating with lower costs and lower prices.
Questions
How did the four environmental factors discussed in this chapter influence Levi’s decision to move its manufacturing outside the United States?
How would you evaluate this decision from a business perspective? What about from an ethical perspective?
Assume that you are an employee working for Levi Strauss and are assigned to the management team in one of the manufacturing facilities in Mexico. What differences would you anticipate in terms of how you manage your Mexican employees versus how you manage employees located in the United States?
APA format the references.