Generous Severance Softens Blow Of Levi's 6,400 Layoffs

ATLANTA - When it comes to generosity, Levi Strauss is a hard act to follow.

The San Francisco-based jeans makers' decision to close 11 factories and cut 6,400 jobs is softened by a precedent-setting severance package that includes up to three weeks' pay for every year of service, a $500 bonus when a worker finds a new job and a $6,000 allowance per worker that can be used to relocate, retrain or start a business.

That means an employee who has been with the company for 10 years will walk away with $32,000 in pay, on average, according to the company.

The $200 million-plus package is reminiscent of hefty severance plans of the early 1990s, according to severance and benefits plans experts.

"This is a leading-edge package," said Wayne Page, an Atlanta-based benefits expert for The HayGroup, an international human resources consulting firm. "The company is very employee-focused with aggressive, positive employee relations programs. So this is not at all surprising for them. But this is not an industry standard. It's above and beyond the call of duty."

A HayGroup survey on severance package policies underscores how rare the Levi plan is: 39 percent of companies that offer such plans give one week for every year of service. None offered three weeks like Levi.

"We studied this (decision) for almost a year to develop a program that we felt would give our employees the best shot at transitioning smoothly to new careers," said Levi spokesman Dan Chew.

Not a bad parting gift from a company that has until now averted massive cutbacks in a business marked by cheap jeans from overseas, layoffs and plant closings. Chew reiterated Tuesday that the cutbacks - which amount to one-third of the company's North American work force - are not a ploy to move jobs overseas. Yet the company is pushing to get government aid for its workers under the North American Free Trade Agreement.

Plant closings in Arkansas, New Mexico, Tennessee and Texas are the results of too many jeans in an overcrowded market, which has forced the company to spend more time on other brands, such as its Dockers and Slates slacks, company officials say.

In Knoxville, Tenn., which will take the hardest hit, losing 2,100 jobs, workers are likely to find jobs in nearby counties that have healthy diverse economies, experts say. But even with the $8 million Levi will pump over the next three years into communities hit by layoffs, experts say, it will be hard to find employers with pay and benefits as generous as Levi Strauss.