Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Not Made in the USA: Levi's

By

The jeans may be produced offshore, but the lawsuits are all-American.

PrintPRINT
"I wish I had invented blue jeans. They have expression, modesty, sex appeal, simplicity…all I hope for in my clothes."
-Yves Saint Laurent

Of all the trends America has tried to export, from baseball to democracy, nothing seems to have caught on quite like blue jeans. It's more than a little striking that Yves Saint Laurent -- perhaps the greatest fashion designer France (and thus the world) has ever produced -- should confess to having wished he'd created them. After all, blue jeans are the one piece of fashion that's transcended all times and styles: They're worn by Americans from all walks of life -- from James Dean to Jerry Seinfeld to Joe the Plumber.

And for that, we can thank Levi's.

The company that started it all was founded in 1853 when Levi Strauss moved from Bavaria to San Francisco. His company began manufacturing denim overalls, and by the 1920s had invented the modern pair of jeans.

For a long time, jeans were worn mostly by cattle ranchers and farmhands, soldiers and poor boys. But by the 1950s, jeans were embraced by the counter-culture. It didn't take long for mods and hippies to cast Levi blue jeans out into the world, where they became an international sensation.

It was around the same time that Levi's followed suit by quite literally casting its jeans out into the world by opening more than 50 plants and offices offshore. It was in these factories where America's favorite fashion was manufactured using cheap labor. Today, most Levi's are still made offshore. Check the label on the pair you're wearing now.

But we've all heard the complaint before: By moving its manufacturing offshore, Levi's abandoned its American soul. What's less well-known, however, is that Levi's turned to another American tradition to fill that hole: suing (quite literally) the pants off its competitors.

Sure, Americans have a reputation for their love of litigation. But few companies embraced it quite like Levi's. Since 2001, Levi's has engaged in over 100 trademark infringement lawsuits, more than General Motors (GMGMQ), Disney (DIS), and Nike (NKE), according to the New York Times.

So what's got Levi's all hot and bothered?

For starters, Levi's invented jeans, so basically any other company that dares to sell denim runs the risk of ripping their design off, whether they know it or not. Levi's most common complaint is that competitors copy its design of the two arcs and folded piece of cloth that are sewn into the back pockets of the pants (aka, US trademark #1,139,254). In addition to dozens of other small companies, Levi's has sued Guess (GES), Esprit Holdings, and Lucky Brand Jeans. Often, they sue multiple times.

Most of the time, the cases are settled out of court -- and in Levi's favor. With styles changing so quickly, competitors often say it's easier just to destroy the litigious jeans and design new ones rather than fight it out in court.

Often, the defendants point to how poorly Levi's performed during the denim boom of the 1990s as to why it's gone sue-crazy. Levi executives deny this claim, arguing that the rapid-fire litigation is all about protecting what's rightfully theirs.

But the fact is, Levi's sales have plunged more than 40% since 1996. It's been forced to close down nearly half of its work force and close multiple plants. Last year, net revenue in Levi's American market fell 13%, from $580 million to $504. (Only 3 million shy of 501, Levi's classic design!)

Which is all to say, it might not be long before Levi's will need to dip its toe into the newest and greatest American trend: the government bailout.

Click Here For Next Article Click Here For More
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE