Socked with declining jeans sales, the San Francisco-based apparel company said it has begun closing eight plants and will shut three other plants later this year. The company, which employs 19,900 workers in the US and Canada, plans to ship more of its production abroad.

The closely held denim empire has seen sales of its pioneering jeans shrink, caught in a market squeeze between trendy, expensive jeans from designers like Ralph Lauren, and cheaper brands from department stores like JC Penney. Since 1990, Levi's market share of men's jeans dropped to 25% from 48%, according to Tactical Retail Solutions, a market-research firm in New York. And last week, Levi Strauss said its sales slumped 13% in 1998, to $6 billion from $6.9 billion a year earlier.

Last year, LeviStrauss closed 11 facilities in an effort to bring its production capacity more in line with demand. About 7,000 jobs, or a third of Levi's domestic work force at the time, were lost in those closings.But the company said the latest round of closings wouldn't lower its production because it intends to shift much of the work to independent contractors in other countries. Many of Levi Strauss's competitors, including Guess and Tommy Hilfiger, have most if not all of their jeans produced overseas. There, labor costs are frequently much lower than the $10.12 an hour in wages and benefits paid to the average US garment worker.Aside from chopping its labor bills, Levi Strauss said it will also be able to reduce the time it takes to get apparel into stores. "The drawback of owning your own plants is that changing the line a plant produces is very time- and cost-consuming," said Clarence Grebey, a spokesman for Levi Strauss. "If we go to contractors to do that, we can get our consumers into the product morequickly."

The company said it doesn't intend to close more plants in North America. "Even after the closings we'll still have 11 plants [in North America]," Mr. Grebey said. "That still leaves us as an apparel company with one of the largest manufacturing operations in North America."

Employees will receive eight months' notice before being cut from the payrolls, Levi Strauss said. Notice was officially given Monday to employees at eight plants: those in Harlingen and Wichita Falls, Texas; Mountain City, Tenn.; Valdosta, Ga.; Morrilton, Ark.; Warsaw, Va.; Murphy, N.C.; and Cornwall, Ontario. In the second part of the plant closings, set to begin in June or July, the company said it will officially notify employees in three more plants: those in Johnson City, Tenn; McAllen, Texas; and the Cypress plant in El Paso, Texas.

The company is providing a severance package worth $245 million for workers affected by the closings. US employees will receive as many as three weeks' severance pay for each year ofservice, extended medical coverage, enhanced early-retirement benefits and an allowance of as much as $6,000 for training and education expenses. Workers laid off in Canada will receive a "comparable" package, the company said.

(The Wall Street Journal)