 In 1850, a 20-year-old Bavarian named Levi Strauss joined the thousands of adventurers seeking their fortunes in the California gold rush. Levi Strauss arrived in California with a roll of tent canvas under his arm, hoping to make pocket money by selling the tough fabric to miners. He soon learned that the miners had a problem more serious than leaky tents. They couldn't find pants that could stand the rigors of the gold field. Knees wore through quickly and pockets ripped when filled with ore samples. Levi Strauss fashioned a pair of pants from his tent canvas and fashioned the pockets with a copper rivet. Levi's tough pants were an overnight sensation as the American West grew miners, cowboys, railroad workers, and lumberjacks all depended on the pants that became known as Levi's. Levi Strauss' company has grown and prospered since the end of World War II, it has greatly expanded product lines and distribution to the point where Levi's are worn by people around the world. In addition to the classic denim, there are lines of children's wear, leisure clothes, and accessories. Through its early days and times of economic expansion, Levi Strauss has relied heavily on its workers and has maintained strong employee loyalty. Since its rough and tumble beginnings more than a century ago, Levi's Strauss has become a billion-dollar-a-year organization. It employs 30,000 people in 70 countries around the world and in many people's minds it works better than a lot of other countries. With us today are some people from Levi's Strauss who may be able to help us understand how and why that's true. The vice president for personnel and corporate relations is Mr. Al Nathan. He's also director of the corporation and has been with Levi's Strauss for 17 years. Kit Durgan is an administrative assistant in the treasurer's department. Kit has been with Levi's Strauss for seven years. And Amel Knapp is a chief designer in the boyswear division. Amel has been with Levi's Strauss for 24 years and began as a cutter. Is that right? That's interesting. Mr. Nathan, did Levi's Strauss himself have any particular ideas on how the company is supposed to relate to its employees? What did old Levi have to say about the people who worked for him? When Levi's Strauss founded the company 125 years ago, his first concern was for the consumer, the customer. And he was very concerned that the pants that he originally first made for the miners were satisfactory to the customer. And for that reason, he discovered that the miners were having some difficulties with holding ore in the pockets. And that is how one of the changes in the Levi's pants was made, and that is by adding rivets to the pockets. That is typical of his concern for consumer satisfaction, and that has carried through today in our company policy of being very concerned of consumer satisfaction. He was also extremely concerned about the welfare of his employees, both on the job and their families and their welfare off the job. And employees who worked with Levi's Strauss have recorded many incidents of his taking care above and beyond normal requirements of their concerns and problems. What sorts of things did he do? Well, there were illnesses in the family. He made sure there was proper medical care for members of the family. He didn't just end his concern at the end of the working day. He made sure his employees, if they had difficulties, had some help. He was also concerned with community projects and was active in supporting activities in San Francisco. One of the projects that he founded in 1892 was a scholarship program at the University of California for members of employee families. That scholarship program is still in existence today and it has since been expanded, but it is still there providing scholarships for children of our employees. These are examples of some of the founding principles of Levi's Strauss which are carried on today. Well, if they're carried on today, Kent, you're in the Treasurer's Department, dealing with dollars and cents. What's in it for a Levi worker today? Well, I think, let me back up a little bit. I think that this whole tradition that Al is talking about is carried on right up until now. My boss, Bob Kern, is the Treasurer and he tells me about and shows me pictures of dinners they've had. The whole company had an annual dinner together and the whole company was, what, 50 people. This was 20 years ago. Everybody had stock and everybody was included in every decision. Right now, I think, we're growing very, very fast and it's hard to keep up with that personal attention, but for instance, we just recently had the billion dollar stock recognition plan for all employees who had been employed for six months. What does that mean? The billion dollar stock recognition plan. Well, Levi hit a billion dollars in sales for the first time in its history, which you mentioned earlier and the top management was concerned that everybody be recognized for their part in reaching this level of sales and they decided that each individual should receive some number of shares, which was determined by how high grade you were and how long you had been with the company. Or for some employees, it was a cash award. Right. And the plant communities where perhaps the stock certificate wouldn't have been as meaningful, they gave him a compensating check. Neville, you started out as a fabric cutter 17 years ago? Not almost 24 years ago. 24 years ago. Well, working from there up to your present physician as designer, has it always looked like Levi Strauss had a special eye to its employees? That's one of the reasons that I stayed with the company because they provided an opportunity for advancement. You started out in one position with the intention of advancement and it was up to you, really, not to the company to educate yourself to reach a certain position. You're always given an ear of your superiors and recommendation when you reached a certain goal. So I went through all the paces from cutting to production to running plant to design. Now, in 1971, Levi had its first public sale of stock. Went public for the first time. At that time, there was an insistence, management insisted that relatively small blocks of stock be sold to employees. Why? Why bother with small blocks of stock to employees? Well, this was unusual. An unusual request and insistence on the part of our management because the stock underwriters as a general practice don't usually want to provide a block for a group of employees or a special group of investors. But because of the company practice of selling stock to employees, which had gone on over 120 years at that time, the management of the firm felt it would be in all fairness. It was right to reserve a certain block of the public issue, particularly for those employees who were fairly new employees or for whatever reason, had not had the opportunity to buy any substantial amount of stock. So for that reason, an ongoing public, they were offered an opportunity to do so. What about when workers retire? Well, when workers retire, we have benefits to provide retirement pensions for them. We also counsel them prior to retirement, which is customary today, but we do have a program to do that. And in the whole area of compensation and salaries, we as a company have a policy of paying salaries and benefits which were equal to or hopefully better than those in industry, in competitive industries. And so our salary scales and our benefits like profit sharing, pension, and insurance are geared to be competitive or better than competitive programs. To some groups of employees, these benefits may take the form of profit sharing awards. To others, it may be a pension program, which is given to the employee either at the time of retirement or if he terminates prior to retirement, he is given the cash award equivalent. Our life insurance policies, to a large extent, are paid by the company rather than the employee. And we have a full benefit package and that's probably one of the reasons why our turnover of employees is lower than that experienced in the industry. Let's take that just a bit further. We're talking about who's buying stock, which raises the question of who's working for Levi Strauss. In the garment industry, there are large pools of labor in certain areas of the country manufacturers of apparel locate in those areas and there are questions raised from time to time as to why people aren't paid more in the industry, why it is one of the lower paying industries. What is Levi's philosophy when you go into an area and open a plant? Mr. Nathie? Well, when we locate in a plant, we make sure that in a city, we make sure that that city will permit the company to carry out its operations within the policies of the company. And this includes its policy of affirmative action, equal opportunity employment, and giving opportunities to all for job fulfillment. By the nature of the work and by the nature of the job skills, historically, most of the jobs in the plants are filled by women because of the skills involved in sewing and garment construction. This isn't necessarily going to continue in the future. It could change for two reasons. One, there is automation of the manufacturing process, which is developing, and we have pioneered as a company in furthering that automation. And secondly, through the affirmative action program, we are trying to fill jobs, typically filled by women, with men, and have had some success in doing that. So over the years, the mixture of men versus women could well change for those reasons. Now, you talk about affirmative action, but that's a rather popular catchphrase, and as a matter of fact, it is law in many parts of the United States now. Is Levi just complying with the law, jumping on the bandwagon? Well, long before the affirmative action program became a requirement by law, Levi Strauss & Company was cited by various agencies for following what was then called fair employment practices and received awards for doing so. We were among the first in the industry, the first in the industry to insist that our plants, particularly in the southern areas of the country, be integrated with equal employment practices, that is equal opportunity for minorities as well as whites. And we were the first to do that in the industry, and this is one of the requirements whenever we go and locate a new plant. The company has long followed equal opportunity fair employment practices long before it became a legal requirement. It just believed in it, and it has followed that through the years. May I add to this that I have noticed in some of our plants that we have handicapped people, such as people that are blind. But that is very difficult to train to operate certain machinery. And they are employed men, especially I've noticed in one of our plants there are two blind people who are employed operating machines. That's right. Amel, you've worked on the floors themselves and in your present job as designer and boys where you're out in the manufacturing plants quite often. Making Levi's products couldn't be much fun from a fun point of view. There's a lot of hard work involved at the sewing machines and so forth. And yet the quality of the Levi product and the work standards of its people are very, very high. I disagree with you on the fund business. I think it's really, it is fun for the operators to well, be assured that they produce something that is quality oriented. How does the company encourage this quality? Well, we have very stringent quality rules. And the quality is encouraged by training the people properly. They have training programs for each new employee in every plant. And that employee is paid on an early basis until they reach a certain percentage of production and they're put on the regular production basis. So they are taught quality in the plant. Every employee is taught. Even if they have experience from another plant they're still retrained to our way of doing things. And quality wise, that's what we insist. As a matter of fact, that's part of my duties to insist that our garments do not pass if they don't reach a certain level of quality. How do you instill the pride? Well, it's a question of management. The manager is instilled with the pride by his superior and he instills the operators and the supervisors. And they are recognized for it. You are proud to say I work for a plant that produces something that is guaranteed. We, for instance, guarantee every garment. A new one if it doesn't meet its specifications, its quality. There's an effort being made now. We talked about job enrichment before and there's an effort being made at one of your plants to expand the responsibilities of certain jobs of operators, sewing machine operators and so forth. Is this an experimental project? If so, how's it going? We have a job enrichment program which is experimental in nature underway at our plant in Albuquerque for the purpose of making the job of sewing and constructing Levi's more self-fulfilling, more satisfying to the employees. Emil, perhaps you could comment further on that. Well, this is a group incentive type of program where a group of people would be given a certain responsibility and they can interchange. For instance, women are being trained as mechanics and at the same time they will take care of the equipment as well as the sewing. What is their incentive for doing this? Well, there's an advancement in pay. There's a certain amount of satisfaction of not doing a repetitious job at all times. We have at present in most of our plants several operators in each plant that knows more than one operation. But normally these people prefer to stay in one operation because the pay is better, they are better experienced. But in this type of program there is an incentive for everyone to try out different things and work as a group. Is there any objective measure of how well it's working? Is productivity increasing? Well, it's still being experimental. So actually it's being supervised by a psychologist. Yes, we brought in some special skills, special backgrounds to develop this program. We think it's going well, but it's too soon to give you final results. What has been the role of unions in the development of corporate employee relations in Levi Strauss? Is it a highly unionized company and how are those union decisions made? At Levi Strauss and Company we have both types of plants, both union and non-union plants, and work well with both types of organizations. Actually I think about three fourths of our plants are unionized and some were unionized when we acquired the plant, others became unionized under our management. Essentially the decision is made by the employees through a union election, and we abide by their decision. We have had very little labor stoppage in labor relations over the years. In fact, I think over 125 years there has been work stoppage of one or two days. Looking forward now that Levi Strauss is a billion-dollar corporation looking forward to the next 20 or 30 years the rest of this century, what will be the significant issues within the company between management and labor? What sorts of things will people be talking about and dealing with? Well, that's hard to project. I would think we would have a continuation of good relations between management and our employees. It's a close, intimate relationship because we do have an open-door policy. That open-door policy means that an employee can be heard either through a suggestion program or speaking to a supervisor or if there's a grievance and it's not being heard at the lower levels. The office of the president and the chairman of the board have an open-door policy and a letter to that office or an appointment with that office is obtainable to all employees. We think that is one of the strengths of the company and we would see that continue and work into an even closer relationship between employees and management than today and probably working toward greater participation of all of our employees in company operations. Go ahead. I think that's going to be the biggest problem is to maintain what the original ideas are and for the people who want to maintain them, being top management, to when you're growing so large and you're so big to communication becomes difficult at any level, business or social. It's a big problem. Not just be like any other corporation but retain as much as possible of the original ideas that were incorporated in the legal process. Do you have any other policies and benefits? I may add another. For instance, I have an assistant who is Chinese and his English is a little bit rusty. He goes to school twice a week on company time, day school to improve his education. This is one of the policies that the company allows under discretion of the manager for a certain period of time. It raises another important point, foreign national employees, but Levi's manufacturing, as well as selling in many foreign nations, you have manufacturing plants in how many different countries? We have manufacturing plants in approximately a dozen countries around the world. We sell in 70 countries and have worldwide operations. Of course, we have a sales force around the world and we have affirmative action working in that sales force. Also, we have a great many women now who are sales representatives and are doing a good job and thoroughly enjoy the work. We have worldwide sales and marketing manufacturing operations. Do the principles that are encouraged by the Home Office in domestic production and sales of Levi's apply to your overseas manufacturing plants? They apply throughout the world. I've read somewhere recently where there's a statistical figure that's about 7% of the Levi's sales force are female at present and that's one of the highest I think for any company at present. That's for leaders in that area, I would say. Is there a plan for expansion of overseas marketing and manufacturing within Levi Strauss? Yes, there is. There is a great deal to be done in expanding overseas markets. We've been in international business a relatively short period of time as opposed to the history of the company. We're 125 years old. We're in international business approximately 20 years and in many of the countries while we have a dominant or a large share of the market we're nowhere near the per capita dimension of the U.S. market. So there's a great deal of growth remaining overseas and we would expect that would be part of the objectives of the future. In a year of international recession Levi Strauss had its biggest year ever and the growth seems to continue as it has ever since Mr. Levi Strauss made his first pair of jeans. If you had to sum up in a few words why the Levi Strauss company works and grows better than a lot of other companies what would you say, Mr. Knopf? Well I would say our employees' enthusiasm is the major part and our quality is probably the foremost. Most of our employees do a better job because they have their hearts in the work and that goes for management as well as for our operators. And I think that's the secret of the success of this company. As long as it continues it will stay that way. I couldn't agree more. I think that's exactly what it is. It also helps that denim is pretty big right now worldwide. I think I can't imagine that it would ever fall off at all. Mr. Levy? To that I would add the strength of the name Levi's itself. It's a worldwide name like Coca-Cola or some of the few widely known brand names and it is one of the strengths of the company. But it isn't just idly done to keep it that way. Our designers like Amel, our merchandisers, our marketers are constantly studying consumer trends in style, life culture and adopting our products to the wants of the people. And I think that is why even in spite of a recession we had a good year this year. We had the products that people wanted. If there's any particular thing that you could change or expand in Levi's what would it be? Well I think each of us would answer it a different way at the moment because of the affirmative action program and the desire of all of us to upgrade employees particularly minorities and women. I think my answer would be that more training opportunities should be provided to the employees. Kit, you're in middle management. That's exactly what I would say. I think there needs to be a place where someone can go for career counseling for training at a higher level not just how to run a typewriter or answer a telephone but where do I go from here? And I've got seven years of experience at Levi. I'm a pretty good administrative assistant but what do I do now? And as the company grows with the divisions how do I get into a division from corporate? And I think the other area that will need continuing attention is education of employees about the benefit plans and what their options are in the profit sharing plan and the pension plan, whatever. If they can contribute as well when do they become a member? What does it mean for them? Especially at the lower levels where it needs to be put forth in a more elementary language and perhaps when they become eligible sit down with them. Do you have questions? Amel, what needs attention? Well, I think the most attention is the programs, not to let them slide by. That's the main keep it the way it was set up as Levi Strauss and not as any other corporation. Thank you all for being with us. We've enjoyed it very much. Thank you.