Manufacturing ‘profits through principles’
Levi’s says a publicly traded company can be ethically operated
When Doris and Donald Fisher opened their first Gap store, on Ocean Avenue in San Francisco, in the summer of ’69, they didn’t start out selling Gap jeans, for the simple reason that Gap jeans didn’t exist. The only jeans the Fishers did sell were Levi’s, alongside records and tapes, under a retail banner that played on the concept of the Generation Gap consumer. (Life magazine had published a Generation Gap cover the previous spring, when Bobby Kennedy had won in Indiana, and the war in Vietnam dragged horrifically on, and an uncle smoked pot with his nephew in order to write about the experience for the magazine. “It expanded my consciousness. No kidding.”)
I cite this piece of trivia in homage, really, to the tenacity and resurgence of Levi’s long after the disappearance of Landlubber and slush-sucking Howicks and name-your-teenagejeans and long after Gap became a force in the denim market with its own branded offerings.
When Levi Strauss & Co. went public this week, for the second time, it offered up a case study in building back from failure. On the surface, the sight of denim-wearing Levi’s executives ringing the opening bell at the New York Stock Exchange would not have warmed the hearts of the young counterculture, business-critical consumer of the Sixties. But in significant ways Levi’s has historically straddled adherence to the bottom line while promising to be attentive to the common good, which could prove a winning formula for contemporary investors seeking authenticity.
I know. There’s something cringeworthy about the word “authenticity.” But if a company that invented jeansmaking in 1873 can’t claim to be authentic, what company can?
More trivia: Levi Strauss, a German émigré who started out in dry goods, lucked into the tailoring talents of Jacob Davis, who was quoted as saying that the “secratt of them Pents is the Rivits that I put in those Pockets.” (The company strangely refers to the red pocket tab as the “Red Tab Device.”)
But what appeared to run through the company all those years ago and what the company claims it intends to honour today is the founder’s commit- ment to philanthropy, integrity and good corporate citizenship. “To this day, we continue to operate our company with these values through an approach we call ‘profits through principles,’” the company stated in its prospectus. “It means never choosing easy over right. It means doing business in an ethical way and ensuring that the people who make our products are treated fairly. It means sourcing in a responsible manner and investing in innovative and more sustainable ways to make our products. Finally, it means using our influence as a successful business with global reach and powerful brands to advocate for social good and to give back to our communities.”
Where’s the proof, you might well ask.
Serious steps to reinforce its principled beginnings were taken by the company after Strauss descendants returned Levi’s to privately held status in 1985 through a $1.6-billion (U.S.) leveraged buyout. The company’s sales were falling, manufacture was moving offshore, consumer tastes were changing. Plants in the U.S. and Canada were closed. Thousands were laid off. Going
private, said Robert Haas, great- great-grandnephew of Levi Strauss, was the “most aappropriate way to ensure that t the company continues to respect and implement its important values and traditions.”
From developing the first code of conduct for apparel manufacturers to establishing global sourcing guidelines to adopting the standards of the International Labour Organization, Levi’s gained notice for operating on a different plane than others in the industry.
Granted, some of these initiatives arrived after alarming reports. News coverage of labourers sewing Levi’s in squalid conditions and living in padlocked barracks in Saipan wwas the trigger for monitoring aand auditing the supply chain. In 1993, Levi’s fired 30 of its 600 suppliers and put 150 on notice to make improvements.
The company pulled out of China in the early ’90s citing “pervasive human rights abuses.” It had already pulled out of Burma.
In 1995, then U.S. labor secretary Robert Reich created a list of Fair Labor Fashion Trendsetters as a contrast to the ssweatshop label that had come to define global garment manufacturer. Levi’s predictably made the list of the good guys.
I say “predictably” because by this point the Economist had cited the company’s “unusual reputation for do-goodery.” AAnother business publication of the era chose “anti-estab- lishment.”
Levi’s first AIDS in the workplace conference was held in 1988. Full medical benefits wwere extended to the unmar- ried partners of employees in 1992. As of 2000 all employees can take five paid hours a month to devote to volunteer work.
But sales were slumping. In 11999 Fortune magazine pub- lished a cover photo of a Levi’sclad bottom graced with the headline “How Levi’s Trashed a Great American Brand.” AAnnual revenues had fallen to $5.1 billion from $7.1 billion in a single year. The comeback under CEO Chip Bergh, who joined Levi’s in 2011 and became famous for telling attendees at a conference that he hadn’t washed his ffavourite jeans in a year, has intersected with a heightened aawareness around corporate social responsibility and a heightened aversion to fast ffashion. “The brand is resonat- ing again,” he said in an interview in 2016, citing a trend back to, yes, “authenticity … wwe’re the antithesis of fast f fashion.”
In a piece for the Harvard Business Review, Bergh wrote this: “If a seasoned brand ddwells too much on its history, it can feel old and dusty. But if yyou disregard your history, y you’re walking away from one of your strongest assets.”
The CEO’s challenge now will be to continue to protect that worthy w publicly heritage traded in company. the arena of