US jeans maker Levis Strauss & Co. has announced that it will close a clothing factory in the central Polish city of Plock that has operated since the early 1990s, laying off 650 people.
The company cited problems in hiring qualified staff and rising production costs – driven by high inflation, soaring energy prices and the weakening of the zloty against the dollar – as reasons for the factory’s planned closure at the end of November this year. Production at the facility is due to stop earlier, in mid-June.
“LS&Co. has long faced an increasingly difficult labour market in Plock – which has posed significant challenges to hiring skilled workers and maintaining full plant capacity – as well as steadily rising production costs,” the company said in a press release.
“Given the rapidly changing operating landscape, with high inflation and ever-increasing energy costs, the company is working across the supply chain to ensure flexibility, manage costs and support long-term strategic goals,” it added.
The company wrote that, although production at the Plock plant in the financial year ending November 2022 increased by 20% YoY in value terms, production costs rose by 25% in the same period.
This was “mainly due to higher energy and gas costs (+70%) and the high cost of production materials resulting from the weakening of the zloty against the dollar”.
Poland has in recent years seen exceptionally high inflation, which peaked at 18.4% in February 2023. Since then, however, it has slowed significantly, reaching 1.9% last month. Poland’s real wages also returned to growth, growing at the fastest pace in 16 years in January.
In recent months, the zloty, which has weakened in the wake of the pandemic and the Russian war in Ukraine, has also strengthened and recently returned to its pre-pandemic exchange rate against the euro thanks to the unlocking of billions in EU funds.
In its announcement, Levi Strauss said that its “main priority is to provide support to departing colleagues who have worked at the plant that has operated here for the past 33 years”.
The mayor of Plock, Andrzej Nowakowski, has also pledged support for the 650 people who have lost their jobs at the plant. He announced that “all institutions of the city” would be at the disposal of the redundant workers and that they would be looking for a new company to occupy the factory in place of Levi Strauss.
Nowakowski said he had only received information about the factory’s closure a few minutes before the facility’s director announced the news to trade unions.
He added that he was told that “high labour costs and high energy costs make production in Plock, in Europe in general, much more expensive than in Asian countries”.
The mayor said that only a few months earlier he had spoken to the director about investments that were planned and had recently been implemented, such as new machinery worth $1.5 million arriving at the factory in January, reported the Polish Press Agency (PAP). (Notes from Poland)
