The 150-year-old company is shutting its sewing and finishing operations and moving production to Latin America and Asia in an attempt to cut costs.

The move will see Levi Strauss become a shadow of its former self in America. Seven years ago the group had 28,000 workers in the US.

Levi, which is owned by the descendants of the founder, Levi Strauss, has been hit by stiff competition from rival brands, such as Diesel and Gap, as well as counterfeiting.

The company, in an effort to reduce its cost base, has been gradually shifting its manufacturing operations overseas since the mid-1990s.

Workers in Levi Strauss’s US plants earn about $15 (£9) an hour, compared with the average hourly wage in Mexico of $1 an hour. In Bangladesh the average worker can earn between 12 cents and 22 cents an hour, according to the National Labor Committee, a New York-based human rights advocacy group.

Critics gave warning that US companies that outsource manufacturing to third-world countries run the risk of exploiting their workers.

But Levi Strauss said that it is “committed to ensuring that individuals making its products anywhere in the world do so in safe and healthy working conditions and are treated with dignity and respect”.

In 2002 Levi Strauss reported a 3 per cent fall in sales to $4.1 billion.

Levi Strauss has suffered a squeeze on its margins since introducing lower-priced jeans into Wal-Mart stores.