The company said it was hit by a shift in demand away from denim products.

Competition in the jeans market is intense

It also cited the falling European youth population and competition from smaller "own label" brands.

Carl von Buskirk, president of Levi Strauss Europe, said: "We regret that these restructuring proposals might lead to plant closures and lay-offs, but these options have to be considered given the current and future business realities."

Levi's also said it would be setting up a new marketing organisation to develop products "that meet the needs of existing and potential customers."

Plants in France and Belgium to close

The four factories that are to close are based in Belgium and France.

The company plans to lay off 931 workers at plants in Gits, Werwik, and Beurne in Belgium, and 530 at a sewing plant in the northern French town of La Bassee. It says these were chosen because they are high cost plants.

There may also be further lay-offs of office workers across Europe.

In total the cuts amount to some 20% of the total European workforce of 7,500.

Levi's also has manufacturing plants in Scotland, Spain, Poland, Hungary and Turkey.

Demise of denim?

Levi Strauss is said to have invented blue jeans during the Californian gold rush in the l850s.

His company became the largest single branded apparel manufacturer, with nearly $7bn in worldwide sales, as demand for more informal clothes spiralled in the last few decades.

But changing fashion, and competition from other blue jeans manufacturers, has already taken its toll, despite the launch of a successful non-denim brand, Dockers.

Last year the company's sales fell by 4%, and it was forced to begin a programme of lay-offs in its North American operations.

It has closed ten factories this year in its home territory, making one-third of its US workforce redundant.

And on Monday it announced the closure of two more plants in Texas, with the loss of nearly 1,700 jobs.

Clothing manufacture is highly labour intensive, and even market leaders like Levi's are finding it more and more difficult to maintain jobs in the industrialised countries.

The Asian crisis has made Third World wages even more competitive.