November 28, 2006

Ms. Lynda Yanz
Coordinator
Maquila Solidarity Network
606 Shaw Street
Toronto Ontario Canada
M6G 3L6

Re: Monclova, Mexico

Dear Ms. Yanz:

The closing of any facility is a decision we reach only after a significant amount of study and analysis. These are not easy decisions. We know first-hand how they affect people and the communities in which we operate. To remain cost-competitive in the apparel industry, we are continuously looking at how we can shape and re-shape our supply chain to maximize its effectiveness and cost position.

The difficult decision to close the Monclova facility was not at all a reflection of our employees or their abilities. They have collectively done excellent work for many years. The reality, though, is that our capacity needs and this facility’s cost structure no longer made it a viable part of our supply chain.

Fortunately and rightly so, the great majority of our employees have full confidence in local management to facilitate a responsible closure. Unlike many manufacturers in Mexico and other parts of the world whom often shut a facility overnight without paying any severance to employees, we always have and certainly will in this case pay all legally mandated severance. Mexican labor officials will directly oversee this severance process to help us ensure that everyone gets everything they are entitled to.

As I am sure you are aware, legally mandated severance benefits are significantly better in Mexico than many other parts of the world including the United States. By mandating such severance requirements, the Mexican government clearly put the onus on companies like us to provide enough of a severance cushion for affected individuals to see (and have the money to pay for) retraining and job searches while supporting their families in the transition.

We are also actively marketing both of the Monclova facilities and have already had serious interest in the facility due to close shortly We feel that one of the very best ways we can help a community that we unfortunately have to leave is to do everything we can to help replace the jobs that are lost. That is our focus now. If we are able to locate a buyer, especially for a facility of this size, opportunities will certainly arise for many of those affected by our departure.

With respect to healthcare, as you know and as required by law, all of our employees have access to the Instituto Mexicano del Seguro social (IMMS) for a period of time following closure of the facility to access healthcare for any issue, job-related or not. It is our first belief that job-related issues are few and far between. Our safety record of the years has been excellent. Recordable accident rates (accidents that require more than simple first-aid) have been reduced from a total of 29 in 999 to 4 last year. Ergonomics related injuries have been cut in half since 2001. We credit this improvement to an extensive and well-developed ergonomics program which included employee lead safety committees. We are confident that all reasonable measures were identified and implemented to minimize the ergonomic impacts that various functions had on our employees.

In summary, closing a facility is always difficult but we feel that we are doing the things necessary to make the transition from employment with us to others as smooth as possible. Our severance obligations, which we fully intend to meet, are substantial. We are also exploring possibilities related to the daycare center operations and hope to also find a busy for this facility as soon as possible. I thank you for your interest in this matter.

Sincerely,

Christopher C. Fox
Vice President Corporate Social Responsibility