American Apparel, once touted as “the largest apparel manufacturer in North America,” is pretty much over as a Los Angeles fashion institution.
“They're going to be lining up the workers Monday and start a series of terminations,” says ousted company founder Dov Charney, who has kept in touch with many of his former employees. “It's a very sad day for Los Angeles.”
Last week a bankruptcy court judge in Delaware approved the $103 million sale of the brand and some assets to Gildan Activewear Inc., a Canadian fashion company that sources clothing in Honduras and Haiti. The sale included $88 million for the name alone, according to a statement from Gildan.
Garry Bell, the Canadian clothier's vice president for marketing and communications, says American Apparel's garment workers have been issued a WARN (Worker Adjustment and Retraining Notification Act) notice, required under California law when mass layoffs and plant closings are planned.
The fate of American Apparel's L.A.-area manufacturing plants looks dire, although its Garden Grove facility could be spared under a job-saving plan that would see it make clothing for another label, according to the outgoing ownership. Bell confirmed that the new owners likely would not be taking over leases on American Apparel's manufacturing sites and offices. “We felt it was best to exclude the assumption of leases” from the bankruptcy purchase, Bell says.
It's also widely believed the American Apparel retail stores will close; Gildan's purchase does not include them. The stores were one source of the company's ills as founder Charney eyed global expansion and borrowed big to create more than 240 brick-and-mortar locations in 20 countries. Bell says a “limited license” agreement would likely keep the stores and American Apparel's website selling T-shirts, underwear, socks and lingerie for 100 days past that deal's expected execution in early February. He says Gildan uses a more indirect route to commerce, including selling to wholesalers and other retailers. The brand, for example, can be found at Walmart. “Their business model was direct-to-consumer,” Bell says of American Apparel.
Charney was ousted by his own board of directors in 2014 following allegations of sexual misconduct. The board, with the help of a hedge fund first wooed by Charney, promised to turn the brand around. But it ended up seeking bankruptcy protection the next year. Charney has maintained that he was illegitimately fired and is the plaintiff in an ongoing lawsuit against American Apparel.
As a result of losses and its 2015 bankruptcy, American Apparel already was shedding Southern California garment workers, according to Nativo Lopez, longtime adviser to an organization, Hermandad Mexicana, that has been representing workers in their fight to save their jobs.
“On the fifth floor on Alameda [at the company's headquarters], there's a private temp agency meeting with workers every day, encouraging them to be placed in different garment companies in the area — without any of the benefits they enjoyed at American Apparel,” Lopez says. “It's the end of an era for American Apparel in Los Angeles. Thousands of manufacturing jobs will be eliminated.”
The brand's local demise ends what some argue was a successful labor experiment. The company once boasted 10,000 workers worldwide, including 4,800 in L.A. Charney hired largely Latino immigrants, paid them above minimum wage, offered benefits to full-time workers and marketed his brand as made in America and “Made in L.A.” His pro-immigrant marketing also inspired “Legalize L.A.” T-shirts.
“It's no longer American,” Lopez says. “They might as well call it Canadian Apparel.”
Ironically, Charney is Canadian. He started the brand out of his dorm room at Tufts University in Massachusetts and moved it to Los Angeles in 1997. Hipsters soon embraced the line, and Charney set out to help stem the outsourcing of garment jobs to other nations by making his threads in America's capital of clothing manufacturing, the Garment District.
Today, as President-elect Donald Trump promises to keep manufacturing gigs in the United States, it looks like an iconic brand with the word “American” in its name is leaving home. Charney is moving on. He says he's starting a new clothing enterprise, That's Los Angeles.
“I plan to employ thousands of people,” Charney says. “We believe it's competitive to make garments in Los Angeles.”