American Apparel may be forced to outsource some manufacturing processes.
Teen apparel retailer American Apparel has announced that it will lay off hundreds of workers in an attempt to cut production costs, and part of the solution may be to outsource some parts of its production to another U.S. manufacturer, the Los Angeles Times reported.
American Apparel founder and former CEO Dov Charney built the brand on hallmarks like domestic U.S. production and superior pay, benefits and working conditions for factory staffers, but that policy is apparently being dismantled: Charney's replacement, CEO Paula Schneider, is laying off hundreds of workers due to pressure to cut costs at the newly privatized (and fresh out of bankruptcy) retailer. That paves the way for not just domestic outsourcing but possibly overseas outsourcing of American Apparel's goods—and that, Charney told the Los Angeles Times, is ”exactly what American Apparel fought against.”
In a letter to the company obtained by The Times, Chief Executive Paula Schneider asserted that as demand is mostly focused on basics, “more complicated garments may be outsourced,” but “If we do decide to produce some pieces out-of-house they will still be American-made.” Schneider explained that there were too many employees working on complex garments when they only made up 20% of the company’s inventory, and that the number of garments made per year will be reduced to clear inventory.
The decision to lay off 500 workers and potentially shift production was made only after “months of careful and rigorous review,” Schneider said. “We have streamlined the number of items we display in each of our stores,” she wrote. “Earlier this year, we closed a number of stores to focus on our best-selling locations.”
“American Apparel is squeezed in between supercheap, foreign-made brands and higher-end U.S.-made retailers such as Imogene + Willie," Christina Cauterucci wrote in a Slate editorial last year. "American Apparel’s products are more expensive and less responsive to trends than the former, but feature lower-quality material and construction than the latter.”
Following years of losses, American Apparel filed for bankruptcy in October and the company anticipates being profitable in 2018. The recently announced layoffs represent 10 percent of the company’s Southern California workforce, according to Jezebel.
