American Apparel, the downtown apparel company in Los Angeles started layoffs of its employees last week. Thus far, over 500 employees in the area have lost employment, said an insider who is aware of the layoffs.
In the southern California area, American Apparel has close to 4,600 employees.
In February, the company was able to emerge from bankruptcy and has tried since to move past a difficult two-year period that saw Dov Charney the founder ousted, store closings and huge fire sales to clear out merchandise that was unsold.
In a letter last week directed to employees, CEO Paula Schneider put blame on the reduction in employees on a redesign of the production process, which will include making less garments throughout the course of the year to lower inventory that eventually must be discounted.
Schneider hinted as well that manufacturing of complicated pieces such as jeans could be soon outsourced to a third parties, though she insisted that those products would remain American-made.
Manufacturing all its knit tops, leggings and its accessories in Los Angeles has been American Apparel’s cornerstone that was set in place, many years ago by founder Charney a staunch advocate for fair wages and immigration.
After Charney was fired the company has moved from its roots through distancing itself from the former CEO who was outspoken, toned down its racy billboards and is now rethinking a fundamental tenets about how and the location of where products will be made.
American Apparel said just a fraction of its garments would possibly be outsourced, according to a letter obtained last week by a local newspaper.
However, analysts have said that it was likely the first step by the company in exiting Los Angeles at least as far as manufacturing is concerned.
One analyst in the garment industry said that if American Apparel is going to start outsourcing garments then it is only a matter of time before they are gone.
It appears that the bad news is coming from American Apparel a little at a time added the analyst, to gauge the opinion of the public and to prevent any revolt by workers.