As Operations are put to Rest, American Apparel starts Mass Layoffs

American Apparel

A fashion industry trailblazer once, with its provocative marketing, commitment towards U.S. Manufacturing and colorful basics, American Apparel, after years of corporate intrigue and striving financially, the company laid off 2,400 workers on Monday, in South California, swaying off its last chapter as largest garment maker of the country. Layoffs start as the Company makes preparations of selling or closing its factories in South Gate, Garden Grove and downtown Los Angeles. Even the 110 retails stores of this company, within few months, are expected to be closed. Gildan Activewear, a Canadian clothing maker bought some manufacturing equipment and the brand, American Apparel, at an auction last week in Bankruptcy Court at $88 million. Initially expressing interest in purchasing some of the manufacturing operations of company, Gildan, later decided not to buy its U.S. factories or stores.

This decision shut the fate of American Apparel, which moved into L.A. in 1997. Dov Charney, its charismatic and controversial founder, over the years grabbed headlines for his antics behind-the-scenes as well as for his true commitment to fair wages and U.S. manufacturing. American Apparel, at its peak, gathered more than $600 million in a year in sales while operating 230 stores worldwide. But, catching up with changing consumers’ tastes and boardroom drama, it was left behind in recent years. Lloyd Greif, chief executive of Greif & Co. which is an investment banking firm of Los Angeles, said that it was a sad day of reckoning that they have to offshore their operations while L.A. was considered to be a design mecca for apparel and also that they are finding themselves in a brave new world in 2017. Gildan, that produces most of its products in Caribbean and Central America, hasn’t yet decided about manufacturing goods of American Apparel in U.S.

Analysts said that ultimate demise of American Apparel was contributed by many factors. The company was enveloped in turmoil when its board dislodged Charney as chairman and chief executive in 2014 stating allegations like misuse of company funds and sexual misconduct with employees. This led to litigation as well as merry-go-round of top executives and directors distracting American Apparel against turning around business. One of the workers at American Apparel, Cortes, 48, said that everything was over and they weren’t even given severance like the workers laid off before got.

About Sonal Srivastava 25 Articles
Sonal Srivastava is a staff writer, covering all the latest happenings from around the globe. A passionate writer, Sonal has previously worked in media and reported national, international and business stories in television and online news portals. Sonal has completed her graduation from Delhi University and is an alumni of Indian Institute of Mass Communication (IIMC). Apart from chasing her passion, she likes to devote her free time to reading and travelling.