Massive cost-cutting actions have started at American Apparel as the clothing maker bids to become profitable by 2018.
Media reports Thursday said that Paula Schneider, chief executive officer, notified employees in a letter that manufacturing at its 800,000-square-foot factory in downtown Los Angeles would be condensed to a single floor. According to nonprofit organization Hermandad Mexicana, at least 100 of the factory’s 2,600 workers have been laid off as a result of that decision.
An interactive image on American Apparel’s website indicates that a million garments are produced each week at the vertically integrated factory, which has cutting, sewing, printing, label making and trims operations throughout the seven-story building.
In addition, a fabric dyeing and finishing facility in Hawthorne in southwest LA was recently shuttered and less than half of its 75 employees were transferred to the company’s Garden Grove factory, which provides knitting, dyeing, cutting and sewing. Both of these facilities, along with another in South Gate, had originally been acquired in an effort to streamline the supply chain, increase its product offerings and lower costs by reducing reliance on subcontractors.
By all accounts, American Apparel appears to be backing further away from disgraced founder Dov Charney’s pledge to never outsource production.
“With the enormous debt burden removed, we can now turn our full attention to our strategic turnaround, which will benefit our customers, vendors and employees,” Schneider said in a press release following the company’s emergence from Chapter 11 proceedings in February. “Our strategy will focus on: designing fresh products and merchandising; launching new partnerships to grow the e-commerce platform; unveiling progressive advertising and marketing campaigns; investing in brick-and-mortar retail locations in more promising areas; and implementing rigorous planning and forecasting for timely product deliveries and to streamline excess inventory.”
Shortly thereafter, the company’s long-time head of manufacturing, Martin Bailey, stepped down to focus on building his own company.