The Demise of American Apparel

LEHI, Utah - Feb. 16, 2017 - PRLog -- Once a trendsetter in the fashion industry, American Apparel is on its way out. On January 16, 2017, major layoffs began in what is left of the company's retail stores and factories. Once the greatest manufacturer of clothing in the United States, with 273 retail outlets around the world, American Apparel has struggled since 2014 to keep its factories and its remaining 110 storefronts operational.

As with any failed business, there are multiple factors leading to the demise of this once great company. One of the biggest contributing factors to the fall of American Apparel is the dissension within itself. Almost from the beginning the company was dogged by lawsuits and bad press surrounding its founder, Dov Charney. In 2014, he was forced out of his positions as chief executive and chairman of the board for his exploits, which had made him more of a hindrance to the company than an asset. After the boards decision, however, it was difficult to keep their executive positions filled. This internal upheaval commandeered too much of the companies efforts and attention. Amidst the confusion and disorder the vision of American Apparel became lost.

Financial issues were another factor. American Apparel's quick growth, which was perhaps too quick, lead the company to acquire debt in an attempt to sustain the swelling number of its factories and storefronts.  This, coupled with the fact that the minimum wage in California is in a steady incline, reported to reach $15/hour by 2021, made operating costs astronomical. To reduce labor costs many companies have begun to outsource their products, having them manufactured outside the United States.

Then, there are the changes in the demand of the fashion industry itself. The younger generations are enamored with things more than clothing. Even with the advent of fast fashion companies, deemed such for their quick transition of designs from the catwalk to the consumer, expensive and flashy contraptions are the desire of the day.

The last hope for American Apparel was the potential purchase of the company's factories and storefronts by a Canadian company, Gildan Activewear. Although there was initial interest, Gildan's final purchase was for the American Apparel brand and some of its production equipment, which was acquired for $88 million from the Bankruptcy Court. While a final decision has not been made on the location of the American Apparel brand fabrication, Gildan currently manufactures the majority of its products in the Caribbean and Central America.

The sale is set to finalize sometime this month displacing jobs for more than 3,400 individuals. Until then, the factories in Garden Grove and Los Angeles, the distribution center in La Miranda, as well as a few positions in human resources will save some of American Apparel's staff from joining unemployment.Beyond that the 110 American Apparel storefronts and its website will be available until around April 2017. Fortunately, Broncs Inc. and Indie Source plan to supply jobs for some of the displaced workers but that still leaves hundreds to thousands on unemployment.

Despite all of the turmoil within this company's rise and fall, a strong positive about American Apparel was that they were committed to keeping their products "Made in USA." This commitment provided jobs for many Americans where now there is a void. For the good they provided, American Apparel will be missed.

Susan Kelly manages SweatshirtStation.com, a casual clothing retailer specializing in corporate apparel for businesses and teams: http://sweatshirtstation.com/product-category/corporate-a...