Layoffs and Changes for American Apparel

American Apparel has been a fixture in the Industrial District since 2000. It was recently purchased by a Canadian company, Gildan Activewear. According to a city report, 2,166 workers at the Downtown factory were laid off. 

For American Apparel, the most significant if inevitable blow came in early January, when the Canadian firm Gildan Activewear agreed to pay $88 million in an auction to purchase the once-thriving clothing manufacturer’s intellectual property and some equipment. Apparel industry observers speculated that the biggest draw was the company’s brand, and despite the longtime tag that the goods were “Made in Downtown L.A.,” they expected that operations would soon be shifted to a less expensive locale.

The layoffs began soon afterwards, with the biggest hit at the sprawling Downtown Los Angeles headquarters. Now the effects of the downsizing are coming into focus, and they are grim for former employees.

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According to a March 10 report from the city of Los Angeles’ Workforce Development Board, a total of 2,166 American Apparel employees were laid off at the Downtown location. They ranged from garment makers to clerks to IT specialists, although most were on the manufacturing side, according to Ilse Metchek, president of the California Fashion Association.

The factory did not immediately shut down, due to orders that still needed to be processed. However, various local entities have been trying to help the former employees find work.

American Apparel first filed for bankruptcy in October 2015, and then filed a second time in November 2016. After the latter filing, company executives reached out to local labor support organizations to help find new jobs for the workers. Entities including the Los Angeles Economic and Workforce Development Department and the Los Angeles Workforce Development Board set up rapid response teams, according to LAEWDD Assistant General Manager for Operations Robert Sainz.

“We were present on that Monday when they did the layoffs,” Sainz said.

Response teams set up orientations in January to help laid-off workers learn about the resources available to them, including unemployment insurance and training. Sainz said that within two weeks, the LAEWDD held four sessions, one of which drew more than 900 people. It also hosted a career fair specifically for American Apparel workers.

Currently, approximately 400 former employees are going through retraining and job placement programs, Sainz said. It is unknown how many people have actually found jobs.

The Workforce Development Board has applied for a state grant, requesting $5 million to help the laid-off workers find new employment.

American Apparel employees earned more than the average local garment worker, Metchek said. They also are experienced and their skills are valued in the industry, she added. She noted that by working for American Apparel, they are vetted within the garment industry.

However, Metchek is unsure that a majority of the workers will be able to find new jobs in the near future. With more than 2,000 people out of work, there likely are not enough positions available.

“It depends on the level of their expertise,” she said. “The factory workers were the ones who came and said, ‘Help us find a new position.’”

The sale and the layoffs marked the end of a long, slow slide for the company founded by Dov Charney in 1989. It moved to Downtown Los Angeles in 2000 and came to occupy 800,000 square feet of space in the massive complex at 747 Warehouse St. It was lauded for the relatively high wages it paid and for benefits offered to workers. As sales took off, Charney opened retail stores across the country.

Eventually profits declined, and Charney was dogged by accusations of sexual harassment and mistreatment of employees. In 2014 he was forced out of the company, though new leadership failed to bring American Apparel back to profitability.

Charney is reportedly launching a new endeavor called Los Angeles Apparel, with headquarters in South Los Angeles.

After the collection of buildings where American Apparel is based was purchased by Atlas Capital, the site was rebranded as Row DTLA. Atlas is renovating the other large buildings on the site and is bringing in new food and retail tenants.

American Apparel’s lease on the Row DTLA space runs until 2019. A spokesperson for Row DTLA said there has not been any indication about how long American Apparel will hold on to the property, nor have there been discussions about future plans for the space.

Media reports have indicated that the once ubiquitous American Apparel stories are also on the way out. Recently, Garry Bell, vice president of corporate marketing at Gildan, indicated changes are coming.

“As we finalize plans for the consumer side of things, we did grant current management of American Apparel a limited license to operate its stores and ecommerce site, which [was] expected to expire the first week of April,” Bell said.

A spokesperson for American Apparel declined to comment on the future of the Downtown factory and its remaining workers. Bell said Gildan has no information on what American Apparel’s management is doing with the facility, or how the bankruptcy affects it.