American Apparel Inc. has started laying off about 180 workers mostly in its sprawling manufacturing operations in Southern California as the clothing maker tries to turn around years of losses.
Paula Schneider, who took over as chief executive in January after the board fired Dov Charney last year, said the layoffs will affect less than 2% of the company's 10,000 total employees. Some office positions are being cut as well, she said.
"It's a tough day," she said in a Wednesday interview. "We're in a turnaround. This is a company that hasn't made money in years."
The company has posted about $340 million in net losses in the last five years, and has more than $200 million in debt.
Schneider said the layoffs will help realign the workforce to meet the company's changing production needs. American Apparel plans to manufacture 30% fewer styles this year compared to 2014, she said, which means the company needs fewer workers in manufacturing.
The Los Angeles company has already been furloughing factory workers en masse and slashing hours.
Schneider said her goal "is to get as many employees as possible back to work full time." But she said she couldn't rule out additional layoffs in the future.
"There are a lot of things that impact our business -- how many styles we are making and what sells in retail stores," she said. "We will have to continuously assess our business."
The furloughs and cut hours have angered many factory employees. They say they have become accustomed to working for a company that, under founder Charney, had made good wages and working conditions a top priority.
Some workers have been organizing meetings with the help of Hermandad Mexicana, a Santa Ana-based group that advocates for worker rights. Nativo Lopez, an activist with the group, said about 1,000 American Apparel workers have signed cards giving Hermandad authorization to negotiate for them during the current workplace disputes.
American Apparel fired Charney last year after an investigation found evidence of misuse of company funds and inappropriate behavior with employees.
Charney, who has vowed to win back the company he founded, said the new management has "created an environment of fear, intimidation and desperation" among employees.
"What we have seen thus far is indicative of a leadership that lacks respect for its workforce," he said in an email. "A company that treated its manufacturing workforce with dignity is now one where workers are viewed as expendable and not as highly skilled workers that constitute the financial and spiritual backbone of the company."
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