A young woman named Mariona lounges on her knees and forearms. She wears a provocative expression and tight red American Apparel booty shorts.
The advertisement's headline: "Made in USA — Sweatshop Free."
The ads sell a racy image, but just as crucial to the Los Angeles company's identity is the American aspect of its apparel. Now, as ousted CEO Dov Charney's campaign to regain his job grabs attention, a bigger question hangs over American Apparel Inc. and the entire garment industry: Can a company make its clothes in the U.S. and still make money?
Although American Apparel reaped a record $634 million in sales last year, the retailer hasn't turned an annual profit since 2009.
"The business model is at a crossroads," said Anne Olderog, director of brand consulting firm Vivaldi Partners Group. "They have to ask, 'What is the American Apparel of the future?' It needs to go beyond made in America."
American Apparel was a trailblazer in the made-in-USA movement. Companies were shifting their manufacturing overseas in the 1990s when Charney landed in Los Angeles and opened what became the largest garment sewing factory in the country, employing thousands.
But in 2009, American Apparel was forced to fire 1,800 skilled workers after an immigration inspection uncovered questionable employment documents. A rocky start last year to a distribution center in La Mirada caused costly shipping delays.
"The financial challenges at the company had nothing to do with our cost of manufacturing in Los Angeles," Charney said. "The made-in-Los-Angeles element is the path of least resistance, and ultimately results in the lowest cost and highest value for the customer."
For clothing makers, the lure of foreign shores boiled down to cheap and experienced workers who could quickly turn around new designs. Trade agreements eliminated duties and other restrictions that had boosted costs.
Since 2003, the number of apparel manufacturing establishments nationwide dropped nearly in half to 7,075, data from the Bureau of Labor Statistics show. American garment companies hemorrhaged nearly 800,000 positions since 1990.
Only 2.5% of the clothing purchased by U.S. consumers last year was made in the U.S., down from about 56% in 1991, according to the American Apparel & Footwear Assn.
But slowly, U.S. clothing production is gaining. That tiny share of U.S.-made apparel inched up half a percentage point from two years earlier — the first time that domestic manufacturers have won back market share, the group said.
The turnabout is gaining steam partly because of a consumer backlash to poor safety records and substandard working conditions abroad. Last year, a garment factory collapsed in Bangladesh, killing more than 1,000 workers.
American consumers also are increasingly wary of mass-produced items and instead want unique, artisanal goods made sustainably at home, marketers say.
More than eight in 10 are even willing to pay a premium for it, according to Boston Consulting Group.
Some manufacturers say they're investing in U.S. production because they want more control over quality. They point to rising expenses at overseas factories and increasing costs to transport goods.
U.S. costs still exceed the rates offered by bulk producers abroad.
Those massive Asian factory complexes can handle a single garment order from start to finish while the U.S. supply chain sprawls across a scattered network of specialist contractors. And in categories such as sweaters or embroidery, few American firms have the machinery or expertise to succeed.
There's also a shortage of skilled apparel workers, who are aging out of the system, switching to more lucrative careers or stymied by citizenship requirements. Often, they aren't up to date with new manufacturing innovations — automated pressing, multiunit sewing machines and more — that help make foreign factories so efficient.
Still, a projected 200,000 garment manufacturing jobs could return to the U.S. over the next decade, according to industry consultants. In Los Angeles County, a historical clothing production hub, employers have added only about 600 jobs from a low of 45,539 workers in 2011.
Long-comatose factories are reawakening. In one of the largest apparel factory investments in the last two years, Ralph Lauren pumped $142 million into expanding a factory in High Point, N.C. And Under Armour shelled out $58 million to buy and enlarge a Baltimore plant.
Textile companies built 23 new plants in the U.S. from 2011 through 2013, according to the National Council of Textile Organizations. This year, companies have invested at least $1.8 billion in building and expanding factories, many in the South.
For years, Brooks Bros. designed its Camelot cool aesthetic from Madison Avenue but constructed it in factories around the world.
Now, an increasing number of shirts from the 196-year-old brand emerge from a factory in Garland, N.C. Some 70% of suits come from a factory the company bought in Haverhill, Mass. in 2007. All of the ties are produced in Queens, N.Y. The workforce at the three facilities has boomed 50% in four years to 900 employees.
Brooks Bros. made the shift to improve quality. It also gained the flexibility to produce clothing in smaller batches, enabling it to "make one thing a thousand different ways instead of making a thousand of one thing," said John Martynec, senior vice president of manufacturing.
"I know deep down there's a viable industry for made in USA," he said, and not just for domestic consumption. "There's value in making these products to be exported as luxury items into emerging markets."
At American Apparel on a recent weekday, the seven-story downtown L.A. factory whirred with activity. Piles of red cloth moved along a conveyor belt on the way to be cut into hoodies. Teams of sewing machine operators, many wearing masks, hunched over bright scraps of fabric. Hot irons hissed.
The factory's 3,500 workers, plus another 1,500 at other local facilities in the L.A. area, produce about 200,000 items daily. Design and advertising is handled in-house.
This kind of all-in-one organization makes the company more efficient and works "even better than the status quo model of continuous outsourcing," the company argued in a recent ad featuring a smiling, apple-cheeked seamstress.
American Apparel's factory workers earn an average of $12 an hour. They have access to $3 subsidized lunches, an on-site medical clinic and free massages.
In contrast, the average monthly wage for a garment worker is $68 in Bangladesh, $95 in Cambodia and up to $300 in China, according to Sourcing Journal, a trade publication.
Some analysts say American Apparel could cut costs significantly by sending part of its production to foreign factories. Combined with a smart marketing campaign emphasizing fair wages to overseas workers, the retailer could still hold on to its brand value.
"If they can shift 25% of jobs overseas, and pay workers in Asia $5 to $6 a day, they would set a precedent in Asia and the U.S. at the same time," said Ronnie Moas, the founder of Standpoint Research, who also runs the activist site PhilanthropyandPhilosophy.com, which evaluates companies on ethical standards.
Moas said relocating 1,000 jobs could save American Apparel up to $20 million a year, a significant sum for a retailer that resorted to issuing stock this spring to pay off a $13.5-million interest bill.
Supporters of American Apparel's methods point out that the company's wholesale and retail businesses in the U.S. have been growing. Expenses have been declining.
Executives of Standard General, the New York hedge fund that in July joined with Charney to gain control of nearly 44% of American Apparel's stock, say the company isn't going anywhere.
Other analysts say that moving production isn't an option for American Apparel.
"They've essentially painted themselves into a red-white-and-blue corner," said Judith Russell, an analyst at the Robin Report, a retail strategy newsletter. "They can't get out of it. It would be viewed as hypocritical."
@byandreachangCopyright © 2014, Los Angeles Times