American Apparel is laying off hundreds of workers and retooling its production process — and may start making some of its clothing outside Los Angeles.
The downtown L.A. company began layoffs last week. So far, about 500 local employees have lost their jobs, said Nativo Lopez, a senior advisor with Hermandad Mexicana, which is helping workers in unionizing efforts. The company has about 4,600 employees in Southern California.
American Apparel emerged from bankruptcy in February and has been trying to move past a tumultuous two years that saw the ouster of founder Dov Charney, store closures and massive fire sales to clear unsold merchandise.
In a letter to employees last week, Chief Executive Paula Schneider blamed the workforce reduction on a "redesign of our production process" that will include making fewer garments throughout the year to cut down on inventory that eventually has to be discounted.
Schneider also hinted that the manufacturing of more complicated pieces, such as jeans, could soon be outsourced to a third-party company — though she stressed that the products "will still be American-made."
Manufacturing all of its colorful leggings, knit tops and accessories in Los Angeles has been a cornerstone of American Apparel, set in place years ago by Charney, a staunch immigration and fair wages advocate. After his firing, the company has been moving away from its roots by distancing itself from its outspoken former chief executive, toning down its racy billboards and now rethinking one of its fundamental tenets about how and where its products are made.
The company said only a fraction of its garments would potentially be outsourced, according to last week's letter that was obtained by The Times.
But analysts said this was probably the company's first step in leaving Los Angeles, at least when it comes to manufacturing.