American Apparel Might Not Be ‘Made in America’ for Very Much Longer

Scumbaggy American Apparel CEO Dov Charney recently used the blunderbuss of a talking hole he ordinarily uses to defend himself against sexual assault allegations to insist that his company's "Made in America" business model is not only salvageable, but a good long-term bet. This despite the fact that American Apparel has suffered nine straight quarterly losses, posted a net loss of $39.3 million in 2011, and watched its share prices close at just 86 cents on Friday. Nevermind all that, insists Charney, who, in spite of his optimism, has nonetheless left the door to cheap, overseas labor open enough to slide his unctuous body through should busines fail to improve.

The L.A. Times reports that American Apparel might finally be losing its grip on its only redeeming (unless you appreciate the Dov Charney soundbite) quality — it manufactures all of its clothes in the U.S., using Southern California factories that employ largely immigrant workforces and feature such benefits as on-staff physicians and masseuses for all those cramped, button-sewing fingers. The company can do this — at least for the time being — because of an incentive-based pay scale and devised by chief manufacturing officer and Fruit of Loom veteran Marty Bailey. Though every worker is guaranteed $8 an hour, employees are also paid for each completed garment at a "piece rate," which means that factory workers typically earn something more like $11 an hour, with the fastest teams making as much as $18. Teams are comprised of between 5 and 20 workers, each with a specific, assembly-line job, i.e. attach the zipper, sew on the sleeves, etc. Factory supervisors are bilingual (the workers are mostly Latin American immigrants) and clock their teams each week, devoting time to train the slower teams.

American Apparel, though, faces the familiar challenges of managing a U.S.-based manufacturing workforce. As a result of paying its workers reasonable wages and using quality raw materials, consumers have to pay a premium for its clothes, hence the $21 price tag on that cotton t-shirt. Moreover, the company has had to hire and train nearly 1,600 workers after a 2009 immigration audit forced it to dismiss a large chunk of the factory floor, and despite Bailey and Charney's professed desire to remain a "made in America" company, Charney has acknowledged how ultimately untenable such business might be:

To say that I'm never going to import from overseas would be unreasonable. At this time our business concept is to make everything here. But I wouldn't rule anything out.

Whatever gains Charney has made in the court of public opinion through his insistence on domestically produced clothing might be moot — according to USC business professor Anthony Dukes explained that "made in America" is a largely meaningless label to retail consumers.

There's been a lot of discussion about the importance of American companies employing American workers. But when it comes to fashion items, that doesn't necessarily resonate with shoppers.

Regardless of whether you revile Charney for his personal sleeziness, his company does employ a lot of people in the Los Angeles area, people who might not otherwise have an opportunity to work for an employer that provides decent working conditions. Charney alludes to an American Apparel "upswing," and, however difficult it would be to watch Charney publicly applaud himself for staying the course in the face of so much derision and criticism, it'd be a lot harder to watch those American Apparel factories shutter and all those workers start casting aimlessly about for new jobs.

American Apparely fights the ‘made in America fight.' For how long? [LA Times]