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American Apparel ( ) is the largest clothing manufacturer in the United States. It is a vertically-integrated clothing manufacturer, wholesaler, and retailer that also performs its own design, advertising, and marketing. It is best-known for making basic cotton knitwear such as t-shirts and underwear, but in recent years it has expanded - to include leggings, leotards, tank tops, vintage clothing, dresses, pants, denim, bedding and accessories for men, women, children, babies and dogs.

Company formation and growth

Apparel was founded in 1989 by Canadian Dov Charney, who had a long history with t-shirts and a fascination with American culture. It was during Charney's freshman year at Tufts Universitymarker that the company took on the name "American Apparel" and began to experiment with screenprinting, importation and other parts of the apparel business In 1997 after a variety of iterations, including a period of manufacturing in South Carolinamarker, the company moved to Los Angelesmarker. Charney began to sub-contract sewing with Sam Lim who, at the time, had a shop with 50 workers under the Interstate 10 freeway in east LA. Months later the two became partners. In 2000 American Apparel moved into its current factory in downtown Los Angeles where it continued to grow primarily as a wholesale business, selling blank t-shirts to screenprinters, uniform companies and fashion brands.After its success as a wholesale brand, the company moved into the retail market. The company was ranked 308th in Inc.'s 2005 list of the 500 fastest growing companies in the United States, with a 440% three-year growth and revenues in 2005 of over US$ 211 million.

In late 2006 American Apparel announced a reverse merger, in which Endeavor Acquisition Corp., a special-purpose acquisition company founded in July 2005, bought the company for $360 million. The merger closed in December 2007, at which point American Apparel became a publicly traded company. As a result, Charney became the President and Chief Executive Officer of the publicly traded company known as American Apparel, Inc. He remained the majority shareholder.

It is also one of the few clothing companies exporting 'Made in the USA' goods and in 2007 sold about $125 million dollars of domestically manufactured clothing outside of America. The company also promotes a number of progressive policies including immigrant rights and labor policies the company dubs "sweatshop free."

Production

American Apparel's headquarters and factory in Los Angeles
American Apparel bases its manufacturing in an factory in downtown Los Angeles, Californiamarker. The company also owns and operates its own fabric dye house, garment dye house, and knitting facility, all based in Los Angeles. American Apparel has decided not to outsource its labor, paying factory workers an average of over $12 dollars an hour. Garment workers for similar American companies in China earn approximately 40 cents per hour. It claims to have the 'highest earning apparel workers in the world'.

The company uses "team manufacturing" which pools the strongest workers towards priority orders. Each team functions autonomously and determines its own daily production schedule, giving them control over their own hourly wages. After its implementation, garment production tripled and required a less than 20% staff increase. The factory claims to have the capacity to produce 1 million shirts per week and manufacture 275,000 pieces a day. According to The New York Times it is the largest single garment factory in the United States and employs over 4,000 people across two buildings.

A banner on top of the downtown factory states "American Apparel is an Industrial Revolution." As of December 2008, banners on top of the factories state "Legalize LA" and "Immigration Reform Now!"

Vertical integration

American Apparel is a vertically-integrated company. The integration extends to 260+ retail storefronts, all of which are owned by the company. By integrating all aspects of production and avoiding outsourcing, the company achieves a fast turn-around time from design concept to finished product. On Charlie Rose, founder Dov Charney discussed the process of developing new merchandise in their unique retail system, saying that it took just a "couple of weeks" for a bathing suit to go from idea to the retail floor. He claimed that a garment could be designed on Monday and be sold in London the following week.

Retail

An American Apparel retail storefront in Mexico City
The company's expansion into retail was the fastest retail roll out in American history. In 2003 American Apparel opened company stores in Los Angeles, Montreal, and New York to nearly $80 million dollars in sales As of 2008 the company has more than 200 stores worldwide and continues retail growth with new stores in the United Statesmarker, Israelmarker, Italymarker, Japanmarker, South Koreamarker, Netherlandsmarker, Switzerlandmarker, Chinamarker, Germanymarker, Austriamarker, Canadamarker, Francemarker, Swedenmarker, Mexicomarker, United Kingdommarker, Brazilmarker, and Australia. Stores are planned or under development for Belgiummarker, Icelandmarker, Irelandmarker, Spainmarker, Chinamarker, and Hawaiimarker.

American Apparel retail stores are marketed and designed individually rather than homogeneous. Store designs are sparse and typically cost between $100,000 and $400,000 to develop. The company tends to reject midtown, high rent locations and generally avoids in-mall stores. The stores are often hubs for urban renewal since the company looks for low-rent but high traffic locations like Houston, Little Tokyomarker, New Orleansmarker, college towns and most recently across from the Apollo Theatermarker on 125th in Harlem. In some stores, the decor features Penthouse covers from 1970s and 1980s - a style that has been controversial. When scouting for locations, it considers urban areas that can be revitalized. After opening on Southwest Stark Street in Portlandmarker, Oregonmarker American Apparel was joined by a vintage clothing store, sushi restaurant, shoe shop and modern-styled hotel. In some cases, the company sublets parts of retail locations to other businesses of the same demographic, bringing additional retailers to previously unoccupied space. The bulk of American Apparel retail venues are in New York Citymarker and Californiamarker.

AmericanApparel.net is the company's e-commerce sales hub. It carries an online inventory of roughly 250,000 SKUs and receives 1.5 million visitors per month. Online sales grew from $13.3 million in 2006 to $29.3 million in 2007. The company site runs on the Yahoo Stores platform and is included in the Internet Retailer 500 Index.

In late 2007, American Apparel opened a retail location for vintage clothing called California Select in Echo Parkmarker, a district of Los Angelesmarker Shortly afterward, the company began selling vintage clothing through an eBay store of the same name.[151291] In 2008, the company was named "Retailer of the Year", following Calvin Klein and Oscar de la Renta.

Wholesale

American Apparel began by selling high-quality t-shirts to screen-printers and boutiques in 1990 under the American HEAVY label. Although it has made its transition into a primarily retail brand, the company is still one of the largest wholesalers in the country. American Apparel shirts are used as band merchandise and concert t-shirts for the bands Van Halen, Wilco, Death Cab for Cutie, Metric, and Flogging Molly as well as websites like Busted Tees, Print Liberation and the I Can Has Cheezburger? store as the tshirts are said to fit true to size. All shirts sold on Shirt.Woot are printed on American Apparel tees. People for the Ethical Treatment of Animals, the animal rights advocacy group, prints its merchandise on American Apparel clothes because they are made domestically and animal-free.

Branding and advertising

American Apparel designs, creates and prints its own advertisements. The company is known for its provocative and controversial advertising campaigns, which is largely the inspiration of the company CEO Dov Charney. According to Adage, American Apparel's advertising 'telegraphs the brand' from person to person Their print campaigns are widely considered to be some of the best in the industry The sexually charged advertising has been criticized, but has also been lauded for honesty and lack of airbrushing. American Apparel images often display subjects with their blemishes, imperfections and asymmetrical features highlighted and attached with brief, personal descriptions. Many of the models in American Apparel's sexual advertising are recruited by Charney and his colleagues on the street, or company stores; others are selected after sending their photos directly to the company website.

For a time, Charney promoted a branding strategy that spotlighted his treatment of workers as a selling point for the company's merchandise, promoting American Apparel's goods as "sweatshop free." In 2008, the company took out a series of political ads featuring the corporate logo that called current immigration laws an "apartheid system." In regards to the company's image overseas, advisor Harry Parnass stated that the brand is about aspiration and that they are "selling the American dream." He dismissed competitors who do the same but refuse to manufacture in America.

The company has also used adult actresses in some of its ads including Lauren Phoenix, Charlotte Stokely, Sasha Grey and Faye Reagan. Some of the company's other ads, which feature nudity or sexual themes, have been banned by various advertising authorities. Most recently, American Apparel agree to comply with a UK ruling to not run an ad that appeared in VICE Magazine because it had the potential to "widely offend" people.

In 2005 the company was named "Marketer of the Year" at the first-ever LA Fashion Awards. Women's Wear Daily published a survey in April 2007 from Outlaw Consulting, a creative research firm tracking the habits of 21-to 27-year olds, which ranked American Apparel as the 8th most trusted brand, ahead of such clothing brands as H&M and Levi's. In January 2008 the Intelligence Group, a trend and market research firm, listed American Apparel as their number two Top Trendsetting Brand, behind only Nikemarker. In 2008, The Guardian named American Apparel "Label of the Year".

American Apparel also briefly experimented with advertising in Second Life with a virtual store on the island named Lerappa but shuttered the operation in the fourth quarter of 2007

Woody Allen billboard and lawsuit

In 2007, American Apparel put up two billboards, one in New York and one in Los Angeles, featuring an image of Woody Allen's character dressed as a Rabbi from the movie Annie Hall and Yiddish text, for a period of one week. According to Charney, the billboards were a satire and allegory alluding to both the scene in the movie and the similar controversy experienced by both individuals. Allen strongly objected to this use of his image and sued the company for $10 million. Allen testified at a December 2008 deposition that he considered the company's advertising to be "sleazy" and "infantile."

Although the company said as early as May 2008 that the billboards were meant "strictly as social parody", there was much debate over whether American Apparel's lawyers would unfairly use Allen's personal life, namely his affair with Soon-Yi Previn as their defense at the trial. Charney claimed that these rumors were outright false and that his speech was protected by the First Amendment. In May 2009, the case was settled by American Appeals insurance carrier for $5 million, with the insurance company paying the bulk of the settlement. The settlement was for half of Allen's initial demand. Dov Chaney said that if it had been up to him, he would have continued the case and taken it to trial.

Legalize LA and Legalize Gay

In addition to participating in a variety of immigration protests, the company launched an advertising and advocacy campaign called "Legalize LA". The campaign featured advertisements in national papers like The New York Times as well as billboards, t-shirts, bus ads and posters. The company also maintains a Legalize LA portion of their website that features news articles relating to immigration reform, the brand and information on the history of the issue.

After the passing of Prop 8 (which makes same sex marriage illegal in the state) in California in November 2008, American Apparel launched the Legalize Gay campaign. It is similar to the Legalize LA campaign, and shirts with "Legalize Gay" and "Repeal Prop 8" printed on them in the same style as the shirts of Legalize LA are sold by the company.

Corporate culture and employment

The production system of American Apparel centralizes most of its employees in a single location. By not outsourcing, Charney believes that he knows his workers better and that it ties them directly to the brand. A banner on top of the downtown factory states "American Apparel is an Industrial Revolution."

Charney has stated that American Apparel hires its creatives by their sense of culture and fashion, not their resume. Conversely, the company has also been accused of focusing on personal style and outward appearance in its hiring practices for retail positions.American Apparel has been subject to several sexual harassment lawsuits, three were dismissed or settled while another remanded to arbitration A fifth was recently filed, premiering on the front page of TMZ.com. In an attempt to resolve one of the cases in which the plaintiff confessed that she had not been subjected to sexual harassment, American Apparel was reprimanded in an opinion by the Second Appellate District for then attempting to issue a press release about the case mentioning an arbitration hearing that had, in fact, never taken place. The company and others have publicly accused a lawyer representing a majority of the suits against American Apparel of extortion and of "shaking the company down."

According to Charney, the unconventional corporate culture at American Apparel is responsible for the company's creativity and rapid growth. He's stated that the company is open about sexuality and its culture because "young people like honesty."

Labor

As of 2008 the company employs over 10,000 people and operates over 200 retail locations in 18 countries. The company pays its manufacturing employees an average of US$12 per hour. According to the San Francisco Chronicle the average factory worker at the company makes $80–120 per day, or roughly $500 per week compared to the $30–40 made daily at most other Los Angeles-based garment factories. Employees also receive benefits such as paid time off, health care, company-subsidized lunches, bus passes, free English as an additional language classes, on-site massage therapists, free bicycles and on-site bike mechanics, free parking in addition to the proper lighting and ventilation.. Every floor of the factory includes free telephones where workers can take and receive long distance phone calls. The company's employees in foreign countries do not receive the same hourly wages as their Los Angeles counterparts. However, employees in China will earn US Federal minimum wage. After going public, the company offered employees as much as $40 million in stock shares. The plan grants employees roughly 1 share of stock for every workday they'd spent at the company. Approximately 4,000 of the company's employees are eligible for the program. The waiting list for employment at American Apparel has over 2,000 names on it.

The company's employees are not unionized. In 2003, the UNITE launched a union drive at the factory. American Apparel countered that the union was "trying to politically force American Apparel into embracing it, regardless of worker interest." In a letter to The Nation, Charney claimed that workers organized a grassroots protest of the union demonstration itself and used it as evidence of the union's unpopularity. The organization reported American Apparel to the National Labor Relations Board for interference with the drive. However, American Apparel was not charged as a result of the claims. Additionally, the nonprofit Garment Worker Center, which usually supports UNITE, did not sanction or back their efforts against American Apparel. As part of the settlement, the company posted a document stating that it would not interfere with worker's rights to unionize.

New York Times reporter Rob Walker wrote about the controversy in his book Buying In and revealed that since the unionization drive, the company Sweat X which was held up as the example for what American Apparel should be, had since gone out of business. He quotes Charney saying more explicitly that "[Sweat X]... f*cking failed."

Immigration issues

As early as 2001, American Apparel has been a vocal advocate for reform of U.S. immigration laws. On May 1, 2002 American Apparel shut down its factory to allow the company's workers, many of whom are immigrants, to participate in a pro-immigration rally in downtown Los Angeles. Dov Charney, a Canadian immigrant, also marched alongside the workers. American Apparel participates annually in the May 1st Immigration March and Rally in downtown Los Angeles. In 2008, they added a route from their factory that eventually connected with other supporters near the city hall. The company's politics were eventually spun off into the Legalize LA advertising campaign.

In 2009, an ICE audit of American Apparel's employment records uncovered discrepancies in the documentation of about 25% of the company's workers, implying mainly that they were illegal immigrants. About 1,500 workers were let go in September of that year as a result. American Apparel responded with questions of the effectiveness of such an action and said "[the firings] will not help the economy, will not make us safer. No matter how we choose to define or label them [illegal immigrants] are hard-working, taxpaying workers.” The ICE audit highlighted a new strategy from President Obama which announced they were shifting away from high profile raids. According to CEO Dov Charney, American Apparel will give priority in hiring to any worker who can get their papers in order.

Environmental policies

Solar panels on the roof of American Apparel's downtown factory
The company promotes environmentally friendly practices and is known for its innovations in sustainability due to vertical integration.

American Apparel maintains a bicycle lending program for its employees and according to People for the Ethical Treatment of Animals it is a vegan-friendly clothing company. As of 2007 the company planned to increase its use of organic cotton within the next four years from over 20% to 80%. American Apparel also sells a line of shirts under the "Sustainable" label that are 100% USDAmarker organic cotton. In 2008, American Apparel purchased over 30,000 pounds of organic cotton known as B.A.S.I.C cotton.

American Apparel installed a 146 kilowatt solar electric system on its factory roof, designed to reduce power costs by at least 20%. These panels power as much as 30% of the factory. The company also recycles its fabric scraps. Much of the company's underwear line is made from these recycled fabric scraps that would have otherwise been wasted. According to estimates, it saves about 30,000 pounds of cotton per week.

Philanthropy

In 2005, the company hosted a bikini car wash benefit with the American Red Cross to raise money for the victims of Hurricane Katrina. In addition, they packaged and delivered 80,000 shirts to the relief effort in New Orleansmarker and the Gulf Coast. As an underwriter of Farm Aid, American Apparel donates the blank shirts that the organization prints and sells as merchandise.

References

  1. @3:50
  2. http://dovcharney.com
  3. Apparel News -Angeleno Style - Alison A. Niedler - August 2000
  4. http://i.americanapparel.net/presscenter/adarchive/popups/scn044_072000.jpg
  5. American Stock Exchange Announces Closing of Endeavor Acquisition and American Apparel Merger[1]
  6. Endeavour Acquisitions Corp. SEC Proxy Statement Schedule 14A, June 5, 2007
  7. New York Post - T-Shirts, As Far As the Eye Can See - Maxine Shen - March 24, 2004
  8. Press Release: American Apparel Purchases Assets from U.S. Dyeing & Finishing, Inc. accessed 6/22/08
  9. True colors: some dyeing operations thrive, others fail - Los Angeles Business Journal - October 10, 2005[2]
  10. Mayor Villaraigosa visits American Apparel as company announces employment milestones PublicRadio.org KPCC 9/2008
  11. "His team manufacturing..."
  12. American Apparel BenCorman.com June 2008. "More important than the pay is the functional organization. Instead of having an assembly line system where people are disconnected from each other, people are organized into groups and the group decides how many articles of clothing they're going to make that hour. Since everyone is paid a base of $8 an hour and then a bonus for hitting certain production goals, the group decides how hard to work and how much to make in a day.
  13. AMERICAN APPAREL, INC - APP Current report filing (8-K) "Capacity to produce over 1 million T-shirts per week with significant potential to expand."
  14. {{cite news | last = | first = | title = An Interview With American Apparel Founder Dov Charney | publisher = Market Watch | date =September 9, 2008 | url =http://www.marketwatch.com/news/story/mayor-villaraigosa-congratulates-american-apparel/story.aspx?guid={E43C0BFC-DE49-441B-BE02-CF525E640935}&dist=hppr | accessdate = 2008-09-21}}
  15. @3:28
  16. inside american apparel: 4,000 downtown employees and counting Angelenic.com June 2008
  17. Flickr "American Apparel is an Industrial Revolution". June 19th, 2008
  18. 32:40
  19. "I can cut on Monday, sew Tuesday through Thursday, and ship on Friday."
  20. "fastest retail roll out in American history"
  21. DNR - All the Way to the Blank - Lee Bailey - March 22, 2004
  22. American Apparel Mapped Curbed LA
  23. Walker book pg 224"
  24. Map of American Apparel stores in Manhattan Racked.com
  25. [3]
  26. www.americanapparelstore.com
  27. Internet Retailer Top 500 Guide 2008.
  28. American Apparel Launches California Select Fashionindie.com May 30th, 2008
  29. Fashionista: Dov Charney, Winner "Dov Charney was just named Retailer of the Year for his work as the Creative Director and entrepreneur behind American Apparel. The award's previously gone to Calvin Klein and Oscar de la Renta.
  30. What is Shirt Woot "Woot Tees are 100% cotton blank shirts made by American Apparel in Los Angeles, California."
  31. Wanna Know What PETA Said? Going Green For Life Blog. June 2008
  32. "Charney takes many of the photos himself, often using company employees as models as well as people he finds on the street."
  33. American Apparel BenCorman.com June 2008. See Photograph "All advertisements are done in house as well."
  34. Advertising Age magazine editor-at large Matthew Creamer said Charney's team develops consistent ads that "telegraph the brand."
  35. Daily Update: Top Of the Charts
  36. CNBC's Made in China American Apparel in China Jul. 21 2008
  37. "Without compromise, we sell that idea and Parnass calls out companies that sell the American lifestyle but still don't manufacture at home."
  38. http://fleshbot.com/5327480/american-apparel-and-pornstars-bringing-you-the-best-in-clothing-ads
  39. http://jezebel.com/5135586/american-apparel-now-sponsoring-bloggers--porn-stars-nsfw
  40. [4]
  41. http://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=ind_focus.story&STORY=/www/story/09-02-2009/0005087252&EDATE=
  42. Grace Cerrone - lasplash.com - LA Fashion Awards - 2005
  43. http://www.huffingtonpost.com/2009/04/16/woody-allen-american-appa_n_187815.html
  44. A Statement from Dov Charney Daily Update, AmericanApparel.net May 2009
  45. http://cityroom.blogs.nytimes.com/2009/05/18/american-apparel-settles-lawsuit-with-woody-allen/
  46. The May Day Marches - Claire Hoffman - The Los Angeles Times - 2006-05-02 "The iconoclastic chief executive of American Apparel Inc. not only gave 3,300 of his employees the day off, but he also supplied them with T-shirts emblazoned with a pro-immigration message," "By noon, Charney had left the factory and joined his workers and their families, who had arranged to march together on Broadway," "American Apparel, with about 130 stores around the world, has a history of supporting May Day marches: In past years, employees were given half the day off and bused to protests.
  47. Legalize LA subpage
  48. LegalizeGay.com
  49. "You know the face of your worker... engineers and designers and finance people and knitters and dyers and chemists can come together in one location and say, ‘How can we do this better?’ You can produce products more efficiently than they can be made on an outsource basis."
  50. @8:13
  51. 32:00
  52. "The case is the fourth against him alleging sexual harassment. One was dismissed. Two others were combined and settled. He has denied the charges in all of them."
  53. TMZ: My Boss is a Jerk Off
  54. NAKED SHAKEDOWN: DOV CHARNEY IS THE VICTIM! HollywoodInterrupted.com Dec. 2008
  55. “We plan to continue to behave in a contrarian matter,” Charney says. “This creative environment is what got us to this point. We certainly aren’t going to stop doing it now after we created a highly profitable company.”
  56. Walker book pg 225 "It wasn't mere imagery; it was honesty. 'Young people like honesty', he said."
  57. "At American Apparel, he says that he works 7:45 a.m. to 4 p.m. most days, with a lunch break, and makes anywhere from $80 to $120 per day... rarely earned more than $30 or $40 a day at other factories.... Its sewing-machine operators commonly make more than $500 a week...."
  58. inside american apparel: 4,000 downtown employees and counting Angelenic.com June 2008 "perhaps most touchingly, free long-distance phone service on every floor of the building."
  59. "[Wages] will not be the same as the L.A. workers, but we will make sure that every worker in China receives at least a U.S. federal minimum wage per hour worked,” Charney said."
  60. "This equates to roughly one share of stock for each workday."
  61. "There's a waiting list 2,000 names strong to work at American Apparel."
  62. Apparel News - Influential in 2002 - December 2002
  63. Stephen Wishart. Behindthelabel.org (January 2005) The Truth Behind American Apparel: Sweatshop free or Union buster?
  64. Walker pg 219 "Indeed, the San Francisco Chronicle pointed out that the nonprofit Garment Worker Center... did not...."
  65. "As part of a no-contest settlement, the company voluntarily posted a notice informing workers that it would not interfere with their rights to organize."
  66. Walker, Rob Buying In: The Secret Dialog Between What We Buy and Who We Are Random House. New York 2008 pg 219
  67. Louise Story - The New York Times - January 18, 2008
  68. May 1,March for Workers Rights - 05_2002
  69. American Apparel Homepage: Legalize LA
  70. "Immigration Crackdown With Firings, Not Raids" article by Julia Preston in The New York Times September 29, 2009
  71. "U.S. Shifts Strategy on Illicit Work by Immigrants " article by Julia Preston in The New York Times July 2, 2009
  72. Dov Charney's Farewell letter (taken from DovCharney.com and "The Daily Update")
  73. PSFK - Piers Fawkes - October 4, 2007 "Why Build Sustainability Into Your Business?".
  74. AA is Apparel Magazine's Sustainability All-Star Daily Update March 2009
  75. RenewableEnergyaccess.com (January 27, 2006). Downtown L.A. Clothing Company Goes Solar
  76. Josh Sims, "Organic Consumers Association" (July 6, 2006). Look Good, Save the Earth
  77. WireImage: Pictures from American Apparel Carwash
  78. Farm Aid: Merchandise Description


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