American Apparel: Difference between revisions

American Apparel, Inc.

Company type	Public (AMEX: APP)
Industry	Garments manufacturer
Founded	Los Angeles, California
Headquarters	Los Angeles, California
Key people	Dov Charney, Founder & CEO
Products	Clothing
Revenue	US$284 million (2006)
Number of employees	6700 (2007)
Website	www.americanapparel.net

American Apparel (AMEX: APP) is the largest clothing manufacturer in the United States, and is noted for advocating and utilizing non-"sweatshop" labor policies, which the company has dubbed "sweatshop free."^[1] American Apparel 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 has expanded to include tank tops, dresses, pants, denim and accessories for men, women, children, babies and dogs.

Manufacturing is based in an 800,000 square foot factory in downtown Los Angeles, California. By integrating all aspects of production and avoiding outsourcing, the company achieves a fast turn-around time from design concept to finished product.^[2] The company also operates its own fabric dye house, garment dye house, and knitting facility, all based in Los Angeles.^[3] The company is unusual in that it manufactures apparel in the United States, when most apparel production today takes place in Central America, the Caribbean, and in Asia.

American Apparel has earned praise for its provocative and sometimes controversial advertising campaign, which in a short period of time has helped cultivate a powerful and trendsetting brand. American Apparel has a long history of advertising in Vice Magazine.^[4] In 2005 the company was named "Marketer of the Year" at the first-ever "LA Fashion Awards" (timed to coincide with Los Angeles Fashion Week).^[5]. That year Advertising Age described the campaign as "hot" and praised it for avoiding celebrity.^[6].

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.^[7]

In January 2008 the Intelligence Group, a leading market research and trend consulting firm, listed American Apparel as their number two Top Trendsetting Brand in their Cassandra Report, behind only Nike.^[8]. In February of the same year, Brand Keys named American Apparel as the number two retail apparel brand, behind Victoria’s Secret and tied with H&M. It was American Apparel’s first appearance on Brand Keys’ annual Loyalty Engagement Index.^[9].

As of 2007 the company is in the process of rapid retail growth, opening stores in the United States, Israel, Japan, Korea, Netherlands, Switzerland, Germany, Canada, France, Sweden, Mexico and the United Kingdom. Other planned countries to open stores in is Australia, Belgium, Italy, and Spain. ^[4] It was ranked 308th in Inc. Magazine's 2005 list of the 500 fastest growing companies in the country, with a 440% three-year growth and revenues in 2005 of over US$ 211 million.^[10]

In late 2006 American Apparel announced a reverse merger with Endeavor Acquisition Corp., a special purpose acquisition company founded in July 2005.^[11][12] The merger closed in December 2007, at which point American Apparel became a publicly traded company.^[13]

As of 2007 the company employs more than 6,700 people and operates over 175 retail locations in 13 countries.^[14] The company pays its manufacturing employees an average of US$12 per hour^[1] Employees also receive benefits such as paid time off, healthcare, company-subsidized lunches, bus passes, free ESL classes, on-site masseurs, free bicycles and on-site bike mechanics, free parking, and proper lighting and ventilation.^[15]. Management style promotes accessibility of upper executives, including the CEO, to all employees.^[2]

In 2003, UNITE launched a union drive at the factory.^[16][17]The drive came a week after Levi's, which had been UNITE-unionized, announced it was closing its last plants in North America in September 2003.^[18] The union claimed that American Apparel interfered with the drive. American Apparel denied the claims. On October 3rd, 2003 an anti-union demonstration took place put on by the workers.Cite error: A <ref> tag is missing the closing </ref> (see the help page). The company was reported to the National Labor Relations Board for violations of Federal labor laws, and a no fault settlement was eventually reached with the NLRB on January 30, 2004.Cite error: A <ref> tag is missing the closing </ref> (see the help page).American Apparel posted in their production facility a document agreeing not to conduct any anti-union activities and on May 10, 2004 the case was dismissed.^[17]

In a 2007 filing with the U.S. Securities and Exchange Commission, American Apparel characterized its relations with its employees as "excellent. ^[19] In the last five years there have been no reports of American Apparel employees seeking to unionize since the September 2003 incident.

The company has been criticized for sexually charged advertising and unconventional corporate culture.^[20] In 2005, four female employees filed sexual harassment lawsuits against American Apparel. ^[21] Three of the four employee lawsuits were either dropped or settled, with the fourth still pending.^[22]. American Apparel has also been accused of focusing on personal style and outward appearance in its hiring practices for retail positions.^[23]

As early as 2001, American Apparel has been a vocal advocate for reform of U.S. immigration laws.^[24] 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.^[25] In addition to participating in this and a variety of subsequent immigration protests, the company has run a series of "Legalize LA" ads and billboards.^[26] This notable campaign, calling for immigration-reform, attracted a fair amount of media attention and was chronicled in The New York Times in January 2008.^[27] Charney has likened his company's position to the decision of Levi Strauss to desegregate their factories during the civil rights movement, saying "Why did Levi's do it? Probably because it was the right thing to do at the time. And they became known as a company that represented what America was all about. What Levi's was to San Francisco, we aspire to be to Los Angeles."^[28]

The company promotes environmentally friendly practices.^[29] As of 2007 the company planned to increase its use of organic cotton within the next four years from over 20% to 80%. The company also recycles its fabric scraps. ^[30] It installed a 146 kilowatt solar electric system on its factory roof, designed to reduce power costs by at least 20%.^[31]

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