American Apparel is a vertically integrated clothing manufacturer based in down town Los Angeles, California. Widely renown for their basic cotton t-shirt, American Apparel has become a household name. At first glance, American Apparel seems to be the exception to the rule in today’s fashion and textile industry. However, there is always more than meets the eye. This site discusses everything from living wage to the anti-unionisation of this seemingly perfect domestic company.
—Dov Charney, CEO of American Apparel
The Environment
In 2006 American Apparel was proud to announce that 20% of electricity in their LA factory was being produced by solar energy panels on the roof. This was the moment when being a vertically integrated clothing manufacturer was no longer enough, American Apparel was going green. Their shopping bags were being made of recycled materials and they were using their fabric scraps from their t-shirt production to create small items such as gloves, hair bows, socks and more.
Another manufacturing change at American Apparel is their low impact dyeing process used on their signature cotton t-shirt and all of their other merchandise. This process uses the least amount of water compared with all other dyeing processes available. The dye itself is a low impact, organic dye. In addition the cotton used absorbs over 70% of the dyestuff using direct linkage which minimizes run off and lessens the toll on the environment.
However, as we have seen before, not everything can be flawless. Although the cotton t-shirt absorbs over 70% of the dyestuff, the excess 30% is being disposed of at treatments plants which cannot handle the harsh and toxic chemicals.The disposal of dyeing industrial effluents pose a major environmental problem because they contain pollutants that cannot be broken down by the microbial used at water treatment facilities. Likewise, if the chemicals aren’t removed, the dyestuff will harm the micro-organisms in treatment plants and in the eco-system where the water is being released.
One thing that American Apparel cannot stop publicizing is the fact that they have recently purchased 30,000 pounds of cleaner cotton to incorporate into their non-organic line. This cleaner cotton (not to be mistaken with organic) will be used to create their basic cotton t-shirt and their signature hoodies.
The Cleaner Cotton Campaign was started by Sustainable Cotton Project, a non profit organization focused on reducing toxic chemical usage in cotton production and without genetically modified seeds, all while still maintaining profitability. This cotton may not be 100% organic but it uses one third the amount of pesticides of normal cotton which is a step in the right direction. American Apparel itself uses 10 million pounds of cotton a year so transitioning to a cleaner cotton would be a great change, even if it is only 0.3% of all the cotton intake at the moment.
Secondly, the other 99.7% of cotton being used by American Apparel is being produced in Texas with heavy doses of insecticides which are extremely dangerous for humans and animals. It is estimated that for each cotton t-shirt, 500mL of pesticides and insecticides were used in the production of the cotton. Aldicarb, parathion, and methamidopho are a few of the most hazardous insecticides yet are the three most common in cotton production. One drop of aldicarb absorbed through the skin can kill a man. Another pesticide that is growing in popularity is Bt (bacillus thuringiensis). Bt is injected into the plant and becomes a part of the plants natural defense system. However, this makes it easy for insects to become immune to the pesticide which would eventually lead to the creation of a super pest.
Although American Apparel cotton t-shirts are comfortable and affordable, there are many indirect ways that the production of cotton affects us. Nitrogen synthetic fertilizers are almost always used to nourish cotton crops but are major contributors to N2O emissions which are 300 times worse than CO2. Next, pesticide residues have been detected on cottonseed hulls. The hull of the cottonseed is used as a secondary crop which is sold as a food commodity. 65% of cotton production ends up in our food chain. Either directly through food oil or indirectly through the milk or meat of animals.
Cotton is extremely versatile but it has an enormous impact on the environment and our health. 7 of the top 15 cotton pesticides are possible carcinogens, meaning they can cause cancer. During the conversion of cotton to conventional clothing, many hazardous materials are used and added such as; silicon waxes, harsh petroleum scours, softeners, heavy metals, flame and soil retardants, ammonia, and formaldehyde. Approximately 10% of all pesticides, and 25% of all insecticides in the US are used for cotton production. Although American Apparel is starting to use organic and cleaner cotton in the production of their t-shirts, the 10 million pounds of cotton that they use per year is taking a drastic toll on our environment. It’s going to be a long time before they can truly become green.
—Mart Bailey, VP of American Apparel
The Workers
American Apparel has one of the largest clothing manufacturing facilities within North America. Their sewing faculty is ranked #1 in size and volume in the western hemisphere. There are a total of 10,000 American Apparel workers in the US and more than 50,000 workers world wide. American Apparel prides itself on having the highest paid sewing workers in the world at $11- $14 USD an hour, more than double the minimum wage in the US. Unlike Nike, who pay starvation wages to their workers (3 tenths of 1%) American Apparel production workers, on average, make 1.6% of total profits from the average unisex t-shirt ($25). “Our goal from the start was to provide a living wage,” says CEO Dov Charney “, and I’m proud to say we have done that and gone further.”
Production workers at American Apparel are able to enjoy a variety of benefits including; healthcare ($8 a day), subsidized transit and lunches, massages, bikes, paid leave and English lessons. These luxuries are in addition to the clean and spacious work areas, and modern technology they work with. Employees are treated fairly and are encouraged to work to their best ability in ‘teams’. This nurturing production atmosphere was chosen over the six sigma method where workers are under pressure to produce a near-perfect t-shirt in unrealistic confines (sweatshop labour).
However, because American Apparel is the first of it’s kind (a vertically integrated business) there are still many kinks and faults within the business, much like any other. Over the past decade there have been allegations of sexual assault, failed attempts at unionization, and factory raids.
Dov Charney is known to many as the very liberal and stubborn CEO of American Apparel. Many also know him because of his involvement in numerous sexual harassment trials. In 2007 four former employees of American Apparel sued him for sexual harassment and many new allegations come up now and then. Perhaps it is because of his strong paternalism towards his workers or perhaps it is because of his radically liberal beliefs. When asked about his views on the exploitation of women Dov responded by saying “I’m a strong believer of liberated feminism and I will continue to fight for what I believe in.” But is this what he means by ‘liberated feminism’?
Believe it or not that wasn’t the first time American Apparel encountered legal trouble with their employees. In 2003 a few factory workers contacted the Union of Needle trades and Industrial Textile Employees (UNITE). At American Apparel the average production wage is $12/hr. The company also provides employee benefits (previously mentioned) in hopes that this will prevent their workers from uprising.
Many skeptics do not believe in the effectiveness of unionisation because of the high wages of the workers. However, in the early 1920’s Ford workers were also paid well; but eventually many were laid off and constantly being asked to accelerate the pace of work. Likewise, the workers at American Apparel were becoming uneasy and decided that they needed the help of Isaura Lucero, an organizer with UNITE in LA. Management had heard word of the meetings between their employees and UNITE and an anti-union campaign of misinformation and fear began.
American Apparel organized an anti-unionisation protest in their head quarters parking lot. Many reporters and media figures were invited to the South Californian parking lot. In addition, management workers organized mandatory information sessions during lunches to inform workers of the dangers of unions. “People were intimidated and the management was threatening to call the police,” recalled Lucero. Perhaps, life at American Apparel isn’t as cheery as it appears to be.
After the union incident, things just kept getting worse for the domestic company. Of the 10,000 workers at the American Apparel factory in down town Los Angeles, it is a well known fact that the majority are immigrants. In 2009 the local police became suspicious of the legitimacy of the employees in the factory. They decided to raid the factory in hopes they would find illegal immigrants working there. Ultimately, they found 1,500 illegal immigrants in the Californian factory and eventually deported more than a sixth of the production staff, taking a large toll on the production of t-shirts, sweaters and everything at the factory.
—Mart Bailey, VP of American Apparel
The Numbers
During the early years of American Apparel there was a steady incline of profits. Everybody could see the profitability of American Apparel. The company originally sold basic t-shirts and tank tops but eventually expanded to encompass all areas of apparel. In 5 years they had cornered the most targeted consumer market, young metropolitan adults, and was raking in the revenue. However, nobody predicted what would inevitably become the fall of American Apparel.
In 2003 American Apparel grossed $80 million, in 2006 $250 million, in 2010 $533 million. Although it may appear as if there is nothing wrong, American Apparel’s 2010 annual financial report showed devastating financial trouble within the company. In 2009 to 2010 their gross income decreased by 4.6% and showed a net loss of $86 million. In addition their gross profit went down 13% to only $280 million. Professionals estimate that the company is currently losing money at a rate of nearly $30 million a year.
With such a strong brand image and a loyal customer base, how can this company be losing so much money? Unnecessary spending, declining sales and the rising price of raw goods have left American Apparel with a growing debt of $120 million. In 2009 American Apparel CEO, Dov Charney, called for a mass expansion of the franchise. Although he was advised otherwise 6 new stores were added, costing millions of dollars. Next, in 2009, $18 million were spent on marketing alone. That’s almost a 25% increase on spending in 2008.
Finally, what is taking a detrimental toll on American Apparel is the rising cost of cotton. For a company who primarily makes versatile, cotton basics, such as their popular t-shirt, the price of cotton is extremely influential when it comes to inventory costs. Last year the price of cotton doubled in a span of only 6 months. Rising cotton prices alone could end the future of this company and that is without the mass expansion plans and overly generous marketing budget.
