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The worker's revolt at American Apparel is getting even more tumultuous. The LA Times reports that American Apparel has laid off 500 Los Angeles employees in the past two weeks. Workers are said to have received two months severence and an additional $800 if they waived their right to file any claims against the company.
American Apparel CEO Paula Schneider, who is trying to right the ship after the brand's bankruptcy, sent a letter to employees explaining that the layoffs were a side effect from a "redesign of our production process."
The letter also stated that AA could possibly soon move the manufacturing of more complicated pieces, like denim, away from the LA factory. Schneider wrote that if American Apparel outsources certain pieces, they will still be made in the US.
But analysts told the Times that it seemed like AA is testing the waters to stop manufacturing in LA. "They’re headed out of Dodge," Greif & Co chief executive Lloyd Greif said. "They are going to outsource all garments. It’s only a matter of time."
Grief thought the brand might move to the South, where factory costs are cheaper. Or perhaps farther afield. "There’s no reason why American Apparel has to be made in America," he said. "It can be designed in America, but cut and stitched somewhere else."
It seems like the reason is right there in AA's name: if you looked past the sexed-up image (now gone from new AA marketing), made-in-LA was one of American Apparel's main selling points.
Of course, AA founder Dov Charney weighed in, telling the LA Times that the new management is "doing exactly what American Apparel fought against" by "outsourcing and searching for ways to pay people less money."
American Apparel declined to comment.
Nativo Lopez, senior adviser to Hermandad Mexicana who is helping AA workers unionize, told Racked that in addition to the 500 and counting layoffs he's confirmed, there are rumors that there will be another wave of layoffs in August of this year.
He believes that the timing of the layoffs is meant to impede union activity, and that AA's new management is dismantling Charney's vertical business model and farming out work to known sweatshops in the area.