American Apparel has fired about 1,500 immigrant production workers in the last month because they were unable to prove to federal authorities they had the legal right to work in the U.S.
The dismissals at the Los Angeles-based company resulted from an investigation started by the U.S. Immigration and Customs Enforcement Agency in January 2008.
American Apparel’s made-in-the-U.S.A. and pro-immigrant stance have become integral parts of its brand image. About 300 employees, who were among the original 1,800 identified in July by the ICE as potential illegal workers, have been able to produce documentation that may allow them to remain with American Apparel, said Peter Schey, a lawyer representing the company. Additional investigation by American Apparel and federal officials will determine the legal status of each of those 300 workers.
The 1,500 employees who have departed represent 27 percent of the 5,600 factory workers employed at American Apparel before the federal investigation.
Dov Charney, founder and chief executive officer of American Apparel, declined to comment and directed questions to Schey. However, in a Sept. 1 letter to employees, Charney wrote: “I am deeply saddened by the fact that many of you will be leaving the company over the next few days and weeks….I want you all to know that when you are able to get your immigration papers in order, you will be given priority treatment, in terms of being interviewed for future positions with the company….I will continue to fight for immigration reform for the rest of my career.”
In a filing with the Securities and Exchange Commission, American Apparel has said the firings would not have a material impact on the company because of its healthy inventory levels and continuing manufacturing capacity.
American Apparel also has hired a “substantial” number of new employees over the past year, and may seek to hire “a few hundred” replacement workers in the near future for the 1,500 who have left, Schey said.
In addition, the company faces weakening demand for its products because of the recession, which has softened the impact of the employee departure, Schey said. American Apparel reported a 20 percent decrease in same-store sales during August.
Disruptions to American Apparel’s manufacturing pipeline would be a serious challenge to the company because its high-volume production facilities, which offer speed to market and quick reactions to trends, have been central to its growth strategy.
American Apparel operates an 800,000-square-foot production facility in the warehouse district of downtown Los Angeles as well as knitting facilities in the city and in Garden Grove, Calif., and dyeing and finishing facilities in Hawthorne and in South Gate, Calif.
In May, Charney led a march of thousands of American Apparel employees through the streets of Los Angeles to push for immigration reform. Los Angeles Mayor Antonio Villaraigosa has decried the federal government’s actions, particularly as California’s economy sputters and the jobless rate has reached 12.2 percent.
For the three months ended June 30, American Apparel’s net income declined 33.8 percent to $4.5 million as net sales increased 2.3 percent to $136.1 million. The company operates more than 275 retail stores in 20 countries.