Los Angeles County and the city are responding to Monday’s mass layoffs at American Apparel, pooling resources to offer informational meetings and other assistance to the company’s former employees.
American Apparel on Monday confirmed it was laying off about 2,400 people from its workforce, with the cuts happening in shifts throughout that day. What remains for the next few months are the company’s retail stores and La Mirada distribution center as management now turns to the closing of various deals struck during its bankruptcy auction last week.
The largest of those acquisitions was the $103 million purchase of American Apparel’s intellectual property and some equipment by Gildan Activewear Inc. Another transaction, for the company’s knit and dye house in Garden Grove, was still pending at the time of the auction’s close, but was expected to yield at least $200,000. None of the deals include stipulations to retain any of the American Apparel workforce, which was something two Los Angeles County Board of Supervisors and the director of the county’s Workforce Development, Aging and Community Services department attempted to have a judge consider in hopes of retaining as many jobs in the area.
L.A. County supervisor Hilda Solis, who submitted a letter to the judge last week in addition to supervisor Janice Hahn, said in a statement Thursday, “with the recent news of the company’s mass layoffs, thousands of multigeneration employees are facing difficult times. With [American Apparel] average hourly wages of $18 to $20 in the cut-and-sew division, and upward [of] $50k to $70k average salary in the administrative and management division, these workers are left with little possibility of finding similar jobs.”
Los Angeles’ Rapid Response Team — made up of representatives from the city and county workforce development boards along with the California Employment Development Department and other workforce groups — are now hoping to help laid-off workers with informational meetings that will provide assistance with unemployment benefits, job opportunities and other resources. The first of those meetings is Friday, with three other meetings scheduled next week.
“Los Angeles Economic Development Corporation had been working with American Apparel for over a year as our subcontractor for layoff-aversion services,” said a spokesman for the county’s workforce development director Cynthia Banks, who also submitted a letter to the bankruptcy court judge last week. “LAEDC was providing them with resources and assistance in an effort to maintain profitability and consequently, to keep the company and save jobs here in Los Angeles County.”
The spokesman added they were unaware of any other layoffs that occurred in more recent years at American Apparel.
The company filed a notice with the state EDD in November warning of 3,457 jobs potentially on the line with a sale up in the air. About a year ago, American Apparel closed its Hawthorne dye house and in April underwent another round of layoffs — the total impact of which the company declined to say at the time — set off by an overhaul of its production lines in an effort, management said, to shore up efficiencies. It also, at that time, began considering the outsourcing of some, more complicated garments.
An American Apparel spokeswoman, when asked if the company thought more jobs could have been saved had a different deal been worked out during the bankruptcy auction, pointed to the three letters from the two elected officials and Banks, along with the prepared statement: “The company and its management team’s main priority has been saving jobs throughout the auction process, in addition to creating value for creditors.” She declined to say if Hahn, Solis or Banks had reached out in past months to provide aid or guidance with respect to the company’s workers.
Some are skeptical the market will be able to quickly absorb the amount of laid-off factory workers, let alone the other administrative and management jobs that were shed.
American Apparel founder and former chief executive officer Dov Charney was outside the factory Monday gathering names of laid-off workers in hopes of eventually rehiring them once his start-up, the Los Angeles Apparel Co., gets off the ground. He said he’s in the position to hire dozens of sewers, but can’t immediately absorb the number of employees whose jobs were lost.
“I think there’s going to be a lot of people on unemployment immediately and it’s going to cost a lot of money,” said Zachary Daniel Hurley, the ceo and cofounder of downtown Los Angeles contract manufacturer Indie Source. “A lot of these workers were at American Apparel for dozens of years. For them, this is not a small thing; for them, this is their entire careers in many cases.”
Some sewers had reached out to Hurley this week about jobs and while he said he’d like to hire some of the displaced American Apparel workers, it would take a broader shift in how brands look at domestic manufacturing to generate the work necessary to create jobs. It also requires looking beyond the labor cost argument, which has often been the roadblock to bringing production back to the U.S. and viewing it in the context of other costs including excess inventory, shipping and taxes, Hurley pointed out.