American Apparel Lays Off Hundreds: UPDATED

LOS ANGELES, CA - LOS ANGELES, CA - More than 500 employees have been laid off at American Apparel, and more layoffs may come as the company emerges from bankruptcy.

The layoffs started last week with laid-off manufacturing employees receiving two month's' pay and an additional $800 if they agree not to sue, according to the Los Angeles Times.

American Apparel has not yet responded to a Patch request for comment.

In a letter to employees obtained by the Times, Chief Executive Paula Schneider discussed the possibility of outsourcing production to another American company.

"We are announcing a redesign of our production process. As a result, we will need to reduce our workforce,” she wrote. "If we do decide to produce some pieces out-of-house, they will still be American-made."

In addition to potential outsourcing, the company is reportedly cutting back on production and inventory.

The company operates 1.5 million square-feet of manufacturing in Downtown Los Angeles and north Orange County. American Apparel emerged from bankruptcy following years of flagging profits and controversy surrounding ousted founder Dov Charney.

The American Apparel board ousted Charney in a dramatic showdown following allegations of sexual misconduct. He declared the decision illegal and promptly demanded reinstatement. When that didn’t work, Charney announced plans to open up a competing wholesaler in South Central LA.

“We could be six weeks away from making ourselves available to wholesale customers,” Charney told The New York Post last week. “I don’t want to be remembered as the guy who was thrown off the bus,” Charney said. “My company was stolen from me, and I want my new business to steal American Apparel spiritually.”

American Apparel hasn’t reported a profit in years. Heading into the bankruptcy, the brand known for its T-shirts and jeans also chose to back away from the marketing that made it famous - young models in various states of undress.

Photo: American Apparel courtesy of Wikimedia Commons