What American Apparel Bankruptcy Means For The 'Made In America' Market
LOURDES GARCIA-NAVARRO, HOST:
For 15 years, American Apparel has produced fashionable clothing at relatively low prices. And as its name implies, its T-shirts and leggings are indeed made in America - LA to be exact. After years of manufacturing jobs, going abroad, American Apparel was touted as an example of how something made in the USA could be cool, socially responsible and profitable.
Except this week, the company declared bankruptcy. Evan Clark joins me now from our bureau in New York. He's the deputy managing editor at Women's Wear Daily, and he's followed American Apparel closely through its rise and now fall. Welcome.
EVAN CLARK: Thanks for having me.
GARCIA-NAVARRO: What brought American Apparel down in the end?
CLARK: Ultimately, people are going to tie it back to one single issue - they had a lot of debt. And the debt had very high interest rates and it became too much for the company to bear.
GARCIA-NAVARRO: But this isn't the end of the company?
CLARK: No, no, no. Now they go through the bankruptcy process. And we'll see what happens as they go through there. If they end up kind of operating it or if another bidder comes up in the process and takes over and kind of moves forward from there.
GARCIA-NAVARRO: So let's talk about this. You know, a lot of people looked at American Apparel as sort of the poster child of the movement that championed being made in America. So what do you think its bankruptcy says about the difficulties facing U.S.-based manufacturing?
CLARK: The end of American Apparel - or at least of this incarnation of it - doesn't spell the end of made in America. And I think that there's a lot of interest in made in the USA clothing. I think there's problems with that, too. It's finding the raw materials and all the parts and the labor.
So it's a complicated process, I think, to put together at the right prices that's going to make sense for retailers and brands. But increasingly, we're seeing there is consumer demand for this and there is a desire for companies to get fashions into their stores quicker. So you can do a quick return if it's made in the United States. And then so it's kind of making that equation work.
GARCIA-NAVARRO: Yeah. I mean, there's a reality. I mean, I was reading that the minimum-wage worker in Southern California working at American Apparel, for example, would make around $1,400 a month. In Bangladesh, that would be $68 a month, in China, $158 a month. I mean, now that they're in bankruptcy, can they afford to be made in America?
CLARK: Certainly, they can. A lot depends on who ends up owning at the end of the day. American Apparel has worked for a long time. It was a company that's got over $600 million in sales now. And it really had a meteoric rise that ended up in a dramatic fall. But retailers want to be able to have the latest styles, the latest fashions. And I think it's also a good marketing hook for a lot of retailers and consumers being interested in buying kind of locally made goods.
GARCIA-NAVARRO: You know, American Apparel, for example, is a brand that's firmly aimed at younger people. What's more important to them? I mean, do they want things that are made in America?
CLARK: I think millennials are very conscious of social issues and being environmentally friendly and all of that. So I think made in the USA ethos resonates very much with that population. But the consumers seem to mostly make their decisions based on style and cost. So if you're making it in the United States, the path would seem to be kind of get styling right or get the timeliness. You need to somehow compensate for the cost factor in there.
GARCIA-NAVARRO: And one of the things, obviously, about American Apparel was that it was supposed be socially conscious. They weren't using sweatshops abroad. How is this going to impact the workers in Southern California?
CLARK: At the American Apparel factory?
CLARK: It remains to be seen. A lot depends on the bankruptcy court, the bankruptcy judge, how this process unfolds, who kind of ends up being in charge. It's possible, at this point, the brand could be sold. And then somebody who brought the brand could decide to make it wherever they want and call it American Apparel. But that's what we're kind of watching closely over the next weeks and months here.
GARCIA-NAVARRO: Evan Clark is the deputy managing editor at Women's Wear Daily. Thank you so much.
CLARK: My pleasure.
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