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Business Maverick Beats the Odds
T-shirt manufacturer abandons sweatshop approach.
Northwest Indiana Times
Susan Brown
November 9, 2003

VALPARAISO — Montreal's Dov Charney started selling T-shirts at 15 when he was still in high school.

Today, at 34, he's selling a message along with the T-shirts. The message is that it's possible to run an efficient, profitable apparel business without turning it into a sweatshop.

The keynote speaker at Valparaiso University's second annual Peace & Justice Symposium on Saturday, Charney founded American Apparel, one of the largest apparel factories in Los Angeles, employing 1,400 people earning a minimum of $8 an hour. He's thinking about kicking the minimum up to $8.50. Most earn considerably more. [Actual average wage as of Jan. 2004: $12.50/hour]

Charney says 60 percent of his employees are illiterate, mostly from the Latino community, but they enjoy health care benefits, lunch and education programs, and the ministrations of a masseuse.

"We believe in lifetime employment," he says.

Rather than breaking the bank, Charney says such ideas have made him successful. When he compared his company's bottom line to that of his more mainstream competitors, such as Hanes and Fruit of the Loom, he found he had them beat.

He's done it, he says, by doing away with subcontracting and bringing all the work back under one roof. American Apparel is a vertically integrated company where the garments are designed, cut, sewn and distributed from the Los Angeles factory.

That allows him to get to know the faces of his employees.

"The main thing is the honesty in the relationship, to know their faces," Charney says. "You lose that integrity through outsourcing."

Charney says he doesn't come at the problem from the right or the left of the political spectrum. He doesn't trust organized labor or the establishment. Instead, what he's about is solving the problem, he says. What he aims for is "exploiting human potential without exploiting human beings."

"We have to pay people in Guatemala or China what we pay ourselves," Charney says. "Why should the industrialized Western world walk into a Third World country and pay less?"

Charney says the good life costs the same the world over.

Currently, 95 percent of clothing orders are outsourced to a bevy of far-flung subcontractors before they ever hit a sweatshop owner, Charney says. Domestically, there are 5,000 sweatshops in Los Angeles alone. The sweatshop owner, often an immigrant himself, is usually "the most innocent one in the supply chain," he says.

Then there's the dirty little secret not only the apparel industry but the government seeks to protect.

Charney says it's not necessary to look toward Iraq to see people being exploited.

There are 10 million to 15 million falsely documented workers in the United States, according to Charney. In Los Angeles, an authentic-looking green card can be had for $100. Contrary to what the public at-large believes, these workers pay taxes, contributing to a system that rejects them.

Charney says he, too, once had a factory in Mexico and subcontracted work to such places as South Carolina and the Dominican Republic, where the wages were lower.

He found, however, he had problems with efficiency and quality. Worst of all, workers were being treated badly, something contrary to his own personal values.

A Canadian by birth, Charney says he fell in love with the United States when he went to high school here. The scruffy, jeans-and-denim-clad Charney comes from a privileged background. He's a graduate of Tufts University.

His fellow graduates, he says, are "puppets" who are at their desks by 7 a.m. Typical boomers kept well-heeled by Wall Street, they have no incentive, he says, to change the face of things.

"Boomers sold out," Charney says. "They lost their ideals."

One VU student asked Charney why he expects more of the current up-and-coming generation, given their own generally conservative attitudes.

In answer, Charney predicted the revolution may be decades away. He expects it will be led by a generation still coming of age who will act to change America for the same reason hippies did in the 1960s. They simply didn't like the ways things were, such as having blacks herded in the back of the bus.

Charney launched his own personal revolution some 10 years ago. Since then, his unorthodox ways have earned him the attention of the national business media. CNN Financial News made him one of their "Mavericks of the Morning." And his work has been profiled in Time magazine and a PBS documentary.

Susan Brown can be reached at [email protected] or (219) 462-5151, Ext. 355.