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Dov Charney is the philanthropic founder of US T-shirt brand American Apparel whose "sweatshop-free" philosophy has paid off. Tom Bottomley meets him in Las Vegas.Drapers
April 10, 2004
With his wiry frame, long hair, handlebar moustache and tinted shades, Dov Charney resembles a character from a cult 1970s cop show, rather than a man who is shaking up the US garment industry.
His LA-based "sweatshop-free" American Apparel T-shirt company has the largest garment factory in the US, employing more than 1,300 people at one location, with, he claims, the capacity to produce more than 100,000 T-shirts a day.
With 83% of all clothing sold in the US now imported, Charney's business model is unusual. It relies on using technological developments that were not available 10 or 15 years ago. "I'm able to take advantage of that technology to make my factory more efficient than the outsourced model," he claims. Charney will not give out sales figures, but an article on the brands website claims that American Apparel's turnover doubled in 2003 to $80 million (£43.6m).
Now 35, Charney grew up in Canada and traces his family heritage back to England. Perhaps that's also where his eccentricity stems from. His grandmother is from Didsbury in Manchester and he lived in a British neighbourhood in Montreal. But Charney's mission is about redefining the American Dream.
With subcontracting and cheap offshore production in "sweatshops" becoming the norm in recent years, Charney has bucked the trend. The average hourly wage of a garment worker in American Apparel's factory is $12.50 (£6.80), more than double the US federal minimum wage of $5.15 (£2.80).
"I think positivity is a critical component to any workplace," says Charney. "What's really important is that people are charged up to come to work every day because that advances your capitalism. It doesn't matter how you get them happy, just as long as you do and they know they're doing better at American Apparel than they could do anywhere else."
Other benefits enjoyed by Charney's largely Hispanic workforce include paid overtime, dental insurance for $1 a week, healthcare for employees and their families, English classes for the non-English speaking, on-site massages and yoga classes. There's also modern machinery, heating and air conditioning, and an abundance of natural light in the 350,000sq ft, seven-storey pink factory in downtown LA. A banner on the building reads: "American Apparel is an Industrial Revolution." Another slogan utilised by the company is: "American Apprel es la compania rebelde" — the rebel company.
Every production process — knitting, cutting, sewing, design and distribution — bar garment dyeing (at two local dye houses) is in-house.
Charney says he would like to set up similar operations in China and India, for selling into local markets, not importing back into the US. "It's about bringing about this marriage between capitalism, democracy and freedom, and making it happen for everyone worldwide," Charney advocates. "We're not going to exploit the poor or make things here or there because it's cheaper. We're going to make sure the business model is sustainable on international terms. If we open a store in Mexico City, we'll pay the same wages as we do in New York City, or close."
But is this really possible? A label showing at Magic in February was using both American Apparel and Fruit of the Loom T-shirts to print on, but the Fruit of the Loom T-shirts were half the price. Charney argues: "Half the price is relative. I can give you a broken car for 100 bucks or a brand new car for $10,000. You've got to get from A to B. Cheaper shirts are poorly designed. Besides which, other companies spend most of their resources managing these very complex offshore supply chains."
The current case price for an American Apparel T-shirts is £3.55 per garment, in a case carrying 144 of the classic plain white "2001" style. Simon Poole, managing director of Boxfresh, is one of Charney's target brands, says the price "is not extortionate", although he adds that it is possible to source T-shirts from as little as 60p. "It's all about the quality," he says, and American Apparel is good quality.
David Butler, UK whole sale and retail co-ordinator for American Apparel, agrees: "The T-shirts are more expensive than their competitors because they use finer quality cottons and the fit, styling and design is superior. There is also a discerning customer who is conscious of human rights issues."
Debating the economics of offshore versus domestic production is a far cry from when Charney started in business at the age of 16, "smuggling" Hanes red label T-shirts into Canada. In 1989 he moved to South Carolina: "It was the beginning of outsourcing, but there was still a big T-shirt industry there, supported by the likes of Hanes and Fruit of the Loom, and I began parasiting off their infrastructure. I was selling my customers Hanes irregulars. Internationally people were paying high prices for Hanes Beefy Tees and I was grey marketing them into Canada."
Then he decided to make his own T-shirts, using old knitters, cutters, sewers and dyers who were being made redundant as production moved offshore. "I was taught by guys who'd been making T-shirts since the 1950s," says Charney. "It was like the Savile Row of T-shirts."
In 1997 Charney moved production toCalifornia, where there was at least an existing apparel manufacture base, although it was mainly sportswear-oriented. That's where he met the Korean contractor who was later to become his silent business partner, and the American Apparel concept was born.
The vast proportion of sales for American Apparel comes from wholesaling plain T-shirts to other brands and up-and-coming labels to print on. In the UK, All Saints uses American Apparel, and brands such as Rude and Boxfresh are being targeted, but Charney admits his wholesale supply to the UK is "a little patchy". He says: "We've had some shipping problems and other challenges but we hope to become as important in the UK as we are in the States. In the future that may involve setting up manufacturing in London, or Europe, or both."
Charney has taken the "basics", including vest tops, underwear and jersey dresses, and made them sexy. The fits are flattering, the fabrics are high quality and there's a wide variety of colours, from plain black and white to vibrant pink, a colour he's rather partial to wearing himself.
American Apparel's one pocket "Nixon" shirt — a short-sleeved cotton polo shirt for men that is pure 1970s nostalgia — is on the button for spring, and the bestseller, aside from the basic T-shirt, is the "boy's brief for girls", as worn by the legion of models he employees to give out free samples at trade shows such as Bread & Butter in Berlin and Magic in Las Vegas. Says Charney: "They're sexy products for young people. American Apparel isn't designed to appeal to the baby boomer generation. It's not that we don't think that's an important market, it's just not our market."
American Apparel garments do not carry obvious logos. The labels in the back of the inside collar are small and discreet. Charney is averse to heavy branding, calling it "false tribalism". He talks of the 1960s, 1970s and 1980s when it was all about the product such as Dr Martens, Levi's 501s or Converse All Stars. "Branding has obviously been around a long time," he explains. "But I think it all culminated in the 1990s when, in apparel, people started to sell the brand first. Beforehand, product was first, made by a great company. It makes me want to vomit when I see a 'D' for Diesel on a pair of shoes, for instance."
Charney cites Muji as having "a great thing going on", because he says it's just well-designed product appealing to people's intelligence.
But last year American Apparel embarked on a retail strategy that can surely only lead to a more branded approach. Two stores opened in New York, one in LA and one in Montreal. Planned openings for this year are two stores in London, at sites yet to be finalised, three in Germany — in Dusseldorf, Frankfurt and Berlin — and additional stores in New York, LA and Montreal.
David Butler explains: "Until now wholesale has been the driving force for American Apparel in the US. However, there is a new global initiative which will combine wholesale with flagship retail openings in key locations. Expansion in New York alone is expected to reach 10 stores over the next 18 months.
"The retail expansion will go hand-in-hand with efforts to grow wholesale on a global basis. The key emphasis on wholesale is for private label print, so as not to conflict with the American Apparel stores selling the plain products."
"We're taking on Gap," grins Charney. "I think we're appealing to the consumers that they'd like to have but don't. There's a new, sexy and intelligent youth market now."
However, one UK casualwear retailer believes that the stores are little more than a marketing tool. "The product's pretty plain, but there are screens playing a CNN interview with Charney on repeat. They are making more of a statement with the screens rather than a product."
But Charney, a self-confessed megalomaniac, has one main goal, to be "the best T-shirt maker in human history". He doesn't believe in diversifying the product too much, commenting: "I see pictures from the Third World and kids are starving, but they still seem to be wearing T-shirts. I've even seen a picture of Osama bin Laden in a T-shirt. And who isn't wearing underwear?" Who indeed?
Made in Downtown LA—Vertically Integrated Manufacturing