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Go Team
American Apparel, a sweatshop free company, strives to be the biggest apparel operation in human history, one t-shirt at a time. Holly Aguirre learns more
Manufacturer
June 2004

American Apparel, a sweatshop free company, strives to be the biggest apparel operation in human history, one t-shirt at a time. Holly Aguirre learns more

W e've all seen the images of children in cramped quarters, working their fingers to the bone for a dollar a day. Kathie Lee was raked over the coals when it was discovered that her line of clothing was produced in overseas sweatshops. A supplier of "sweatshop free" T-shirts and casual wear, American Apparel is the exception to the rule in today's fashion and textile industry. The garment company is the most passionate and innovative wholesale blank T-shirt manufacturer and distributor in the world. They are committed to leveraging art, design, and technology to produce garments of the highest quality, while pioneering industry standards of social responsibility in the workplace.

The company is steadfast about not out-sourcing its production, confining all aspects of manufacturing and management to a single building in downtown Los Angeles, somewhat ironically in the shadows of former sweatshops. All aspects of production, from knitting the cloth to designing the garments, take place in a seven-story pink warehouse adorned with a banner that reads, "American Apparel Is an Industrial Revolution."

The brainchild of Dov Charney, a Canadian expatriate, American Apparel's goals are simple: to be the biggest apparel manufacturer in the world, to do it by treating their workers fairly, and to do it in their own backyard.

They could save pennies by going offshore to manufacture the T-shirts, but the folks at American Apparel don't think it is worth it. Since American Apparel is a privately owned company, the manufacturer's priorities are different from the others. "While many companies are offshore chasing pennies, we're here at home making dollars. We're not about impressing stockholders," says Marty Bailey, vice president of operations.

Foregoing such concepts as Six Sigma, AA developed its own concept of team manufacturing. Factory workers are assembled according to their skill level in teams.

"You have to put people together that fit. We put a lot of effort to see if people are compatible skill-wise and the real key is to support it mechanically," explains Bailey. "In many cases modular manufacturing has failed miserably. We are winning with our teams."

Indeed. In 2003, American Apparel grossed $80 million, double its sales figures for 2002. Those numbers are expected to double again in 2004. Last November, the company opened its first three retail stores, two in New York City and one in Los Angeles; by the end of the year, there will be outposts in London, Frankfurt, and Berlin. Charney is currently opening retail locations across North American and Europe. He intends to open factories internationally, be it in China or England, but to always respect US minimum wage standards. In Thailand, Mexico, and China, American Apparel is dedicated to paying workers US-dollar minimum wage.

The Los Angeles-based piece workers currently average $12.50 an hour. The company currently boasts around 1,700 employees and shortly plans on hiring 200 more operators, expanding what is already the largest apparel manufacturing operation in the US. There is also a waiting list of about 1,000 applicants.

A real-time scoreboard is kept for each team so that workers are constantly aware of where they stand. Through scoreboard postings, each team can see their potential production for every hour of the day, based on their ability. Then their actual production is also posted and translated into real money. "Workers told us, If you want me to be part of a team, you've got to let me know what the score is.'"

Bailey further explains that their manufacturing floor is unique in that it is not about being multi-skilled. It all boils down to the elimination of wasted time. Each member on a team is an expert at one particular operation. The combination of their efforts leads to successful team manufacturing; the more skilled people become at a single operation, the greater their earning opportunity, as a team. Teams are balanced with people of similar skill levels, and some teams may earn more because they have the potential to. "We don't judge teams based on their production or earnings, nor do we compare teams with one another. We do judge teams based on how they perform against their own potential. This way we are able to evaluate effort more than output. With equal effort, I'm equally proud of each team. If they give their best, I am happy," Bailey further states.

The concept of team is working. American prides itself on having the highest paid sewing workers in the world. Not surprisingly, the turnover rate at American is extremely low. Workers get full medical benefits for about $8 a week. Tenured employees get paid time off. Other perks include free English classes, on-staff masseuses, and subsidized lunches.

"We want people to be treated excellently," says Bailey. "And when we get people, we don't lose them. Our retention is unsurpassed. The commitment needs to originate from us in order to assure that kind of loyalty from employees. It's just the right thing to do."

Besides treating workers fairly, according to Bailey, the secret to American Apparel's success is maintaining a business mode based on four elements. The first is quality control. "In order for us to be successful, we have to make a good product. Regardless of being socially responsible, if your product is no good, you can count out repeat business. A turd is still a turd no matter how you market or package it," he states.

Secondly, having a targeted market and staying clear of the mass-market retailers is key. "When you deal with a discount store they dictate what you must produce. Our customers are printers and artists with boutiques from Myrtle Beach to Melrose Ave. Screen printers love to print on our product because it is a better canvas, which brings us back to the emphasis on quality," says Bailey.

The third element is the commitment to quick turnaround. American Apparel's customers not only count on quality, but they depend on the company from a delivery standpoint as well. "When our clients decide they need a product, they need it now," says Bailey. Five million pieces of finished product are kept in stock along with 2,000 lots of finished fabric. If there is fabric, they can turn it into finished product right away. "If somebody calls and they want one piece or 1,000 pieces, we'll deliver when and however they want it. It's about serving the customer."

The last component is visibility, one of the reasons that the company has grown so steadily. "Anytime that you can have your arms around your business, you're in good shape. We are a domestic company and have visibility. We can make commitments to our customers that other people can't." Decisions are made and problems are solved on site. Red tape is minimal and lines of communication are always open. "If I need to talk to Jose in production, I go to the second floor, not to El Salvador," explains Bailey.

Their global philosophy and political mission to manufacture "sweatshop free" T-shirts, seeking profits through innovation not exploitation, remains the company's constant. By relentlessly pursuing efficiencies in management and production, AA aims to demonstrate that the use of exploitative labor tactics is not only unnecessary but also actually counterproductive.

In a response to the ever-polluted environment, AA has embarked on a program to recycle thousands of tons of fabric scraps annually. Electricity, dyes, fiber source, and transportation have a terrible impact on the environment and resources. They are committed to finding viable alternatives such as solar power, pesticide-free organic cotton, and an internal environmental audit of their daily operations.