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Dov Charney Takes on the Garment Industry With His American ApparelL.A. Downtown News
October 7, 2002
By typical garment industry standards, American Apparel is thriving. Yet by those same standards, the company should have shuttered its factory years ago.
The Downtown-based T-shirt manufacturer depends on a commodity product for its livelihood, pays its employees an average of $10 per hour, and charges more than competitors using cheap foreign labor. But those competitors don't have self-proclaimed "T-shirt freak and hyper-capitalist" Dov Charney at their helm.
"We're sweatshop free and advancing a capitalist-socialist fusion," says Charney, "a new hyper-capitalist model that relentlessly pursues efficiencies in management and production." Relentless pursuit is Charney's mantra, and he extends the philosophy to providing a positive workplace for his employees.
With yoga workouts, massages, education, legal advice, on-site health support and more, American Apparel's list of benefits looks like something for the senior partners of a prestigious Downtown law firm. But this is the garment industry, and although the 1917 Southern Pacific Railroad building on Warehouse Street doesn't shine like a Bunker Hill glass tower, the company's employees work in a comfortable environment with good lighting and modern equipment.
Paying for such benefits is a challenge, but Charney says keeping all the work in-house helps. From his company's start, he has kept his hands on product design, business development, employee relations and marketing. He travels to 15 major industry trade shows per year.
The efforts have paid off. In less than eight years, the 33-year-old upstart and his partner, Sam Lim, have built American Apparel into a 200,000-square-foot manufacturing and distribution center, employing more than 1,000 workers [as of April 2004, it has 1,500 employees]. Charney says the company is on track to break $35 million in sales for 2002.
"Dov's success is unusual but it shouldn't be," says Jerry Sullivan, editor of the Los Angeles Garment and Citizen. "They knit the fabric and control every step of the process right through shipping. The 'made in America' message and the social conscience resonate with customers and address the issue of security for suppliers. The more you know that a supplier is observing laws properly and taking the social approach, the less you're worried about lawsuits."
Born in Canada, Charney wasn't concerned with labor issues when he discovered the garment business in his teens. He was just trying to make money hawking bootleg silkscreened T-shirts at rock concerts in Montreal. He moved to the U.S. in the early '90s to get more involved with the industry, settling in the garment district of Columbia, S.C. He laid the foundation for American Apparel in 1995, with his breakthrough product, the "Classic Girl" line of T-shirts. Targeting the silkscreened (or imprintable) T-shirt market, the Classic Girl was as radical as Charney's ideas about benefits for garment workers. Rather than boxy and loose, it was sexy and form fitting. The fabric was a fine, ribbed knit, in contrast to the stiff, heavy cotton in favor at the time.
Charney's ideas were initially dismissed by the T-shirt establishment. Major players like Fruit of the Loom and Haines dominated the $10 billion per year imprintable market, and paid little attention to the new kid's crazy scheme to pit clingy lightweight products against such stalwarts as the "Beefy Tee."
However, the buying populace took notice, and Classic Girl quickly became a hit. Hoping to capitalize on the momentum, Charney moved American Apparel to Downtown Los Angeles in 1998. As the company's business grew, so did Charney's commitment to hyper-capitalism as a new force for labor activism.
"Traveling 3,000 miles just to pay less for labor is bad capitalism and it's lazy business," explains Charney. "I'm advancing a new business model which says you don't manufacture garments or anything in an exploitive situation.
"The state of the U.S. and world apparel industry looks like apartheid," continues Charney. "The challenge to business leaders is to create business models that are efficient, exciting and not based on exploitation."
Not exploiting the environment is also an issue for Charney. American Apparel recently began recycling 30,000 pounds of cutting and fiber scraps per week that would otherwise be dumped in landfills. Pesticide use in cotton is another concern.
"I've found that domestic yarn is less exploitive of workers and the environment than foreign product," says Charney. "We're going to try to work with the farmers on how to use less pesticides. My yarn spinners in the Carolinas pay about $10 per hour to their workers so I'm trying to buy as much as I can from them, but I don't have the financial strength to buy from just one source."
American Apparel is privately funded, and finding capital remains a challenge.
Charney says commercial banks are a dead end, a situation that doesn't surprise Sullivan. "American Apparel appears risky because they produce a commodity domestically and face extraordinary pressures from overseas competitors," he says. "But they advertise fashion and quality control through a vertical production process. They knit the fabric and control every step of the process right through shipping. All of that takes them out of the category of commodity producer."
Keeping control provides Charney a major advantage: fast turnaround. The company produces orders quickly by organizing its workforce in modular manufacturing teams (where employees rotate positions within teams so the tasks don't become boring), rather than the traditional assembly line approach. "I can take a 25,000 piece order that I don't have in stock and manufacture it in a day-and-a-half," Charney explains. "Other manufacturers would take months."
Hoping to expand the company's market, Charney introduced a line of men's blank T-shirts, and a "Classic Baby" line of upscale infant/toddler blank T-shirts. His efforts have been noted outside Los Angeles; several years ago Charney and another young Downtown T-shirt maven, Rick Klotz of the company Freshjive, were the focus of a major New Yorker profile.
Despite the search for capital and competition from industry heavyweights ready to imitate his company's fashions, Charney says a relentless pursuit of new styles and better manufacturing practices will keep American Apparel growing. Besides, he adds, the firm's Downtown location is one of its strongest assets.
"I have a campaign ready that says, 'It's not only made in America, it's made in Downtown L.A.,'" Charney says with pride. "I love L.A. and the Latino-Asian-Anglo fusion. I think the suburban market across America is interested in Downtown's story and I'm trying play it up."
Who: American Apparel
Senior Partner: Dov Charney
Senior Partner: Sam Lim
Employees: 1,000 [1,500 as of April 2004]
Annual Sales: $35 million projected for 2002
Location: 747 Warehouse St.
Made in Downtown LA—Vertically Integrated Manufacturing