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'Made in Downtown L.A.'
American Apparel's progressive practices winning over customers
SignOn San Diego
Shannon McMahon
December 18, 2004

LOS ANGELES - Dov Charney breezed onto his factory floor in L.A.'s garment district, drinking in the atmosphere of one of America's most progressive T-shirt companies. He stripped off his shirt and plucked a jersey from the assembly line. One of the Latina seamstresses peeked up from her black fabric.

"Mira," she said, giggling at her half-naked boss, "es Dov." The factory workers whistled and cheered.

Yes, look at Dov, the wiry, eccentric CEO basking in his glory as the new darling of the apparel world.

In an industry notorious for its dirt-cheap wages and Third World work force, the Montreal native has created American Apparel: an L.A. company, with one San Diego outlet, that designs American-made casual wear without sweatshops or subcontractors.

"We are a rebel company," declares a banner in Spanish outside the company warehouse.

Founded in 1997, the company once labored beneath the radar and embraced the anonymity of its product, a well-made line of cotton knit T-shirts, now in 38 colors. After moving into retail last year, it found a niche by marketing itself as brand-free, sweatshop-free and made in America, or more specifically, "Made in Downtown L.A."

It had no public face - no image, not even a logo - until recently, when Charney filled the void with his own visage.

His flamboyant persona is on display at the outlet in Hillcrest, where window shoppers crowd around TV screens to hear Charney talk about his views of capitalism, his thoughts on livable wages, his take on fashion and commerce. Inside the shop, Charney's photographs fill the walls. His promotional ads echo his speech, poking a thumb in the eyes of his competition.

"We are challenging the corporate establishment and rejecting institutional norms while keeping our pledge to make the best T-shirts in the world," states the latest catalog.

As the business expands - it now offers sweat shirts and underwear and baby clothes - Charney wants to shift its marketing campaign in new directions. "We're trying to de-emphasize the whole sweatshop-free thing," he said.

But American Apparel's socially conscious vibe is still what first strikes a chord with consumers.

"I like the fact that the sign says, "Manufactured in L.A., Sweatshop-Free'," said Jackie Swe, as she flipped through piles of T-shirts recently in the Hillcrest store. "I love how the material is plain, but you can work with it ... it's fun to mix."

American Apparel's allure is built around distrust of corporate America, a theme that resonates especially with young people.

"It's about independence," said Doug Akin, senior director of business development at the consumer marketing firm Mr. Youth. "Being nondescript, logo-free, is letting the individual have ownership of the brand."

American Apparel has doubled its revenue every year since 2001, according to Charney. This year, he said, the company is poised to set sales at $160 million.

"It's a brilliant time to be positioning yourself in the socially conscious, American-made regard," said Rob Cannender, senior trends manager with Teenage Research Unlimited. "Rather than letting the fashion do the talking, they're letting the core belief system do the talking."

The company will open nine stores this month, bringing the total to 40. In San Diego, Charney said, he plans to open branches in Pacific Beach, La Jolla and downtown next year.

And the brandless mystique is spreading. In 2005, Charney said he plans to open between three and five shops each month.

"But how far can they can go? That's the big question," said Mitch Kates, a strategist with the retail consulting firm Kurt Salmon Associates. "Part of the formula is to not get too big and mass-oriented. For right now, they've got all the right pieces in place."

Analysts and company executives agree that American Apparel products, which run slightly higher than The Gap, will never show up on shelves at Wal-Mart or Target.

In his more bombastic moments, Charney dreams about opening 1,000 stores, "It's the can-do spirit." Moments later, he calms down, twiddles his lip balm and adds, "Well, let's say hundreds."

Charney is a study in excitability. He speaks quickly in a nasal voice, constantly gesturing or smoothing his '70s-style mustache and sideburns. Mid-conversation, he flips through photos of his hand-picked female models, reshuffles papers on his desk, or tugs at the drawstring on his pants. His remarks jump from baby boomers to former lovers to capitalism to cotton, peppered with allusions to pop culture.

"This isn't off-topic," he said during a digression on the anti-Communist movements of the '60s. "This is what American Apparel is all about."

Charney doesn't embrace a particular ideology. His bookshelves contain a volume on Ronald Reagan alongside a paperback for legalizing marijuana. There are posters of scantily clad women as well as the pope on the walls at headquarters.

For all his talent as a front man, Charney's secret weapon and the force behind American Apparel's expansion is his low-key, Kentucky-bred vice president, Marty Bailey.

Where Charney's view of the business encompasses busing employees to labor protests, Bailey just wants to sell T-shirts.

Bailey arrived in March 2002, and transitioned the company's production lines into "NASCAR pitstops," or team set-ups, that produce a T-shirt every 11 seconds. The former accounting major and Fruit of the Loom executive doesn't undress on the factory floor. His hands shake when he talks with reporters. And he admits feeling out of sorts in the company's creative department, which sits under the gaze of a Mao Tse-tung poster.

But he buys into Charney's philosophy that happy workers make happy shirts.

"If you've got a company where everybody wins, that company will be around for a while," he said.

All of American Apparel's clothes are made in a U.S. factory, something almost unheard of in the garment industry. Only 3.3 percent of apparel sold in the United States is made domestically, according to the American Apparel and Footwear Association. Equally unusual are the workers' wages. At American Apparel, the average factory worker earns $13 an hour.

The political correctness "helps us sell our product one time," said Bailey. "But what's going to help us sell it again is quality."