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March 17, 2005
Last year, he was named America's "Entrepreneur of the Year", now Dov Charney wants his unusual company to have locations all over Europe. Meanwhile, American Apparel sells not only quality merchandise, but also a new concept of capitalism.
Sometimes, an idea appears to be crazy for no other reason than to call into question what others have practiced forever. Dov Charney, 36 years old, founder and mastermind of American Apparel, did not, until recently mind being called a "total nutcase". On first look, there were enough reasons for this impression. Case in point: his stores look rather like art galleries than places to do business. The prices: surprisingly moderate for this type of environment. American Apparel's T-shirts bear no logos or imprints; however, they make up for this with an extraordinary color palette and a multitude of styles.
Next to the cash register stands a TV set showing Dov Charney on the screen. He could easily be taken for a character from the legendary seventies TV series "Starsky & Hutch". In a casual conversational tone he explains that this store stands for a new generation of capitalism. The production of the shirts, sweatshirts , underwear and everything else besides T-shirts are guaranteed "sweatshop-free", which is not the norm in the textile industry — (the norm being deplorable working conditions in low-wage countries like Honduras or Bangladesh). Charney's garments are manufactured exclusively in the pleasant, loft-like premises of American Apparel's headquarters in Los Angeles. The cotton they use comes predominantly from pesticide-free plants, adds Charney, and this explains the subtle softness of the fabric and the perfect fit: By combing the raw material it is reduced to long, even threads. The yarn consists of thirty instead of the usual eighteen threads. Those threads are knitted especially tight. In other words, "American Made Clothing" which is a synonym for the company's name, offers quality merchandise, in the latest style, at affordable prices — and a clear conscience, with respect to working conditions, is thrown into the bargain.
During the last six months, this Californian knitwear manufacturer has opened stores in Berlin, Frankfurt and Dusseldorf. Hundreds more are to follow throughout Europe. American Apparel's sales have doubled four years in a row and their present goal is to reach $160 million in 2005. According to information disseminated by them, American Apparel is the largest T-shirt manufacturer in the United States. This is, last but not least, due to buyers like designer Donna Karan, who orders such quality merchandise in large quantities, then prints her own logo on it. According to Charney, the company's total T-shirt production has now reached one million pieces per week. The number of employees at American Apparel has risen steadily from three thousand in September of last year to four thousand in January, 2005.
Six years ago, Dov Charney founded his T-shirt factory on half the floor of an empty warehouse. Born into a family of intellectuals in Canada — the father is a famous architect, the mother a well-known painter — Dov Charney published a newspaper at age nine in which he denounced particular injustices. Later he smuggled T-shirts by Hanes on a large scale over the border into Canada. Hanes' T-shirts were very much en vogue in those days, but were unattainable in his homeland. From the beginning, he had a clear vision: he wanted to combine social consciousness with financial success. For Charney outsourcing is out of the question. Everything, from storage of the material to shipping the finished product, is handled all under one roof and by one management team. For some time, the company has occupied floor space of about 4,350 square meters, and just recently signed a contract to rent the building next door.
At the entrance gate of the factory visitors are greeted by a broadly smiling doorman in jeans and T-shirt. He is also in charge of the list of job applicants. Just this morning, more than twenty applicants have put their names of the list, which is now more than a thousand names long. The ancient elevator at American Apparel groans as it lifts itself upwards. The working atmosphere everywhere is very relaxed. There are large windows and seemingly endless expanses of space. Next to the staircase are several old-fashioned red telephones. The employees are allowed to make phone calls during breaks provided them during working hours. A number of mountain bikes are leaning against a coca-cola machine. When public transportation went on strike, the company purchased fifty bikes for substitute transportation. There are shower rooms, classrooms, massages and yoga classes. This working environment is the exact opposite of what constitutes the norm in this industry. Even the employer's contributions towards the well-being of its employees is far superior to the U.S. average. Health insurance is provided and the employee is responsible for only 20 percent of the premium. If an applicant has no bank account because he or she has not established credit, the company acts as a guarantor for him or her. One of the primary reasons for the company's success, however, is the outstanding teamwork of the workers who sew the garments. The composition of the nine member sewing crew is perfectly balanced and coordinated.
Workers are paid according to piecework and on average earn triple the U.S. minimum wage of $5.25 per hour. The majority of the unskilled workers represent fourteen nations, and hardly anyone counts English as their native tongue, but they realize that this job is their big opportunity in life. Their incentive to work long and hard is so prevalent that electricity has to be cut off during their lunch break, so that the workers must leave their machines and take the requisite time off. Ruben Eustaquio, 31, is a prime example of an employee contributing to the success of American Apparel. Eustaquio, a burly man, was jobless when he met Dov Charney. In the beginning he worked as a messenger, then he was given the responsibility to bring checks to the bank for deposit. Eventually, he advanced to become the head of the shipping department. Presently, Ruben has twenty seven people working under him, who make sure that each order, whether large-scale or individual client, will be shipped on the same day it is ordered. His boss suggested recently that he attend school to become a bookkeeper, and if he did so, American Apparel would pay for the tuition. "For the first time in my life, someone believes in me", he says. Before joining the company, he earned $6.- an hour for occasional jobs. Today he makes more than double that. "I was able to have a steady job, get married, have a beautiful little daughter and may even buy a house one day", he says. "I call this progress!"
In Dov Charney's office one wall is completely covered with thank-you notes. Even George W. and Laura Bush congratulated him personally, when in 2004 this unconventional businessman was named the American "Entrepreneur of the Year". The fact, that he has become someone known for his social consciousness, as well as a successful businessman, does not seem to faze him. Neither does the fact that the protests of the American feminists against the supposed sexist presentation of the female models shown on photos in his stores are getting increasingly louder. Charney sips on a cup of coffee and explains, how he envisions the future of American Apparel: "The fact that our production is sweatshop-free is now secondary in importance. We are already one step further. Our employees have become an important part of our success. American Apparel has brought a new awareness to the world of business", he observes. "We will build up a global enterprise, which will differ substantially from what we have seen so far." The thirty stores he opened last year are just the beginning. Besides expanding the business, he wants to dedicate his full attention to the unending possibilities of knitwear and enlarge the product palette: "After all, everyone should be wearing American Apparel; every day, even at night". He sounds very driven, this open-minded thinker from downtown Los Angeles, and also slightly obsessed. But that is in all probability the secret of his success.
Click here to read this article in German.
Made in Downtown LA—Vertically Integrated Manufacturing