Southern California based retailer American Apparel has been confirmed to be sacking about 10 percent of its workers due to revamped production processes. The clothing manufacturer is surely making some moves as this could imply the outsource of the company’s clothing production to another company nationwide, as reported by LA Times on Tuesday.
Even though personnel cuts take a tough toll on the people who just lost their work, American Apparel has been struggling to thrive in today’s economy. Nonetheless, former workers for the retailer got a consolation gesture with two month’s pay, in addition to $800 more if they pledged not to file further claims against American Apparel.
Considering the clothing manufacturing company and renowned fashion brand filed for bankruptcy as recent as October 2015, layoffs following the bankruptcy weren’t hard to predict for some. The company’s Chief Executive Paula Schneider claimed they needed to reduce American Apparel’s workforce, yet there’re other measures being taken as well. In addition to reducing the numbers in its workers in Southern California from 4,300 to about 3,800, American Apparel will redesign its production process, according to Schneider.
Taking into account the renowned retailer manufacturer from Los Angeles just got afloat from bankruptcy two months ago, outsourcing the production of some clothing could help significantly. According to LA Times, the company claims that jeans’ manufacturing for example, could start getting outsourced across the U.S. It’s worth noticing that famed retailer American Apparel has long advertised its brand as ‘Made in the U.S.A.’, so it wouldn’t be wise for them to outsource aboard.
Necessary steps towards the company’s revamp
Included in the planned measures to be taken in order to keep the company afloat, the retailer said it would reduce the variety of clothing pieces made over the year. This would not only help them to clear their inventory, but also allowed the company to focus funds on the necessary cogs of the revamp.
The recent change if management – figurative speech – could provide a different outlook for this upcoming year regarding the company’s repositioning in the clothing marketplace. During American Apparel’s bankruptcy trial, there was a key factor in addition to the judge’s approval of the company’s restructuring program.
After the American retailer got out of ruin a couple months ago, the company’s management was taken over several hedge funds. Among those who added capital to American Apparel and seized control of the company while it was undergoing bankruptcy procedures, Standard General and Monarch Capital were included. Nevertheless, the company is set to make a comeback and their recent layoff of over 500 people proves it’s taking steps towards economic restitution.
Source: LA Times