American Apparel, which has just dodged bankruptcy two months ago, announced that it plans to cut up to 450 factory jobs in downtown L.A., Garden Grove, and South Gate. The workers’ union broke the news this week.
The L.A.-based clothing manufacturer has already fired 80 factory workers in Garden Grove and said it would slash an extra 150 jobs next week. According to a recent report from the General Brotherhood of Workers of American Apparel, hundreds of sewers, supervisors, and auxiliary personnel are expected to lose their jobs.
But the former workers will receive compensation packages which depend on the years they worked with the company. The union said that the move happened when it was negotiating its position as the sole bargaining entity at the clothing retailer with the National Labor Relations Board.
According to a separate report, the company’s chief executive Paula Schneider told workers via a letter that the manufacturing unit in downtown would be downsized to a single floor. In the wake of the announcement, 100 of 2,600 employees lost their jobs.
Additionally, 75 workers had to be transferred from Hawthorne to Garden Grove after the company shut down a finishing and fabric dyeing unit.
American Apparel narrowly escaped Chapter 11 bankruptcy after a court agreed on a reorganization of the business that in the end transferred ownership of the business to the company’s main lenders. The retailer filed for bankruptcy seven months ago, after being struck with a slump in sales and internal fights stirred by its founder and ex-chief executive Dov Charney.
Ever since, the former CEO has made inroads to get back in the company. But as of recently he said that he would create a new business that will rival American Apparel.
He also said in an interview that his idea of building an American Apparel manufacturing plant in downtown LA has proven extremely beneficial to the district. Additionally, Charney unveiled his plans to base his new business in South Central L.A.
“Downtown L.A., I made it cool,”
he told journalists.
He added that the next site he plans to ‘make cool’ is the southern parts from the 10 freeway, but declined to provide more details on the new business. He only said that employees would no longer work on minimum wage while some of them may even have ownership of the company.
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