One of American Apparel’s (APP) selling points has always been that its T-shirts and other clothes are actually made in America—in a seven-story, salmon-colored factory in downtown Los Angeles to be exact. There are a lot of hypersexualized ads, too, of course, which have received plenty of criticism. But the company’s commitment to manufacturing in the city and paying its workers something close to a living wage was hard to find fault with.
American Apparel founder Dov Charney was responsible for both the ads and the wages. So after he was pushed out by the board of directors, people rightly began to wonder if either would change. Ryan Holiday, the company’s director of marketing, had an answer to the first part: No. “I think that sexuality and evocative imagery, done authentically and honestly, has always been a critical part of the American Apparel aesthetic, and there would be no reason for us to abandon the brand that we’ve built and that our customers love,” he told Adweek.
Photograph by Ann Johansson/Corbis
The board of directors seemed to recognize that American Apparel couldn’t very well be made in China, or Bangladesh, and retain much credibility. But that wasn’t necessarily true of some bondholders and other potential investors. Now, according to the New York Times, Charney may have found a way to keep American Apparel clothing manufactured in in the U.S. The founder struck a deal with a hedge fund called Standard General last week to buy more shares in the company, and this week he handed over control of his 27 percent stake to the fund. With a 43 percent stake, Standard General is in a good position to negotiate with the board. And the hedge fund says it wants to keep the American Apparel factory open.
“We think it would be really foolish to try to move American Apparel operations overseas, because that’s the company’s identity,” David Glazek, a partner at Standard General, told the Times. “If you’re not made in America, you’re just another guy selling T-shirts, and that’s not a good position to be in.” Glazek also noted that it’s no longer a fight between Charney and the board over who should run American Apparel. It’s a fight between different investors over what American Apparel should be.