Clothing and accessories firm American Apparel is laying off about 500 of its workers in downtown Los Angeles, where the company has more than 4,000 employees.
The company has notified the workers to be laid off, said Nativo Lopez, a longtime activist who described himself as the unofficial adviser to the General Brotherhood of Workers of American Apparel.
The first notices of layoffs started on April 6, with CEO Paula Schneider sending out letters to employees, Lopez said.
The layoffs come as American Apparel, which just emerged from bankruptcy in February, is looking to implement an overhaul of its production process. The pending changes could include outsourcing a part of the company's production to another manufacturer within the United States, in addition to making fewer items per year to reduce inventory.
The items that could be outsourced are the ones that are more difficult to manufacture, such as jeans. Schneider, however, stressed that the pieces will be still be made in the United States, and that outsourcing will only cover a fraction of its products.
American Apparel was once known for its sexy advertising campaigns and its devotion to having its products made in the United States. However, since the firing of former CEO Dov Charney in 2014 amid sexual misconduct allegations, the company has been toning down its edgy billboards and rethinking its core principle of how and where it makes its products.
With the sexy campaigns and the devotion to United States manufacturing being siphoned out of the company, analysts believe that the layoffs are the first step of the company to leave Los Angeles for its manufacturing process.
It is only a matter of time before American Apparel decides to outsource all of its products, and that the company is only gradually making moves leading to the outsourcing to gauge the opinion of the public and to prevent any massive revolts from its workers, according to Greif & Co. CEO Lloyd Grief.
The employees that were laid off were given two months' pay as a severance package, along with an additional $800 if they waive the right to file claims against the company.
Boeing is another major American company that is struggling at the moment, with the airplane manufacturer said to be laying off as many as 8,000 workers in Washington.
