Ethics or Money: What is Most Important About a T-shirt?
An American Apparel t-shirt represents exactly what the company stands for. They are versatile, authentic, and “Made in the USA.” A t-shirt is cut, dyed, sewn, and printed all in the United States, in close proximity to consumers. Intrigued by American Apparel’s progressive business model, the consumers, typically middle to upper class young people, buy that t-shirt at the price necessary to make a profit for the company after paying extensive production costs in the United States. That ethically made t-shirt is a statement of progressive politics, ethical business, and a stance against neoliberal economics in our capitalist global market.
American Apparel Incorporated, a trendy, “all-American” clothing company founded on the principles of authenticity and the stereotypical American dream, has been in the public eye and a staple of young, urban, hipster culture, since its origin in the late 90’s. The company consistently prides itself on being “sweatshop free” and “Made in USA.” It is the consumers themselves who are responsible for keeping this company accountable for its core beliefs, despite gaining extreme popularity and economic power over the last decade. The authenticity of American Apparel Inc.’s business model is exemplified in the company’s manufacturing plants, conditions for and impacts on its employees, and its role in a neoliberal apparel industry, a light will be shed on the authenticity of American Apparel’s business practices. The core beliefs of the company, its role in the economy, and consumer behavior are unfortunately linked to the reason they are now, in 2017, bankrupt and have been purchased by Gildan Activewear, a larger parent company. A simple American Apparel t-shirt has a greater effect on the garment industry than the average consumer would assume.
Founded in 1998 in Los Angeles by Dov Chaney, American Apparel Inc. opened its first retail store in 2003. Since 2005, the company has expanded to have locations in several countries, selling American-made clothing to millions of people and promoting its vertically integrated business model internationally. According to its public website as well as its 2010 10-K Form from the United States Securities and Exchange Commission, American Apparel Inc. conducts all manufacturing operations from its facilities in downtown Los Angeles, California. It creates fashion for men, women and children. It also engages in wholesale t-shirt retail to other distributors.
American Apparel practices vertical integration or “the business strategy of expanding business into different steps on the same production path” (Investopedia.com). American Apparel “designs, manufactures, sells to other retailers and sells directly to customers” (Stoel). Vertical integration centers manufacturing in the United States, shortening the distance between executives, manufacturers, distributors, retailers, and consumers. This cuts costs, reduces unethical business operations for garment workers, and creates jobs for Americans. This has helped the company gain popularity among consumers attracted to the ethical beliefs for many years. All of the cutting, sewing, warehousing, and distributing operations necessary to create the company’s signature t-shirt, as well as corporate offices are located in several California locations. As a result of the in-sourcing of jobs to locations within close proximity, the company improved efficiency, decreased transportation expenses, and reduced its carbon footprint. The centralization of the different functions of this company allows for reduced travel time for its products and in turn reduces the detrimental impact large-scale transportation can have on the environment. According to wedreambusiness.org, a concise gallery of business models, the company also has worked with many NGO’s in the Los Angeles area such as Trash for Teaching, which uses excess materials from American Apparel to teach children in LA schools about sustainability while creating crafts from the scraps. Excess material is also recycled as yarn for new garments. The company also is involved in political activism by using its advertising and clothes to highlight important issues such as immigration reform and gay rights (Hou Jie, Acquarelli 10/10/2012)
Along with the positive environmental and social effects, vertical integration also creates a better workplace atmosphere and higher wages for the employees at all levels, something that outsourcing jobs tends to neglect. At American Apparel Inc., garment employees are paid almost 50% more than competitors in international garment manufacturing plants, many tending to be sweatshops. Because of this, employees can also take advantage of more benefits and are protected from exploitation. According to LA Times, in a report on the bankruptcy and purchase of American Apparel Inc. this past year, “a garment employee working a 40-hour week — at California’s minimum wage of $9 an hour — will earn $1,440 a month. In comparison, monthly minimum wages for apparel workers are $68 in Bangladesh, $90 in Vietnam and $127 in Mexico, according to the International Labor Organization. It is $156 in China, where wages have climbed in recent years” (Li). The governments of these countries often turn their backs on the horrible working conditions and unfair wages for their employees to continue to have business relationships with American corporations. These large corporations outsource to obtain cheap labor and flexibility to lower retail prices of their products, something American Apparel does not have the luxury of doing. Low retail prices and access to cheap labor come at a high cost for many lower-class individuals in developing countries. Successful American executives take advantage of this to stay competitive among other American businesses. This class conflict is rampant in developing countries and often determines the fate of many impoverished people, particularly young women, forcing them to work in sweatshops, as this is often one of the only options for them to acquire any income. Despite the popularity of American Apparel’s “sweatshop free” label, the harsh competition with brands that outsource manufacturing operations overseas to countries with fewer rights and regulations for laborers and lower minimum wage requirements has destroyed the company’s ability to compete.
Outside the United States, corporations can find “rock-bottom labor rates” and extremely scarce regulation laws, making it easier to outsource production and then turn around and make a large profit from American consumers, according to research done by Lisa Rowan of Georgetown University. This has created a huge problem for American Apparel. It cannot simultaneously generate enough profit from ethically conscious consumers and keep up with high production costs under United States regulation. The profits will not surpass those companies that outsource their manufacturing operations. It is thought that if it begins to outsource, American Apparel will in turn lose popularity amongst its target consumers who are drawn to the “sweatshop free” and “Made in USA” values that differentiate American Apparel from other apparel manufacturers. The company would have to compromise its ethics to the capitalistic business world if it wanted to survive the industry, something could not do. This competition ultimately ended in its bankruptcy and purchase by Gildan Activewear this past January.
Along with the increasingly higher costs on the manufacturing end, the company faced backlash from the risqué lifestyle of its CEO, Dov Chaney, and provocative promotional material. Chaney is known throughout the company for his outgoing personality, crude behavior, and encouragement of a “sexually free” atmosphere, which he states “fosters his company’s innovation” (Ordonez). Chaney has been sued several times for use of crude language and nudity in the work place. The company’s advertisements, often depicting men and women half naked, in sexually suggestive poses, have received criticism for promoting sexual attitudes to a family-centered market. Some have suggested that the advertising features “soft porn, due to the use of nudity and overly suggestive poses of the featured models” (Stoel). American Apparel sells clothes for men, women, and children, making the provocative advertising seemingly inappropriate for a sector of its target customers. The controversial criticism draws attention to the company, leads to a narrow consumer base, and ultimately has hurt its profits. The combination of the financial competition, provocative advertisements and risqué lifestyles of the company’s leaders drove its popularity down among the consumers holding the wealth able to keep the company afloat.
This struggle between financial stability and protection of ethical treatment of the labor force within companies is rooted in the popularity of neoliberal economics embedded in the apparel industry. Tim Bartley for Working USA, discusses the “challenges of securing significant gains in an industry built on capital mobility, intense downward wage pressures, and political environments hostile to labor.” This is a problem exemplified by American Apparel and its struggle to stay successful in the competitive pool of capitalist corporations. American Apparel’s challenges over the last few years include a combination of sinking below many other companies in profits due to high production costs and the struggle to maintain a reputable corporate face, specifically related to CEO Dov Chaney’s controversial behavior. American Apparel, exemplifying moral and ethical business strategies, has led to its ultimate failure in the industry.
This double standard is a wake-up call to consumers. The entire apparel industry, like many other businesses, is built on the staunch principles of neoliberalist and capitalist economics. A successful business often comes at the expense of many human lives. Making money is held at a higher priority than making certain that human beings are respected and protected by their employers and their society. As consumers, this should absolutely concern us. American Apparel is going out of business because we do not realize the effect that our purchases have on the extensive commodity chains connected to getting that t-shirt in our closet. While purchasing an American Apparel t-shirt, we connect ourselves with a plethora of people. By purchasing clothing from many other corporations, the people we are connected to are often in extremely impoverished situations struggling to live every single day. Consumers and corporations alike care more about the money than keeping young men and women in school and out of dangerous sweatshops. It is our responsibility, as consumers, to recognize how little knowledge we have about the effects of our economy around the world. By purchasing a t-shirt from a company such as American Apparel, that is one less t-shirt needed to be made by a 14-year-old young girl in Bangladesh who works 15 to 20 hours a day for little to no payment. Each one of our actions as consumers creates a chain reaction that affects much more than we can fathom. More companies must be encouraged by and follow the business practices of American Apparel Inc., to change the apparel industry, to save millions of lives, and to place a higher value on human life than on something as simple and arbitrary as a t-shirt.