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American Apparel Sent Layoff Notices To Over 3,300 Southern California Employees
American Apparel, headquartered in downtown Los Angeles, has informed over 3,300 employees in Southern California that their jobs might come to an end in early 2017. American Apparel issued potential layoff notices to employees at three separate production facilities, amounting to 2,166 employees in downtown Los Angeles, 959 employees in South Gate, and 221 employees in Garden Grove, the L.A. Times reports. These numbers can be seen in a WARN report among other potential layoffs from California employers. American Apparel's notice is dated November 7.
"WARN" stands for Worker Adjustment and Retraining Notification, and according to the State of California Employment Development Department:
Per Chapter 4, Part 4, Sections 1400-1408 of the Labor Code, WARN protects employees, their families, and communities by requiring that employers give a 60-day notice to the affected employees and both state and local representatives prior to a plant closing or mass layoff. Advance notice provides employees and their families time to transition and adjust to the prospective loss of employment, time to seek alternative jobs and, if necessary, time to obtain skills training or retraining to successfully compete in the job market.
As such, American Apparel says the notices are only a "legal precaution" and the layoffs have not been set in stone. American Apparel laid off 500 employees in Southern California earlier this year.
The layoffs may depend on a possible sale of American Apparel to Gildan Activewear. The Canadian manufacturer is looking to buy portions of American Apparel for $66 million. Because American Apparel filed for bankruptcy (twice), other buyers may also bid on the company or pieces of the company. For instance, Gildan is interested in the company's intellectual property rights, but not its retail stores. If no one buys the retail stores in the United States, they will liquidate and shut down, according to Consumerist. American Apparel stores outside of the U.S. will close after the holiday shopping season. The auction is scheduled to take place on December 21, the Winston-Salem Journal reports.
Craig Johnson, president of consumer research firm Customer Growth Partners, told the Times that a sale to any buyer is liable to result in layoffs in Southern California, as they may choose to move some of the production outside of the U.S. or to cheaper states than California. Gildan manufactures most of its products in Central America and the Caribbean.
However, Forbes reports that a crucial part of the deal was that Gildan would keep production in the United States and at least some of it in L.A. Gildan recently purchased Alstyle Apparel, which is also located in California.
Gildan VP of Corporate Communications Garry Bell told the Times, "We felt like 'made in America' is an inherent part of that brand. It is our intent to continue that focus."