American Apparel, maker of hip clothing and accessories is laying off about 500 workers, a consultant of its union organizers said on Tuesday. The company has previously undergone bankruptcy reorganization.
The company has already notified around 500 employees out of the 4,300 workers who are employed in Southern California, according to Nativo Lopez, who considers himself an unofficial adviser to the General Brotherhood of Workers of American Apparel.
"The first notices of layoffs began last Wednesday," said Lopez.
The Los Angeles-based company became popular for its sexy advertisements and its commitment to American manufacturing. While undergoing bankruptcy negotiations, its officials tried to cut its growing debt.
Last January, a judge approved its restructuring program but several hedge fund investors took control of the company while bankruptcy proceedings were going on. These companies include Monarch Capital and Standard General which also added the needed capitalization to maintain the company's viability.
Previously American Apparel has already withdrawn some of its garment lines but revenues are still going down so it is now forced to cut back hundreds of its workers too.
In a letter to her employees last week, Paula Schneider, American Apparel's chief executive said that job cuts would be expected as part of the company's streamlining after its completion of the bankruptcy proceedings in January.
"We are announcing a redesign of our production process, and as a result we will need to reduce our workforce," said Schneider in her April 7 letter.
Some worker advocates have revealed that over 500 employees were already laid off starting Wednesday last week, but the company refused to comment.
According to Nativo Lopez, of the 500 employees laid off, 250 were from the company's downtown headquarters, about 150 from a site in Garden Grove and over 100 were from a factory in South Gate.
