American Apparel slashes jobs

American Apparel is laying off workers and could move some manufacturing to another source as the company looks to retool following its emergence from bankruptcy.

Roughly 500 of its 4,600 workers in Southern California have been laid off so far, according to the Los Angeles Times.

New CEO Paula Schneider told employees in a letter that production is being scaled back to help reduce unsold inventory and hinted that some manufacturing could soon be outsourced to a third party.

The garments "will still be American-made," Schneider said.

While only more complicated pieces such as jeans may be relocated, the initiative is seen as the first sign that American Apparel will likely relocate all its manufacturing to either another part of the United States or eventually, overseas.

It's a huge departure from the brand's foundation, built on a made-in-America ethos that helped revive the apparel industry in downtown Los Angeles.

But American Apparel has struggled financially, and after ousting founder and CEO Dov Charney, the company filed for Chapter 11 bankruptcy protection in October and emerged in February.

After failing to regain control of the company, Charney announced he was forming a new business to take on American Apparel. It will be nearly identical to the one he lost, providing apparel basics made in Los Angeles, this time in South Central.

For more:
- see this Los Angeles Times story

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