American Apparel factory sold to Los Angeles textile company

Dive Brief:

Bankrupt retailer American Apparel has reached a preliminary agreement to sell its Garden Grove, CA knitting mill to Compton, CA-based textile company Broncs, Inc. for between $200,000 and $250,000, the Los Angeles Times reports.
Joel Chun, who owns Wescoast Textile, told the Los Angeles Times that he’s working closely with American Apparel's human resources department to preserve some 200 jobs at the knitting and dyeing facility. Chun has been in talks with the retailer about buying the mill for months, but its second bankruptcy in little over a year stalled those discussions, the report notes. Retail Dive’s requests for comment from American Apparel or Chun were not immediately returned.
With a final cash bid of approximately $88 million, Montreal-based Gildan Activewear Inc. on Tuesday emerged as the winner in the court-supervised auction to acquire the American Apparel brand and certain assets (but none of its 110 stores) as well as some manufacturing equipment, but not its factory leases. Gildan sources most of its textiles in overseas factories and some in lower-cost southern U.S. textile centers.

Dive Insight:

California textile manufacturing was once widespread statewide, but is now largely confined to the Los Angeles area, despite the high (and rising) costs there — especially when compared to other textile manufacturing areas in the U.S. and abroad. Yet the job numbers in the Golden State’s apparel factories and knitting mills have remained stable in recent years at about 105,000 workers, according to numbers from the California Employment Development Department cited by California Apparel News.

Over the years, American Apparel founder and former CEO Dov Charney was adamant about keeping the company's manufacturing efforts in Los Angeles, and many of its factory workers remained loyal to him throughout the public relations and legal tussles that ensued after the retailer ousted him in 2014. Paula Schneider, who took over from Charney as CEO, said she was also committed to American Apparel's made-in-USA ethos, but during her tenure the company reportedly mulled moving some operations to lower-cost textile hubs in Tennessee, North Carolina, or South Carolina.

For now, the health of textile manufacturing in L.A. will be dependent on clothing makers other than American Apparel — including Charney’s new endeavor. He told Retail Dive last summer that he is now working on establishing a new t-shirt company: According to updates to his Facebook page, that effort includes L.A.-area manufacturing and headquarters, and could launch next December.

Gildan anticipates completing the American Apparel acquisition by early February. Gildan, which runs factories in low-cost regions of Latin America, is unlikely to maintain the made-in-the-USA manufacturing ethos that both Charney and even Schneider were dedicated to preserving. The company said it will provide details on the projected financial contribution of the acquisition in its February earnings report.