Vertical integration is not only smart for our company, but for our community, our local and regional economy, our environment, and, in turn, our customers.
In the past decades, it has become the norm amongst the majority of US apparel companies to move their manufacturing operations abroad to third party vendors. American Apparel has kept it local. We are vertically integrated, and operate the largest apparel manufacturing facility in North America, right in Downtown LA. Though it's not the easy road to travel, this has always been our business model.
The Vertical Integration Paradigm What does it look like in action? Let's take our staple product, a t-shirt. The shirt starts as spools of yarn that are knit into rolls of fabric in one of our three knitting facilities in Southern California. These rolls are then dyed, either within the same facility, or in another one of our dye houses, at most 30 miles away. These lots of fabric are then cut, sewn and packed into a box under the same roof at one of our three factories in Southern California. At the same time these garments are being made, our creative department, including photographers, models, and graphic designers, is creating the marketing campaign for our brand without the help of an outside PR firm or celebrity spokespeople. Our shipping and retail departments handle the distribution of these products that we sell ourselves in more than 280 stores.
Not only is this an efficient method for our company, but also for the environment. Vertical integration by definition shrinks a company's carbon footprint, as the materials are not shipped back and forth internationally, across thousands of miles, in the production process. As you can imagine, most garments you buy are the sum of disparate entities - knitted in one place, dyed in another, sold wholesale somewhere else and finally cut and sewn in unethical, sweatshop conditions.
American Apparel, in contrast, is made in the USA by highly skilled workers we consider our friends and family.
When you buy a t-shirt from American Apparel, a smaller portion of the margins goes towards fuel, trans-ocean container ships, middlemen, boxes, pallets and entropy. Instead we're able to spend that money on paying living wages to our workers, higher-quality materials for our garments, and investing in the future of our company.
By centralizing our manufacturing operations, we're not only increasing efficiency, we're being held accountable and responsible for our actions, because our name is on the side of the building. We do our own knitting, dyeing, cutting and sewing in-house which means we can ensure adherence with US environmental regulations with regards to effluents, waste disposal, airborne particulate matter, and many others. Fashion labels who sub-contract their labor and sewing to dozens of shadowy third-world factories never even need to know the names of the environmental codes intended to keep run-off from polluting local drinking water.
Our average factory worker makes $12 to $14 dollars an hour -the highest pay worldwide for the manufacturing of apparel basics, and significantly more than California's minimum wage. For us, higher pay means heightened efficiency, a better and more consistent quality of work, stronger employee morale, and ultimately, retention rates of skilled operators. For them, higher pay is often a path to the American Dream for their families.
We don't have to do things this way, we just believe it's the right way.
We employ more than 5,000 people in our LA area manufacturing facilities, making us one of the largest apparel manufacturing employers in the country. This, in a state with unprecedented unemployment and an unprecedented budget deficit. American Apparel keeps Californians, keeps Americans, working, and in doing so contributes millions of dollars annually to the State and country's tax base, as well as the local economies in which our employees live.
Some of these initiatives may fall under the banner of "Sustainability." Others may be closer to "Corporate Responsibility." To us, these are the natural results of our business model, which encourages responsible and informed decisions, alongside innovation.
American Apparel's industrial revolution has been in progress for nearly 10 years now. And in our opinion, it's only the beginning.
