May 31, 2017
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Gildan's Garry Bell discusses American Apparel manufacturing plans

May 31, 2017

Gildan acquired American Apparel for $103 million in February, bringing an end to a long saga for the brand that has included two bankruptcies, CEO changes, overhauled marketing campaigns, and later, mass store closures.
The Canadian company, as of this month, moved one-third of American Apparel's manufacturing to Honduras and Nicaragua, marking as the first time the brand would produce its clothing outside of the US. 
Although Gildan owns factories in Central America, the company plans to maintain American Apparel’s ‘Made in USA’ moniker by continuing to manufacture products in the US.
Garry Bell, Gildan’s Vice President of Corporate Marketing and Communications, spoke with FashionNetwork.com to elaborate further on the company’s plans for American Apparel and the relaunch of the American Apparel website.

Foto: American Apparel

FashionNetwork.com: Can you provide us with an update on American Apparel?

Garry Bell, VP, Corporate Marketing and Communications, Gildan: 
As has been previously reported, our acquisition of the American Apparel brand and some manufacturing equipment, as part of their bankruptcy process, closed on Feb 10th, 2017. We have always communicated a clear synergy between their wholesale segment and our existing printwear business. In case you are unfamiliar with this segment, blank apparel is sold through distributors or directly to screen printers who service a variety of end uses including event merchandising (concerts, festivals), fundraising, corporate identity and promotions, tourism and souvenir stores and school/group events.

In this business the prime selling season starts in April/May, so given the date we took ownership of this brand and given that their bankruptcy meant an interruption of production, we quickly secured contract manufacturing in Southern California to continue to produce a Made in the USA Collection of their key styles.
FN: What about the recent news about American Apparel produced elsewhere?

GB: As we have begun engaging with their core customers and resellers of the brand, it is clear that there exists a loyal American Apparel customer who loves the fabrics, great styles and the distinct marketing but is looking for a better price to compete with similar products not manufactured in the USA. It is to service these customers that we are launching an incremental grouping of products that include US cotton and fibre spun into yarns in our US facilities and leverage our existing manufacturing operations outside the U.S. The same US cotton and fibres and US yarns will be in the existing collection of products that are Made in the USA. The strategy is quite simply to offer the best of both worlds to each of those core customers.
FN: American Apparel was always edgy and viewed as a disruptor in this category. Is that going to change?

We have a very good track record of acquiring companies and allowing their brands to maintain their uniqueness. This brand is no exception. We intend to invest in and drive efforts to return this brand to the leading position in this space, as innovators in fabrics, fashion styling and great colors. As such, we have decided to open a Los Angeles-based merchandising and marketing center, staffed with some former American Apparel personnel, and focused on keeping this brand stylistically relevant and fashion forward.
FN: Gildan is a very different brand. How does American Apparel fit within the company?
There are many similarities between what American Apparel built their reputation on and Gildan’s business model. From our founding 32 years ago, it has been our view that owning the factories where the products are made is the only way to truly make better quality, drive better manufacturing efficiencies and operate responsibly. We have taken that vision of 'Making Apparel Better' and built one of the world’s largest and most responsible apparel and sock manufacturing companies. We control almost every step in the process, from raw materials to finished products and currently employ more than 48,000 people in our facilities.

Close to 90% of our revenues are generated from products we manufacture in our own facilities and given our large purchases of US cotton and our US based yarn-spinning and other operations, a significant percentage of our cost base is U.S. generated. Gildan has invested in US manufacturing, with more than $400M USD spent building US-Based yarn spinning and sock manufacturing facilities. We currently employ in excess of 3,200 people in the US and remain one of the largest domestic consumers of US cotton, creating positive economic impacts for thousands of US farmers.
FN: What about the American Apparel brand for consumers?

GB: The retail stores and the B2C e-commerce site remained under control of the team managing the bankruptcy process until mid-May. We extended a limited license to this group for use of the brand as they completed their process. 

We are looking forward to relaunching the AmericanApparel.com website this summer and will continue to assess other opportunities for delivering the brand to consumers in the coming weeks. As we evaluate these opportunities, we understand the drivers of the success in this market will likely be the same as the printwear segment, namely a combination of great products, innovative fabrics, fashion-forward styling, distinct marketing and ethical manufacturing and ‘Made in the USA’ collections as a focus.

American Apparel former factory in Los Angeles

FN: This brand was known for its ‘Sweatshop Free’ slogan, how does that compare with Gildan’s position?

GB: This brand generated much attention to very important issues within the overall apparel space, creating conversations that have triggered consumers to question brands about the sources of their products. Gildan has always shared the vision that owning the factories where our products are made is simply the best way to make better apparel. Our vertical integration extends further than American Apparel’s, with almost complete ownership of every part of the manufacturing process, including US-based yarn spinning operations.

While possibly not as publicized as American Apparel’s tagline, Gildan’s corporate social responsibility programs, branded Genuine Responsibility, are much broader reaching given the company’s larger scale and the geographical diversification of our business. 

FN: May we discuss how Gildan decided on Central America for manufacturing. Any particular reason in regards to the brand or delivery times?

GB: Gildan has owned and operated vertically integrated manufacturing facilities in Honduras since 2002. We currently operate three fabric facilities, two sock manufacturing facilities and several garment sewing facilities in Honduras and Nicaragua. This region was selected due to several factors including availability of natural resources, available land, skilled workers, proximity to the US market, duty-free access to several markets and relative economic and political stability.
FN: Will American Apparel products be produced at Gildan’s manufacturing facilities?

GB: As indicated we are a vertically integrated manufacturer including the yarn-spinning, textile (knitting, finishing and cutting) and final garment assembly operations. Almost all yarns used in both the Made in the USA collection and the incremental collection utilize US cotton and fibres spun into yarns in our US-based facilities. In the incremental collection of more price-centric products the fabrics will be knit, dyed, finished and cut and sewn in our Central American company-owned facilities. This collection will offer consumers a lower-priced option, ethically and sustainably made in Gildan’s company-owned facilities.
FN: Will manufacturing in Central America mean cheaper prices at retail?

GB: While we are still working out the specific details of this collection we anticipate the prices to consumers would be lower in comparison to the Made in the USA collection.
FN: How will this change affect American Apparel in terms of communications and advertising? 

GB: The core promise of American Apparel has always been to deliver amazing fashion basic styles that were manufactured ethically and responsibly. The belief was that workers were paid a fair wage, provided progressive benefits and treated with respect and dignity. None of that will change with the new American Apparel, as it is now supported by one of the world’s largest apparel manufacturers with a strong history of leading responsible and sustainable practices, encompassed within our Genuine Responsibility CSR programs.

In terms of advertising and communication, you should expect the brand to continue to maintain a strong creative direction with authentic, fashion driven content that highlights the ongoing commitments to operating responsibly and sustainably
FN: Can you elaborate more on the Southern California contract and the merchandising and marketing center?

GB: We do not divulge information about suppliers and contractors, for security and confidentiality reasons, but it remains that the facilities have undergone strict audits for labor, environmental and security compliance prior to commencing producing products for us. The merchandising and marketing center is being staffed as we speak and will be located in Anaheim where we already had offices from a previous acquisition of Alstyle Apparel LLC.
FN: Finally, can you share more about Gildan’s vision for American Apparel? 

GB: We believe this iconic brand is a great addition to our portfolio of brands, rounding out our offering in the premium fashion segment of the market. We look forward to leveraging our operational and manufacturing expertise and global scale to raise the brand to new heights globally. We know this brand will do very well within our printwear business, expanding its distribution around the globe. We also know that there is an important opportunity with consumers to be explored and we look forward to relaunching the e-commerce B2C website in mid-summer 2017.

We look forward to investing in this brand to reinvigorate the parts of this brand’s history that made its customers fall in love with the brand, namely fabric innovations, great designs and silhouettes, creative marketing and an unwavering commitment to ethical and responsible manufacturing.

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