The "American Apparel" Company, which is located in Los Angeles, California, has been on the verge of shutting its doors for about 3 years and even the filing of chapter 11 bankruptcy on Monday of this week, might not be able to save it.
Under continuous pressure from lenders, the Chief Executive of American Apparel, Paula Schneider, says that she has no plans to move manufacturing operations out of Los Angeles to a foreign country. She claims that the restructuring of American Apparel will allow the company to continue operations in the United States.
Chief Executive, Lloyd Greif, of the banking firm, Greif & Company, states that "there is too much emphasis placed on having things made in America". "The company needs to move if they want to survive".
American Apparel employs 4,000 sewing and manufacturing workers in Southern California with the labor costs being dramatically higher than those in other countries.
The minimum wage of $ 9 dollars an hour in California allows a worker to earn $ 1,440.00 a month. In contrast, the minimum monthly wage earned in other countries is as follows:
Bangladesh - $ 68.00 / month
Vietnam - $ 90.00 / month
Mexico - $ 127.00 / month
China - $ 156.00 / month
The minimum wage at American Apparel was $ 12.00 per hour but due to a slow down in production due to lack of sales volume, the workers now make $ 9.00 and hour.
The bankruptcy will wipe away most of American Apparel's debt however, many lenders feel that the business model makes no sense. Josh Arnold, an equities Analysts and contributor to the financial site "Seeking Alpha", feels that by manufacturing in America, "the company is spending way too much money".
When the lenders start discussing a business in this manner it appears to be extremely hard for American Apparel to recover, but isn't this the results of an even greater systemic problem in the United States?
As consumers, we all want the best product for the lowest price and in today's global economy, this can only be achieved by purchasing goods and services that are not made in America. The government could place an import tax on many of these items as they land in this country but many politicians are against this and so will the American public.
On the other hand, sentiment might be changing since our last recession because so many people lost their jobs and much more.
The younger, more liberal generation, labeled "Millennials", prefer to purchase products made in factories with good working conditions.
This is one of those "catch 22 and damned if you do and damned if you don't" moments in our society where as Americans, we are faced with either to shit or get off the pot.
But, if Americans made the wages to make the products, they wouldn't mind paying a little bit more for them. This was the GM and Henry Ford model. There was a reason that Black people drove Cadillac's. As they migrated north to find work, they ended up in the automobile factories and while making very good wages for that time, they drove the cars that they made.
Sure, some would view the paying of higher wages to pay for more expensive products to be potentially inflationary but to Mad Man, this is something that Janet Yellen, Chairperson of the Federal Reserve System, should be able to determine.
One other alternative that has been mentioned to Ms. Schneider is to move the company to another part of the United States and Mad Man's question would be; "where are the places in this country where a worker could live, feed a family, send kids to school, on
$ 68.00 per month"?
Mad Man
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