American Apparel, special for its “made in US” tag, has filed for bankruptcy recently. Again, whether manufacturing in the US has truly benefited the company is brought up for discussion. Different from its competitors in teen clothing industry, American Apparel isn’t a trend follower under manufacturing globalization. My question is, will outsourcing be an effective strategy for the business to restart?
Admittedly, manufacturing in the US makes the brand stand out from the crowd and helps it form the core value of being socially conscious1. Promoting fair employment, the company is paying $30,000 for each worker annually instead of $600 (a Bangladeshi garment worker’s average earning). As well, “made in USA” marks the “guaranteed” quality of the product, which helps the company easily earn customers trust and loyalty.
However, most decisions made by young customers are based on the cost and style of the product. From my perspctive, basic styles at high costs only result in the loss of customers regardless of the social consciousness (rather hypocritical value) it’s promoting. Outsourcing, which leads to a big drop in manufacturing cost2, seems the optimal choice as to lower the selling price. It’s necessary for the company to find cost-saving materials and labours under such urgency.
How about AMERICAN Apparel?
Having a long-term debt of $234.9 million, the company can hardly keep the business going, and the liquidity necessary to sustain operations may evaporate in the next few months3. I believe it’s quite challenging for the company to boost sales in a short term due to factors such as the unpopular sexist brand image (overtly sexual ad) and intense rivalry (competitors including H&M, Zara, etc.) the company is facing. Cooperating with oversea manufacturing sectors should be regarded as one of the most significant opportunities for the company, which can largely reduce the variable costs and thus increase the profits.
Works Cited
If a company wants to lower labour costs, scale fast and be more competitive, outsourcing is a good choice.
It is evident that outsourcing may provide a temporary solution for American Apparel’s financial struggles, but it is not a long-term solution. While outsourcing can reduce production costs, it comes at the expense of American jobs and may compromise the brand’s commitment to ethical manufacturing. To truly revive American Apparel, the company needs to focus on innovation, streamlining operations, and strengthening its domestic workforce.
I completely understand the dilemma American Apparel faces. While their “made in US” tag has undoubtedly garnered them a loyal customer base, I believe that outsourcing could be a potential game-changer for the struggling company. As someone who has experienced the lure of affordable and trendy fashion, I know firsthand that cost and style often drive purchasing decisions among young consumers. By embracing outsourcing, American Apparel could significantly reduce manufacturing costs, making their products more accessible and appealing to a broader audience, ultimately revitalizing their business in the process.
I completely understand the dilemma American Apparel faces. While their “made in US” tag and commitment to fair employment are commendable, the reality is that many consumers prioritize cost and style. I can relate to this because, as a budget-conscious shopper, I often find it difficult to justify paying high prices for basic styles. Given their financial challenges and fierce competition, outsourcing seems like a viable option for American Apparel to lower costs and regain profitability, even though it may compromise their socially conscious image.
I remember shopping at American Apparel during its prime, valuing its commitment to local manufacturing. Yet, as the article suggests, modern consumers weigh cost and style heavily. It’s a challenging dilemma: stay true to core values or adapt to market demands.
As a reader, I find myself torn between the brand’s admirable commitment to fair employment and the harsh reality of a staggering $234.9 million debt. The vivid portrayal of American Apparel’s struggles, coupled with the suggestion of outsourcing as a potential solution, leaves me pondering the delicate balance between ethical considerations and business survival in a competitive market.
The author presents a compelling argument about the dilemma American Apparel faces with its “made in US” identity. While the brand’s commitment to fair employment and quality is admirable, the harsh reality of a $234.9 million debt and fierce competition raises doubts about its sustainability. As a reader, I can’t help but wonder if outsourcing is indeed the necessary lifeline for American Apparel, sacrificing its unique selling proposition for a chance at survival in a cutthroat market. The insights into the company’s challenges are thought-provoking, leaving me with a sense of concern for the iconic brand’s future.
American Apparel faces in balancing its commitment to “made in US” production and the economic realities of the industry. The emphasis on social consciousness through fair employment practices and the quality associated with “made in USA” products is commendable but seems challenged by the harsh financial landscape. The mention of a staggering $234.9 million long-term debt paints a grim picture, and the suggestion of outsourcing as a potential solution raises interesting points about the delicate equilibrium between values and economic viability.
Outsourcing has the advantages of lower expenses, more profitability, and greater efficiency. You should also ask yourself if outsourcing makes sense.
Outsourcing could have been a game-changer for American Apparel. While the brand was built on ethical manufacturing, the high costs of domestic production put immense financial strain on the company. By outsourcing to countries like the Philippines, businesses can significantly reduce labor costs while still ensuring high-quality production and ethical labor practices. The Philippines, in particular, offers a skilled workforce, strong English proficiency, and a business friendly environment. Many global brands successfully outsource operations from manufacturing to customer support allowing them to stay competitive while maintaining profitability.