Oct 28, 2008
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US garment maker takes stand on immigration

Oct 28, 2008

By Alexandria Sage

LOS ANGELES (Reuters) - Atop its pink factory in downtown Los Angeles, a sprawling banner declares American Apparel a "Compania Rebelde" (rebel company) and all over town, benches and billboards sponsored by the company shout "Legalize LA."

While immigration is almost a non-issue in the U.S. presidential campaign, American Apparel, the biggest garment manufacturer in the country, is doing its best to keep the debate alive, saying legalizing foreign workers is good for business.

Amid the whirr of sewing machines and clatter of cloth-laden carts, workers sport T-shirts that display their job functions in both Spanish and English, and telephone calls to family in Mexico are free.

Its campaign to legalize immigrants fits with a progressive image -- the 230,000 garments it churns out a day are all made by some 4,500 workers at its Los Angeles factory, and the company advertises its products as "sweatshop free."

"This is a company with equal opportunities for everyone and that fights for people's rights," said Eric Martinez, a stock room worker.

The debate over how a country built on immigration should manage its new immigrant workforce exploded into mass demonstrations in several major cities in 2006.

After policy overhaul efforts failed in Congress the following year, both presidential candidates have said they support humane reform, but have kept quiet on the subject in the months leading to the election on November 4.

Democrat Barack Obama wants a halt to raids that separate families and supports citizenship for immigrants who pay a fine, learn English, and wait their turn in line.

Republican John McCain, who once supported a temporary guest worker program for illegal immigrants, now emphasizes border security.

The dramatic tailspin of financial markets and the slowing U.S. economy has pushed the immigration issue even further into the background, a situation that American Apparel is trying to challenge.

"It is essential that we do not idly stand by in this next election," read a memo the company recently sent to its workers in a voter registration drive, urging them to remind both candidates to honour their promises for reform.

Chief Executive Dov Charney, a Canadian immigrant who displays his first alien resident card in the lunch room, did not respond to requests for an interview. But employees proudly cite his pro-immigrant policies -- $13 (8.3 pound) average hourly wages, $5 above California's minimum; stock in the company; subsidized health care, bus passes and meals; free English classes; and shuttering the factory during past protest marches.


"He's in love with the American dream," said Shawn Shahani, who works on the company's "Legalize LA" campaign.

American Apparel, hotel chain Marriott International and others that employ lower-skilled workers argue that federal regulations can ensnare employers who unwittingly find themselves with undocumented workers, despite their best attempts to comply with confusing and often contradictory rules.

Large workplace sweeps by U.S. immigration police have hit meat-processing and electronics plants across the country this year. American Apparel has never been raided, but it has had to let workers go whose papers are discovered to be false.

American Apparel diligently complies with the law, but identity documents can be easily forged, said Adrian Kowalewski, director of corporate finance. "Because the immigration system is broken, we're exposed," he said.

Mayors from New York's Michael Bloomberg to Los Angeles' Antonio Villaraigosa, who recently toured the American Apparel factory, have been vocal about the economic benefit of immigrant labour and reform without xenophobia.

Past reform efforts may have failed because business leaders did not join the debate, but now nurseries, fast-food outlets and construction firms are speaking out against what they deem restrictive, confusing laws and federal crackdowns on immigrant labour, said Tamar Jacoby, president of ImmigrationWorks USA, a national employer's coalition.

American Apparel is "arguably the most vocal" in that movement, Jacoby said, calling it "unusual and very courageous" for a large company to stick its neck out.


There are risks to speaking up in favour of immigrants.

Criticizing a raid cost a two-term mayor of a small Colorado town his job last fall; Bank of America was boycotted following reports it would issue credit cards to undocumented workers; and Absolut Vodka withdrew an ad campaign depicting the southwestern United States as part of Mexico after conservative blogs howled and called for boycotts.

But Charney's in-your-face stance is also savvy marketing that resonates with the company's edgy, urban fans.

Sales at its U.S. stores were up 24 percent in the third quarter, despite the financial crisis, but shares are down 66 percent this year, in line with many other small-cap stocks.

Some on Wall Street have questioned whether such fast sales growth is sustainable under a largely untested management team led by an unconventional CEO and have worried about the possibility of a raid.

But Tayler Lynn, owner of a Seattle T-shirt company visiting the factory's showroom, said she liked how the company mixes its simple, made-in-the USA apparel with a social message.

"They've been successful at making it cool to be socially aware. It's definitely a draw," Lynn said.

(Reporting by Alexandria Sage; Editing by Mary Milliken and Eddie Evans)

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