Bailey joined American Apparel in 2002 and quickly set out to retool the retailer's operations. His key innovation, borrowed from his years at Fruit of the Loom, was implementing a "team-based" manufacturing method that upped productivity and — he says — positions the company to successfully make it in America.
On an open factory floor with light streaming in from large windows, workers are divided into teams, with each responsible for sewing one style of clothing from start to finish.
A team, made up of 5 to 20 workers with their sewing machines pushed together, starts with fabric that has been cut on the fourth floor. The first person sews the sleeves. The next may attach a zipper. The items are passed among the team members, one after another.
At the end, there's a finished shirt or skirt that is inspected by a quality control worker and then boxed up and sent down a conveyor belt to the distribution warehouse next door.
American Apparel's skilled workforce can churn out 120,000 T-shirts in a day and quickly whip out new designs. Bailey said the fast turnaround from design to factory to store is a key advantage when jockeying for shoppers with competitors such as Forever 21 and H&M.
"I've had ideas on Monday and had them hanging in a storefront on Friday in Manhattan," Bailey said.
The company's products cost more than its fast-fashion rivals' — a simple cotton T-shirt can sell for $21 if it comes from American Apparel and as little as $8 if from Target. Bailey said superior fabrics and better designs justify the higher price tag.
In the factory, motivation is key: Employees are paid for each completed garment, at a "piece rate." Although everyone is guaranteed minimum wage — $8 an hour — factory workers typically earn $11 an hour, on average, and the fastest teams can earn $18. Supervisors clock their teams several times a week and devote time to training slow workers.
The company provides a welcoming workplace for its largely immigrant workforce. Banners such as "Legalize LA" hanging on its downtown factory building proclaim corporate support for immigration reform, and Charney has marched for workers' rights. Supervisors are generally bilingual.
There is a medical clinic staffed with a doctor and nurses. Factory employees also get subsidized meals and free massages (masseurs in light blue American Apparel tops are sprinkled through the factory).
"They're all here because they want to earn, and the more successful they are, the more successful the company is," Bailey said. "These people are professional apparel workers, and they are better and faster than training people in Honduras how to operate a $5,000 machine, who don't even know how to flush a toilet because they haven't seen one."
Besides paying higher wages, the company has faced other drawbacks of managing a U.S. workforce. Productivity slipped dramatically after the company was forced to dismiss 1,600 workers from its downtown factory after an immigration audit in 2009, Bailey said. The company had to hire and train thousands of new workers. It has tightened its hiring practices to ensure that all its employees are working legally.
Lopez, the team supervisor, jumped to American Apparel four years ago after toiling in other Los Angeles outfits, many with sweatshop conditions. She now earns $12 an hour.
"The pay is better here than at previous places I have worked," said Lopez, 43. "If you are a fast sewer, you can earn a good salary."
Oishang Mai, a 60-year-old who worked for decades as a mechanic at garment factories in Guangzhou, China, says conditions are better than busing tables at Chinese restaurants, the only job he could find after moving to the U.S. two years ago.
"I've been working at clothing factories for decades," Mai said. "I'm glad to have a job doing something I'm trained in."
In addition to the two large buildings downtown, the company owns four smaller manufacturing operations in Southern California. Fabric for the company's trademark cotton T-shirts, which come in 52 colors, is knit and dyed in those facilities before getting trucked downtown for sewing.
On a recent day, Bailey climbs into a company van and heads to the American Apparel factory in South Gate, where much of the company's denim is cut, sewn and dyed.
In a cavernous warehouse, about 300 workers churn out shorts, skirts and brightly colored skinny jeans. From washing machines the size of compact cars, workers pull out piles of jeans freshly dyed a deep forest green and shove them into equally giant dryers that can hold 200 pounds at once.
"At first we commissioned the dyeing" from nearby companies, Bailey said. "But we ended up chasing the product all over L.A. So we ended up buying this in 2008. It made sense to do it ourselves."