Gildan Acquires American Apparel

November 19, 2016 | By | 3 Replies More

gildan_logo_blueT-shirt and activewear maker Gildan offers $66M to buy American Apparel.

There’s tons of news about this acquisition, but here’s an article from Fast Company that covers the news pretty well.

An Inside Look at Gildan (link)

There are a couple of interesting things about this acquisition.

First, Gildan doesn’t want any of the Amercian Apparel physical retail stores. 

Assuming that is the case, it could open up opportunities for other retails to snap up that would-be prime real estate at a deep discount.

Second, Gildan seems more interested in the American Apparel factory assets.

In other words, Gildan is interested in manufacturing in the United States — and with the acquisition, will be doing so in Los Angeles, California.

There’s some speculation that Gildan is doing this as a result of new incoming President, Donald Trump, who has vowed to get rid of the NAFTA deal.

If that does happen, it’s going affect a lot of apparel brands that take advantage of the NAFTA agreement’s elimination of clothing export/import tariffs.

Meaning, brands manufacturing their apparel in Canada and Mexico, and exporting them to the United States are gonna pay more to get their garments into the United States, which increases their overall cost structure.

For some, that will result in either lower profits, or price increases.

So, if you’re buying your undershirts, underwear, socks or any other apparel from brands manufacturing in NAFTA countries, you might be paying a little more for your stuff if NAFTA disappears.

 

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Tug is the world's undershirt expert. He is also one of the most knowledgeable individuals on sweat management solutions, men's shapewear, grooming, and new fabric technologies. Got a question? Visit Tug's contact page and hit him up.

Comments (3)

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  1. Chad says:

    Interesting developments … we’ll have to see how this is all going to shake out!

  2. Demetri

    says:

    Great stuff as always

    I always liked some of the weight of the AA tees but some cuts are to youngish but I so need them for my designs.. but I think Gildan needs this style as I think they are still to boxy but price very well. Interesting about NAFTA.

    I have always questioned why so many clothing companies in LA? Why is that, we know cost of living is not low so why mfg there. Any insight on this?

    • Tug says:

      heya demetri,

      thanks for stopping by and sharing your thoughts!

      why los angeles?

      purely a guess, but i would suspect the following have an impact on why there is such a big apparel industry there:

      1. available lower-cost labor pool — not all parts of southern california are expensive to live in, and there is a large population of immigrants that have a history of being willing to work for lower wages. some undocumented workers as well (2.4 million unauthorized immigrants > source).

      2. skilled labor pool – these same people, who are willing to work for lower-wages also come from countries where apparel is a large part of the ecosystem. thus, these people learn the trade from a young age, and then come with skills in-hand.

      3. proximity to international container ports/terminals. the ports of los angeles & long beach are massive shipping ports, importing/exporting massive amounts of goods. they are also closer in proximity to china, india, etc (massive apparel manufacturing) than the east coast of the united states. shipping goods via truck throughout the country adds cost, so why not just setup shop close to a major port, and keep from having to pay that extra shipping cost?

      there is big apparel industry on the east coast of the united states, and texas, likely for similar reasons.

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