Alstyle Apparel is planning to close its doors on its distribution center, which will result in 81 employees receiving a pink slip. All this became public information when the company filed paperwork with the state Employment Development Department.
Parent company Gildan Activewear Inc. (TSE:GIL) decided to close the warehouse distribution center as part of its business strategy. Gildan is a Canadian company based in Montreal and it purchased Alstyle Apparel back in 2016.
Why Did Gildan Decide to Close Its Doors and Lay Off All of the Staff?
Gildan is a company with a presence around the world, with more than 42,000 employees under all its brands. In 2017, Gildan purchased American Apparel, which has a warehouse location in Jurupa Valley, California, roughly 35 miles from the Alstyle warehouse.
Due to its large nature, Gildan is able to scale its business operations with other assets it currently holds. Now, the plan going forward is to move the operations of Alstyle Apparel into the American Apparel warehouse.
Since the overhead costs of the business warehouse are quite large—including maintenance costs, property taxes, and utility expenses—the move to the nearby distribution center makes sense from a purely business perspective. The decision of the warehouse closure comes down to making the business as efficient as possible. The management is looking to improve the top line revenue while trying to generate as high margins as possible by reducing business cost. This move will allow GIL to achieve its target numbers.
In regards to the employees, they have the opportunity of applying to the Jurupa Valley warehouse. Gildan is offering to pay for the employees’ moving cost if they choose to work at the new facility. For employees not planning on continuing their current employment status, they will be receiving a severance package.
This move shows that there is still a need for distribution centers. However, there is a larger problem here; this is a prime example of companies making business deals and reducing their overall business operations in the United States. This move is more concerning because a foreign company has come in and reduced its economic activity in the country. Now, the overhang is that there is always a possibility that the jobs move to a lower-wage country because of GIL’s large global presence.
“Alstyle Apparel Closing Distribution Center in Anaheim,” California Apparel News, December 28, 2017.
“Alstyle Apparel Closing Anaheim Distribution Center,” Promo Marketing Magazine, January 3, 2018.