If vertical integration is a good business platform and one that creates and keeps jobs in the US, why is it not used more?

Much of it is because the expertise of running one line of business does not apply well to a different line of business. Safeway isn’t good at making processed food, or growing food. They handle bulk purchase, distribution, warehousing and marketing and sales well. But they can’t manage making all the products they sell.

By the way, American Apparel is a lousy example, as they have dismal performance, barely staying out of bankruptcy, the stock is at $0.55, and the employees are treated poorly.

^ By the way, American Apparel is a lousy example, as they have dismal performance, barely staying out of bankruptcy, the stock is at $0.55, and the employees are treated poorly.
They may not be doing well now, many companies have had their bumps, Apple and Facebook included. Most of the financial woes came because they were trying (and now have succeeded for now) in ousting their founder and CEO. They did not open store in all the nations they have if they were always doing that poorly. I guess it depends on what publication one reads as to how well the workers felt they were treated.

Vertical integration can also lead to monopolies, and that is a dangerous thing as lack of competition means that the winner and sole provider can do whatever the hell they want and nobody can do anything about it.

Apple is a good example of vertical integration. They use Chinese kids to assemble their product, and make their products such that only Apple-approved techs can service them effectively. They do make a lot of their own stuff, and their recent lawsuit against Samsung has prompted Apple to look harder at making their own ARM chips for their iDevices instead of buying them from Samsung. but that will come at the cost of Samsung losing a bit of business, and probably more than a few jobs as a result.

So vertical integration isn’t used so much because it’s anti-Capitalism. It makes one entity do well at the cost of others while stifling competition (and therefore, innovation) even in a best-case scenario that isn’t rife with corruption and greed. When the best-case scenario for a system is comparable to a worst-case scenario for a true Free Market economy, you can see why it’s not used… much to the chagrin of those likely to emerge as THE winners in their respective fields, like Comcast.

It’s not always a good strategy. Apple made it work, as @jerv pointed out. But to be effective, the company has to be good at all three levels – production, distribution, and sales. And most companies are good at one (and maybe if they are lucky, two), but very seldom all three.

Even drug companies, who are very good at production and distribution, leave sales to other retailers.

So vertically integrated firms can be successful, but only if all the pieces are in place.

@Hypocrisy_Central American Apparel has been performing poorly for over 5 years, the highest stock price in five years was about $2.25. At its best in late 2007, it was still trading under $15 per share. Dov Charney was a lousy CEO.

@jerv Vertical integration can also lead to monopolies, and that is a dangerous thing as lack of competition means that the winner and sole provider can do whatever the hell they want and nobody can do anything about it.
How would that happen? If World Wide Widget company is producing something to cook food quicker, tastier and healthier and they own the factory that makes the electronics, a packaging company and a fabrication company, plus use their own trucks to move 90% of their product, how can they corner a monopoly unless they have a patent that assures no one can copy their technology, less it be so innovative no one else can figure it out? If Universal Widget company figures out what technique WWW Co. used and figured a way to produce a widget to do the same, even if they did not control all aspects of their manufacturing, but controlled making their own electronics and fabrication but farmed out sales, shipping, and packaging to another, how could they not compete with WWW Co.?

[…but that will come at the cost of Samsung losing a bit of business, and probably more than a few jobs as a result.
That is capitalism at it finest, isn’t it? When you have a big box with dozens upon dozens of outlets and superior buying power to the point they can buy widgets as X amount of dollars, but a smaller chain with only 6–7 outlets have to buy that same widget for $3.25 more, if the smaller chain cannot find ways to convince the shopper to buy the widget from them at the higher price, the big box will either knock them out of competition selling that widget, or knock that smaller chain out of business altogether; that is the free market.

You answered your own question there. Going back to Apple, they patented the black rectangle with rounded corners. They have plenty of other patents just as lame, and though some of their patents are later rejected, that comes only after a long and costly trial that most companies don’t have the money to win against a corporation that has more liquid assets than the US government.

Also, if you can undercut the competition on price by enough, you can let quality slide, especially after your competition winds up being starved into oblivion. Or you can go the Apple way and have profit margins that are far larger than industry average because your marketing is so good that you can make people ignore reality and make your product more desirable even though there is no objective way that your product is truly superior.

You also just discovered why Capitalism and Free Market are incompatible. The endgame of Capitalism in a society where money buys power is basically a state-run monopoly as those who make and distribute the products are the same people making the laws.

Ironically, the people who support that system are the same ones who decry Communism even though they are the same fucking thing, with the only difference being that corporate executives are not oath-bound to support/uphold/defend the Constitution, and they are only responsible to their shareholders rather than being accountable to society at large. Capitalism destroys the Free Market by eliminating choice, and sometimes even Democracy. If there were a referendum on the ballot and the only employer in town threatened to fire anyone who voted contrary to that employer’s wishes, how free is that election? Especially if that employer also has a big say in what the laws surrounding unemployment compensation are?