Arnold P. Cohen doesn't waste time.

In his first nine months as chairman and chief executive officer of London Fog Corp., the 38-year-old retailing executive has moved a coveted corporate headquarters from Eldersburg to Connecticut, shut down a pilot Mexican plant, acquired a West Coast outerwear company and closed three factories in Maryland and Virginia -- eliminating 575 jobs.

Now, he appears to be on the brink of ending more than 70 years of London Fog history as a major Maryland manufacturer.

After a three-month impasse with the Amalgamated Clothing and Textile Workers Union, Mr. Cohen said the company has withdrawn a proposal for the three remaining Maryland plants.

The fate of the plants -- and their 700 jobs -- is now being decided.

"We're evaluating as we speak," Mr. Cohen said Friday.

The union remains contentious.

"They are going to have to make that decision, and the union is not going to take the blame," said Carmen S. Papale, international vice president and the top Maryland official for the ACTWU.

The situation has attracted the avid attention of Gov. William Donald Schaefer, who has met with both sides, urging that an agreement be reached to preserve the remaining jobs and one of Maryland's most famous trademarks. Founded in Baltimore in 1922, the company also employs another 650 people at its distribution center and administrative offices in Eldersburg.

The governor stands ready to intervene, according to Mark L. Wasserman, secretary of the Department of Economic and Employment Development. "If both parties are willing, we have signaled to both that the governor would like to be a part of a last-ditch effort to stave off the unthinkable," Mr. Wasserman said.

To both sides, the issues appear deceptively simple.

For Mr. Cohen, it's the bottom line. It costs $18 to $20 more to produce a coat in its Maryland factories than it does overseas, he said. That adds up to millions a year in lost profits.

Mr. Cohen said his plan was a way to reduce that gap by broadening the product line made here and increasing output, thus cutting the cost per unit.

"Our intent was to change the way these factories produced and be able to come back and look everybody in the eye . . . and say, 'Here's what we've done.' "

But Mr. Papale asserted that Mr. Cohen's objective is, and has been from Day 1, to close the plants and make the union a scapegoat.

"They have to have somebody to blame for what they are going to do," Mr. Papale said.

Complicating the conflict are the bitter relations between the two men, who have never met. The company wanted its proposal put to a vote; Mr. Papale refused. Mr. Cohen, furious, said Mr. Papale has called him a liar.

"I wouldn't meet with him today. I wouldn't meet with him tomorrow. No interest," Mr. Cohen said.

Caught in the middle are the 700 workers whose $7.60-an-hour jobs are threatened.

"They are putting everybody out of work . . . because two people can't come to an agreement," said Betty Buchanan, a seamstress at the company's plant on Carlins Park Drive in Baltimore. "That's ridiculous."

"If my job is in jeopardy, sure, I want to vote on whether I'm going to work or not."

The origin of the conflict dates to last fall when Merrill Lynch Capital Partners, which owns most of London Fog, tapped Mr. Cohen, the former president and chief operating officer of J. Crew Group Inc., to revitalize and expand the company. His goal: to make London Fog the nation's foremost rainwear and outerwear maker.

"I'm not here to turn around the company," said Mr. Cohen, who holds what he described as a "meaningful" equity stake in London Fog. "I'm here for enhancement."

The vulnerability of the domestic plants is evident in the numbers. Although famous for its raincoats, the company's top-of-the-line London Fog raincoats -- the ones made here -- account for only about 10 percent of annual sales, which reached $316.6 million for the year ended Feb. 28, 1993. (The company would not disclose figures for its last fiscal year.)

Shift in demand

And demand for these coats has fallen dramatically; sales have dropped by about two-thirds, from 1.3 million coats in 1980 to 450,000 now, Mr. Cohen said.

"There has been a real shift in consumer purchasing," he said.

Ninety percent of the company's sales come from other products -- jackets, knit shirts, sweaters, woven shirts, knitwear as well as cheaper raincoats sold under the Towne brand -- manufactured overseas by factories under contract to London Fog. London Fog closed the only foreign factory it owned -- in Mexico -- last February after about 9 months in operation.

London Fog remains a dominant force in the raincoat market. In department stores, the company's products account for 80 percent of men's raincoat sales and 60 percent of women's.

And department stores account for the majority of raincoat sales in the country, Mr. Cohen said.

Overall, the company is in good financial shape, particularly after its merger earlier this year with Pacific Trails Inc. of Seattle, which involved no debt, Mr. Cohen said.

A recent refinancing cut the interest rate on the debt to finance a 1988 leveraged buyout by more than 25 percent, Mr. Cohen said, and the company's earnings before interest and taxes are about $30 million a year.

Mr. Cohen expects sales this year to be around $500 million, and he wants that to grow to $700 million by 1997.

Mr. Cohen said that there were already plans in place to close the domestic plants when he was hired. It was he, he said, who persuaded Merrill Lynch to give him 90 days to try to save them.

"I wanted to prove that I could make those factories work," he said.

The company came up with a proposal that called for a wage cut of $1.60 an hour, shutting down a 70-person factory in Baltimore, and reducing the work force at plants in Boonsboro, in Washington County, and Portsmouth, Va. -- all without any guarantees that the plants wouldn't be shut anyway.

But the union points to the initial meeting on that proposal as evidence that the company planned to close the factories all along. During the Nov. 18 session, Mr. Papale got a call from

union officials at London Fog's Portsmouth plant, saying microphones were being set up to announce the plant would be shut down in two months.

After confirming the shutdown notice was being given, Mr. Papale said the union officials were too upset to continue and let their lawyers finish the session.

Edward L. Frey, executive vice president of operations for London Fog, who was at the meeting, said the company issued the notice to comply with a law requiring it to give two months' notice. But he denied that a decision to close the plant had already been made.

"But we also had, we believed, a way of keeping the plants open," he said.

Yet, Mr. Frey concedes the way the meeting was handled was a misstep for the company.

"I would say in retrospect, I would have done it differently, yes," he said.

Even though it meant the certain closing of the plants in Portsmouth and Boonsboro, the union membership overwhelming rejected the proposal in a December vote. The company then closed the plants, along with the Baltimore operation, in late January, eliminating 575 jobs.

The company came back to the union in March with another proposal for the three remaining plants -- in the Park Circle Enterprise Zone in northwest Baltimore, in Hancock and Williamsport. Like the first offer, the threat of a shutdown hung over the negotiations. The Baltimore and Hancock plants each have about 300 workers and Williamsport 100.

This time no wage concessions were sought, and the company was offering a guarantee of 70 percent of normal work hours through October 1995.

In exchange it wanted to be able to make its Towne brand of products, which have always been made overseas, in the Maryland factories and to be able to try a new team approach, on a voluntary basis.

Mr. Cohen said he also was working on deals with an unnamed department store chain and catalog companies like J. Crew and Land's End to buy products to be made in the Maryland plants.

Company's demands

The company also demanded that the union drop a pending arbitration over the importing of raincoats. The union contends that a contract provision limiting imports to 500,000 a year is being violated. The company maintains that the clause refers only to its London Fog brand of raincoats, which are not imported.

In total, the company spent about $250,000 during three months to develop the proposal, which included consultant fees, trips to the Far East to study manufacturing methods and making sample products.

"It's a lot of money to spend if you just want to close a factory and you have the power to do it," Mr. Cohen said.

Mr. Papale said the union had been willing to drop the arbitration if the work guarantee was extended to three years. Or, he said, the union was willing to put the arbitration on hold until the end of the contract, when it could be reactivated if the two sides haven't resolved their differences.

Both of these options were rejected by Mr. Cohen, who said the company already stands to forego $7 million to $8 million in profits by keeping the plants open through October 1995.

"You're asking me to give up my fiscal responsibility and sensitivity and commit not to waste $7 million or $8 million, but you want me to commit to waste at least $21 million," Mr. Cohen said. "Come on, if I ever did that, somebody should take me out and shoot me."

Mr. Papale, however, defended the union position.

"What happens in October 1995 and they say, 'You did a great job, see you later,' " Mr. Papale said. "I'm looking for job security of some kind for our people and just taking it to the end [of the contract] is just not going to make it."

"He's offended," Mr. Papale said. "He's already shut down three factories. I didn't. The proof is in the pudding."