London Fog Corp., a Baltimore-born company that has made clothing in the city for more than 70 years, announced yesterday it will close its three Maryland plants, eliminating 700 jobs, including 300 in Baltimore.
The three factories, in Northwest Baltimore, Hancock and Williamsport, are London Fog's only U.S. manufacturing facilities. After they close, all the company's raincoats will be made overseas by contract workers.
Yesterday, company and union officials held out a very slim hope that the closing might be averted by talks scheduled for early August.
"From my perspective, I don't see how we can make it work. The hurdles are too high," said Arnold P. Cohen, London Fog's chairman and chief executive officer. "But nobody wants to let go until they are sure there is no other way."
Yesterday's announcement culminated a five-month labor struggle between the company, owned by Merrill Lynch Capital Partners, and the Amalgamated Clothing and Textile Workers Union, the union that represents the 700 workers. During that time Gov. William Donald Schaefer, Rep. Kweisi Mfume, a Baltimore Democrat, and Rep. Roscoe G. Bartlett, a Western Maryland Republican, intervened with no success.
Two weeks ago, Mr. Schaefer met with Mr. Cohen and appealed to him to find a way to keep the plants open, according to Mark L. Wasserman, secretary of the Department of Economic and Employment Development. A series of meetings between union and company officials were then held.
Mr. Wasserman also doubts the conflict can be resolved. "Frankly, it's a crying shame," he said.
The Baltimore plant, in the Park Circle Business Park, sews London Fog-brand coats, as does the factory in Hancock, which also has 300 workers. The Williamsport operation, with about 100 workers, cuts out the material to be sent to the other plants. Workers make a base rate of $7.60.
The 54,000-square-foot plant in Baltimore, which opened in May 1989, was built for London Fog by the quasi-public Baltimore Economic Development Corp. for $3.5 million. The building is leased to the company for $24,435 a month, according to Robert L. Hannon, executive vice president for the development agency's successor, the Baltimore Development Corp. Under the contract, the company cannot cancel the lease until May 1999, Mr. Hannon said.
Early this year, the company shut down another Northwest Baltimore plant, with 70 workers, along with factories in Boonsboro and Portsmouth, Va., which had a combined work force of 575.
Also this year, the company moved its corporate headquarters from Eldersburg to Connecticut, Mr. Cohen's home state.
After the plant closings, the only major remaining London Fog facility in Maryland will be its 650,000-square-foot Eldersburg operations and distribution center, which has about 640 workers.
The labor dispute originally centered on the company's proposal to make Towne coats -- which have been made overseas -- at the three plants. One of the company's conditions for bringing in the new production was for the union to drop an arbitration case involving import limits.
But on June 14, after the union refused to drop the arbitration without a three-year work guarantee, the company withdrew the proposal.
Negotiations have since expanded to include company requests for wage concessions and the elimination of seniority rights, according to Carmen S. Papale, international vice president and the top Maryland official for the clothing union.
The clothing union's national president, Jack Sheinkman, on Thursday requested another meeting with the company. "We will do anything we can do to resolve this situation," Mr. Sheinkman said.
But Mr. Papale was not optimistic about the meeting, which may be held in either Baltimore or New York on Aug. 9 or 10. "I don't know what they now want to do," he said. "He [Mr. Sheinkman] is trying to keep things alive."
"I'm only hopeful in the sense that we are talking," Mr. Papale said.
Mr. Cohen said the notice to close the plants was made because London Fog must make arrangements for overseas production of its spring line. "We've already ordered our initial spring deliveries," he said.
The first layoffs could begin within 60 days, the company said, and severance packages will be negotiated with the union.
The company got its name from Baltimore lawyer Israel Myers, who in 1931 took over the Depression-wracked Makover-Rhoten Co., a 20-year-old Baltimore-based manufacturer of men's coats.
One of his first moves was to rename the company Londontown -- the original name sounded too much like "rotten" clothing, Mr. Myers said.
With more Americans driving heated automobiles, Mr. Myers recognized the need for a lighter raincoat. He started working on the design in 1938 and, for the next 15 years, experimented with waterproof materials. Finally, in 1953, he perfected a coat with a new material, Dacron.
Mr. Myers' innovation revolutionized the raincoat industry. Soon Baltimore became the raincoat capital of the world, and the company boasted sales of $5 million a year by 1960.
The company's image was solidified in 1961, when it moved into an old sail-making plant at Clipper Mill. In February 1976, Interco, the St. Louis-based maker of Converse shoes and Ethan Allen furniture, bought Londontown for $44 million. By this time Londontown, which had expanded into men's and women's sportswear, reported annual sales of $75 million.
Threatened by a corporate raid in 1988, Interco sold the company to a group of 40 Londontown managers for $178 million.
The managers, including company President Mark H. Lieberman, insisted they wanted to keep the company in Maryland. But the $100 million in debt that funded the leveraged buyout quickly forced layoffs.
In 1993, Mr. Lieberman sold his interest and left the company.
The company's biggest stakeholder, Merrill Lynch Capital Partners, brought in Mr. Cohen from catalog clothing company J. Crew to lead the company, renamed London Fog Corp.