A clothing manufacturer that received more than $1 million in public subsidies to keep jobs in Baltimore said yesterday that it will close its two plants here and move the work elsewhere in the country. More than 300 workers could be laid off.
SourceOne Manufacturing Services LLC, a subsidiary of Pietrafesa Corp. of Liverpool, N.Y., said it will close the plants in February. The company said it has been too difficult to find and retain skilled labor in Baltimore. The plants have an annual employee turnover rate of 54 percent, the company said.
Pietrafesa, founded in 1922, manufactures clothing for various brands and many department stores' private-label lines, among them Brooks Brothers, Dillards, Jos. A. Bank, Nordstrom and Sam's Club.
The laid-off workers will be "eligible to apply" for jobs at the company's plant in Liverpool, the company said in announcing the decision.
"The decision to close the Baltimore facilities was obviously a difficult one due to its impact on our employees and their families," Linda N. Gay, SourceOne's president and chief operating officer, said in a statement. The company will provide employees with career counseling and assistance in finding other jobs, she said.
Officials at Pietrafesa and SourceOne did not return phone calls yesterday.
Pietrafesa purchased the plants, a cutting room on Brookhill Road in Northwest Baltimore and a sewing plant on North Avenue, from Jos. A. Bank Clothiers Inc. in April last year. At the time, Pietrafesa said it planned to modernize the sewing plant and add more workers to the 300 who worked there.
As part of SourceOne's deal to buy the plant, the state agreed to buy Jos. A. Bank's equipment and new equipment, and lease it to the company, said Robert Brennan, assistant secretary of financing programs at the state Department of Business and Economic Development. The state spent $540,000 to buy the used equipment and $210,000 on the new equipment. The lease agreement expires in February.
State 'stuck' with machines
"Pietrafesa can walk away from the equipment," Brennan said yesterday, adding that his agency had not been notified of the plant closings. "They can give notice and then we're stuck with a bunch of equipment."
He said he does not know how much Pietrafesa has paid in lease fees.
Baltimore Development Corp. gave the company two loans totaling $300,000 for worker training and general operations, Brennan said. Officials at the BDC could not be reached for comment.
Brennan said that because he had not talked with company officials about the closings, he had no information about SourceOne's trouble keeping workers.
"We need to follow up and understand the unique attributes of the job requirements and find out if the employees are leaving for better-paying jobs," he said.
Of the company's 300 employees in Baltimore, about 270 are represented by the Union of Nee- dletrades, Industrial and Textile Employees. The union had no comment yesterday on the closings.
Wages of the SourceOne workers were not available, but workers at Jos. A. Bank -- many of whom stayed on to work at SourceOne -- were making $8 to $12 an hour plus pension and health benefits in 1997.
Job guarantee with union
In February 1997, Timothy Finley, then chairman and chief executive of Jos. A. Bank, signed a contract with union workers saying the factory would remain open at least through this year and guaranteeing their jobs for three years.
The company, in a statement filed with the Securities and Exchange Commission in August in preparation for an initial public offering, reported net income last year of $1.4 million with net revenue of $57 million.
Layoffs begin in December
The offering was never made, said an assistant vice president of Janney Montgomery Scott Inc., which was to help handle the deal, because the market is generally interested only in technology and Internet-related companies.
The Baltimore plants will end production in mid-December and continue laying off workers until the plants close in February.