London Fog plant closing Rest of production now goes overseas to lands of low wages

Workers expected the news

Israel Myers' creation once made Baltimore world raincoat capital

April 03, 1997|By Sean Somerville | Sean Somerville,SUN STAFF Sun staff writer Liz Bowie contributed to this article.

London Fog Industries Inc., which has manufactured raincoats in the city since 1922, said yesterday that it will close its Northwest Baltimore plant in June and eliminate 281 jobs.

The closure of London Fog's sole remaining U.S. factory comes two years after the company reopened the shuttered facility with help from $1.8 million in state and city incentives and a $1.25-an-hour wage cut.

"The substantially lower costs of goods manufactured by overseas contractors, as compared to U.S.-based costs, has forced us, finally and reluctantly, to join our competitors in placing the remaining portion of our business with offshore contractors," said Robert E. Gregory, chairman and chief executive of Eldersburg-based London Fog.

The plant's workers, who earn about $6.90 an hour, heard the news yesterday from C. William Crain, president and chief operating officer of the raincoat and outerwear company.

"They had talked about this before; we were just really waiting for the news," said Barbara Holland, 63, a sewing machine operator with the company for 13 years.

London Fog, which will close the plant June 6, called its operation "an experiment that was simply too costly to continue."

The 54,000-square-foot plant opened in the Park Circle Industrial Park in May 1989. It was the only one of three London Fog plants in Maryland spared from being shut in 1994. The company also closed three plants in Virginia in the early 1990s, eliminating a total of about 1,000 jobs.

In July 1994, London Fog announced it would close all three of its Maryland plants, but in September, with pressure from state officials, large concessions from the union and a sudden change in London Fog top management, the company kept the Northwest Baltimore plant open.

London Fog thought that the plant could work as a "quick response" facility, turning orders faster than the company's overseas contractors to fill gaps in retailers' inventories. To help save the plant, the city and state offered incentive packages.

In return, the company invested $2 million in the factory, closing it for retooling for three months in late 1994. The plant reopened in February 1995.

Meanwhile, London Fog, which had revenues of $300 million to $350 million, was struggling from high interest costs and the expense of the plant closings. The company was saved from bankruptcy in June 1995 after Gregory negotiated an arrangement with its bankers that gave London Fog a measure of debt relief. In exchange, the banks became the new owners with an 80 percent stake in the company.

Crain told Baltimore workers in August 1995 that "the success of this factory rests squarely on your shoulders."

But yesterday, the company praised its workers and said the plant's closure was the result of factors beyond their control -- a movement toward casual rainwear fostered by "casual Fridays" in workplaces and costs that are $10 to $20 higher per garment than those abroad.

According to the American Apparel Manufacturers Assocation, the average base wage for apparel workers in the nation is $8. With benefits, most get $10 an hour. In Bangladesh, workers make about 25 cents an hour, and in Mexico, less than $2 an hour.

Despite overall progress by London Fog, which achieved an operating profit in its last fiscal year, the company said the Baltimore plant had lost money since the reopening.

"There wasn't anything we could do to make it profitable," said company spokeswoman Lynne MacFarlane Borges. "We tried and the workers tried. There was nothing the city could do to help us and nothing the state could do to help us. It was a long shot and we knew it was a long shot."

State and local economic officials expressed disappointment. "I am obviously disappointed because we had worked with state officials and the Baltimore Development Corp. to try to assist London Fog," Baltimore Mayor Kurt L. Schmoke said in a statement. "We knew that it was going to be difficult because the Baltimore plant is their only manufacturing plant in the United States."

The closure ends a long relationship between the city and London Fog.

The company got its name from Baltimore lawyer Israel Myers, who in the early 1930s changed the name of the company from Makover-Rhoten to Londontown because he thought the original name sounded too much like rotten clothing.

Recognizing the possibilities of a lighter raincoat, Myers spent 15 years experimenting with waterproofing materials and, in 1953, he perfected a coat with a new material, Dacron.

The innovation revolutionized the raincoat industry, and Baltimore became the raincoat capital of the world.

In 1961, the company moved into an old sail-making plant at Clipper Road and Union Avenue, and the London Fog sign would long be visible from the Jones Falls Expressway.

That building was plagued by flooding and, in 1989, the quasi-public Baltimore Economic Development Corp. built the Park Circle for London Fog for $3.5 million.

London Fog, which employs about 1,600 -- including 350 at its Eldersburg headquarters, said it would work with the city to allow start-up businesses to use the Park Circle building for the balance of the company's lease, until June 1999.

Howard Davidowitz of Davidowitz & Associates Inc., a national retail consulting firm, said the company probably had little choice. "My instinct is they had to close it," he said. "This is not a super-profitable company. If this was a winning company, you would say, 'Why are they doing it?' But this is a company fighting for its survival."

Yesterday, as she walked to her car from the plant, Mary Hood, 48, a sleeve setter and 22-year veteran of London Fog, said work had been slow at the plant. "Maybe they exhausted all their options," she said. "Maybe this was what they needed to do."

She said she had no specific plans. She added, "I'm a survivor."

Pub Date: 4/03/97

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