London Fog rolls out Another closed factory: Subsidies could not offset pressure from low-wage foreign labor.

LONDON FOG INDUSTRIES' plans to close its Baltimore sewing plant in June and put 281 people out of work is disturbing news. The loss of a firm that once made Baltimore the "raincoat capital of the world" further erodes the city's fragile employment base.

To its credit, London Fog and its employees made a good-faith effort to keep alive the Baltimore operation as long as possible. In July 1994, when the company closed five plants in Maryland and Virginia, it consolidated its remaining U.S. manufacturing at its facility at Park Circle. With $1.8 million in incentives from state and city governments and workers' agreement to give up $1.25-an-hour in wages, London Fog made Baltimore its "quick response" plant that autumn.

The plant turned designs into finished product faster than the company's overseas contractors. More employees were added; new management said it was pleased with the plant's performance. However, with the rise in the value of the dollar and cheap foreign labor, manufacturing at the Baltimore plant added $10 to $20 to the cost of each garment, the company said. Workers in Baltimore earn about $6.90 an hour; in Bangladesh, 25 cents.

Unfortunately, many of the displaced workers lack skills to move into high-technology or service jobs. In retrospect, government money might better have been invested in retraining London VTC Fog's low-tech workers for high-tech work. It is a mistake to believe low-skilled jobs can be saved through government subsidies. Generous incentives from the state and city ultimately were insufficient to overcome the inherent problem of competing with low-wage manufacturing abroad.

We lament the closing of London Fog's Baltimore plant and the loss of jobs. But one can't wring one's hands over this bad news without recognizing it is also the price we pay to have inexpensive goods and a free market economy.

! Pub Date: 4/05/97