London Fog to shut center, cut 150 jobs

Loss of Eldersburg unit to end presence in Md.

Firm was founded in Baltimore

Memo is sent to workers at distribution facility

May 18, 2002|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Some 80 years after it was founded in Baltimore, London Fog Industries Inc. will close the doors to its Eldersburg distribution center - cutting about 150 jobs and putting an end to its presence in the state.

The building is expected to close on or around Oct. 1, said the company's manager of marketing and communications, Todd Gilmer.

Employees received an internal memo about the distribution center closing from Chief Executive Officer William Dragon Jr. "The facility itself has a substantial office building attached to the distribution center, and that office has been mostly vacant for the last two years," the memo said.

When London Fog consolidated two years ago, it moved much of its operations to Seattle. The company has been trying to sublease parts of the office space in Maryland over the last couple of years but hasn't had much success, the memo said.

"We felt it was in our best interest to close the facility down and sell it off," the memo said.

London Fog, an outerwear manufacturer, emerged from bankruptcy protection last year. But in the years leading up to its bankruptcy filing, the manufacturer struggled with strategy shifts and management changes.

In 1991, Merrill Lynch & Co. Inc. bought a majority share of the company.

Two years later, Arnold P. Cohen, then president of J. Crew Group Inc., was brought in to become London Fog's chairman and chief executive. He lasted a year and in that time closed factories, laid off the company's national sales force and hired new salespeople in New York.

He also moved London Fog's headquarters from Maryland to Connecticut, and the company bought Pacific Trail Inc. of Seattle.

By 1995, the company was losing ground in department stores, so it turned to outlet centers.

That's when Robert E. Gregory Jr. came aboard as chief executive. The company had $300 million in losses when he took over. Following the direction of the board of directors and creditors who owned most of the company after the debt restructuring, Gregory began increasing London Fog's retail business.

Gregory stayed at London Fog until 1999. He brought the company back to profitability and cut some of its $425 million debt.

Then in 1999 Dragon came on as chief executive. He also had plans to trim the company's debt - and its retail business. That would mean closing 115 of 140 stores around the country.

"It does not make sense to be competing directly with our retail partners," Dragon said in an interview with The Sun in 1999. "That's not where we ought to be, going forward."

The company has moved its headquarters from Connecticut back to Maryland and then to Seattle.

Vernon J. Thompson, assistant secretary for the Maryland Department of Business and Economic Development's division of regional development, said he was disappointed - but not surprised - about London Fog's decision to close the Eldersburg facility, given the competitive pricing pressures of its industry.

The state has "bent over backward" to try to retain London Fog, Thompson said. And London Fog has benefited over the years from state loans, grants and work force training funds to help slow the decline of its presence in Maryland, he said. Specific numbers on incentives were not immediately available yesterday.

"If there is a saving grace, it's a nice facility in the right location," Thompson said.

Thompson said he was certain other companies would be interested in the space.

"We're confident that between the company, the county and the state, we're going to be able to get some clients in there to take a look at it," he said.

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