The Mensch of Malden Mills

 Aaron Feuerstein

   I noticed Mr. Feuerstein's obituary and recognized his name right away. He was a fine fellow, as the death notice indicates:

"Aaron Feuerstein, Mill Owner Who Refused to Leave, Dies at 95: After a Fire Devastated His Massachusetts Factory in 1995, He Kept Paying His Employees and Spent Hundreds of Millions to Rebuild," Clay Risen, NYT, Nov. 5 2021

Aaron Feuerstein, a Massachusetts industrialist who became a national hero in 1995 when he refused to lay off workers at his textile plant after a catastrophic fire, then spent hundreds of millions of dollars to rebuild it, died on Thursday at a hospital in Boston. He was 95. [There is much more. Read the obituary if you can.]

   I recognized his name because, years ago, I was associated with a university business school that had, as part of its mission, the desire to develop leaders who "contribute to societies within which they operate." I decided to search for such leaders and it is not an easy thing to find them. One can be a very good business leader and not be good. Apart from donors and philanthropists, how can you locate those who are contributing socially, not just commercially? Some were found and Mr. Feuerstein was one of them. That is why I recognized his name.

   As a result, a short profile of him was developed for dissemination in a newsletter. It is no longer available on the website of the university or the business school, but it is provided below. It is interesting that Mr. Feuerstein, was once interviewed by a graduate of the same university. During a time when there are so many bad stories, it is nice to read a good one. Students were the intended audience and that is why so many sources are mentioned. They may now be useful for those who wish to learn more about the leader of Malden Mills.

[Note: Current readers in 2021 - what follows was written in 2007.]

         "He became that rare duck, the businessman as natural hero"

   That quotation is taken from "The Mensch of Malden Mills" a profile done on the CBS program 60 Minutes back in 2003 by Morley Safer (a Western graduate, by the way). Although many Western students may shop at Mountain Equipment Co-op, Trex or Patagonia and be aware of the Malden Mill's product Polartec, most are too young to know the reasons why the owner, Aaron Feuerstein, was hailed as a hero.

   Malden Mills was started by the Feuerstein family in Lawrence, Massachusetts. In 1995 a fire destroyed the Malden buildings, potentially dealing a severe blow to the community. Rather than move south or out of the country, or retire with the $300 million in insurance, Mr. Feuerstein chose to keep the employees on the payroll and re-build the company. He said simply: "I have a responsibility to the worker, both blue-collar and white-collar. I have an equal responsibility to the community. It would have been unconscionable to put 3000 people on the streets and deliver a deathblow to the cities of Lawrence and Methuen. Maybe on paper our company is worthless to Wall Street, but I can tell you it's worth more". While taking such action would have been, perhaps unconscionable, it certainly would not have been unusual for most to do so. Indeed, Mr. Feuerstein's care and concern for the company, community and workers were what were perceived by the press as being unusual behaviour for a CEO, and which led to him being regarded as a hero and "rare duck" in the many accounts that were published at the time.

   Stories about Malden Mills and the fire are easy to locate in late 1995 and early 1996, particularly in the newspapers in New England (available to you via Factiva and Lexis/Nexis) . Mr. Feuerstein was invited to the State of the Union address by President Clinton and was praised as a paragon of corporate responsibility by Labor Secretary Robert Reich. There were also many news reports such as the one mentioned above by Morley Safer on 60 Minutes. An interview with Tom Brokaw on NBC is found on Dec. 18, 1995 and Lou Dobbs chose Feuerstein as "CEO of the Week" on CNN on Sept. 20, 2002. For reports such as these we encourage you to use the resources of the Vanderbilt Television News Archive to which Western has a subscription.

   For background information about the company see: "Malden Mills Industries, Inc." in Vol. 16 of the International Directory of Company Histories, p.351. A good article that appeared just prior to the fire is found in the New York Times: Susan Diesenhouse, "A Textile Maker Thrives by Breaking all the Rules," July 24, 1994, p.A1. From both those sources you learn that Malden Mills was consistently socially responsible. For example, in the 1990s the company undertook environmental initiatives to protect the Spricket River by constructing a water treatment plant that conserved energy and reduced emissions. There had also never been a strike at any of the Malden plants. For an article that offers an academic assessment and which concludes that Aaron Feuerstein epitomizes the responsible leader see: "Market Controls on Corporate Social Responsibility: An Exploratory Study of Banking & Investment Policies," Breena E. Coates, Journal of American Academy of Business, Vol.11, No.1, March 2007, p.110.

   It would be nice to conclude such an uplifting story on a positive note, but that is not the case. One reason we were reminded of it has to do with the fact that Malden Mills is again in the news and the news is not particularly good. During the rebuilding period the company lost money and customers. Sales were also affected by unseasonably warm weather. Like hundreds of other Northeastern textile operations, Malden Mills struggled to compete with foreign companies that offered far lower wages and which were less concerned about environmental issues. Given the quality of the product it produces and with the assistance of military contracts, Malden Mills may continue to survive as Polartec. To follow the recent events related to Malden Mills we suggest the following: "Malden Exits Bankruptcy as Polartec," Evan Clark, WWD, Vol.193, No.59, Mar. 20, 2007, p. 10; "Malden Mills Prepares for Sale," Home Textiles Today, Vol.28, No.4, Jan. 29, 2007, p.12; "Malden Mills Bankruptcy Case Reopened," Bob Kievra, Telegram & Gazette (Worcester, Mass.), Jan.13, 2007, p. B8. The profile found on Hoovers is also useful.

From: The Bottom Feeder, March 2007 Vol.7. No.3.

The Bonus: 

   Other good leaders who contributed a great deal to society were found and I will mention here, another example: Robert and Ellen Thompson who founded the Thompson-McCully Asphalt Paving Company, just across the border in Michigan. It was the largest road construction company in Michigan. When they sold it, they chose a buyer who would keep as many employees as possible. Then, "the good news that Thompson-McCully employees would not lose their jobs was followed by the even better news that most of them would not have to worry about it if they did -- since they were sharing in the proceeds of the sale. According to most accounts, more than 80 Thompson-McCully employees received cheques ranging from $1 to $2 million. Some retired employees and widows also received payment as the Thompsons distributed $128 million among the workers. Mr. Thompson stated: "I'm particularly pleased that this agreement will allow the employees of Thompson-McCully and a charitable trust I have established to share the proceeds of the sale. Our company's success has been due in large part to dedication and hard work of the men and women who have worked here over the years, and they deserve to be recognized"….You realize that the people around you have gone through all the pain and suffering with you….I wanted to pay them back".

There is more: "The story does not end there. "The Thompsons provided $100 million to establish the Thompson Foundation which is largely used for educational scholarships for the underprivileged in the Detroit area. As well, Mr. Thompson's alma mater, Bowling Green, has benefitted from his generosity, as have the University of Michigan Cardiovascular Center and the Kellogg Eye Center."