November 21, 2021 (756 words)
Do you happen to remember that twenty-five-year-old story about a Massachusetts industrialist who refused to lay-off his 1,400 employees, even after the textile plant they worked in suffered a catastrophic fire? His name was Aaron Feuerstein, and he died earlier this month at a Boston hospital. He was 95.
Mr. Feuerstein became a national hero when he pledged to keep paying his line workers while he rebuilt. As part of that process, he bought an empty factory nearby to hold new equipment, and within two years opened a gleaming new $130 million complex on that site.
By the time of the fire on December 11, 1995, Feuerstein’s operation was among the last large textile companies operating in Massachusetts, a state which had seen manufacturing employment drop from 225,00 in the 1980s to about 25,000 a decade later.
Others faced with competition from low-wage states and cheap imports either closed or moved away. Maiden Mills, located just outside the old mill city of Lawrence, Massachusetts, stayed put. Its secret to success was a proprietary fabric it named Polartec, and sold to cache clothing brands like Patagonia and L.L. Bean.
Mr. Feuerstein’s commitment to his community and his production employees was in stark contrast to the massive downsizing and lay-offs then sweeping the country in the wake of private-equity mergers and acquisitions that were reviving into high gear. This got him noticed. He received numerous civic awards and honorary degrees, and used his celebrity status to chastise companies that refused to prioritize their workers’ interests.
That’s as much of the story as I knew, until I read Feuerstein’s obituary in the paper (NYT, Saturday, November 6, 2021, page A19). Turns out the saga of Malden Mills did not have a happy ending. The massive rebuilding effort left the company with a mountain of debt, even as sales of Polartec soared in the late 1990s. In 2001 the company went into bankruptcy. It emerged two years later with a restructuring plan that stripped Mr. Feuerstein of his management roles. His attempt to buy back the company was rejected by the board, and he left in 2004.
Malden Mills did not survive long after that. The new owners moved Polartec production to New Hampshire and Tennessee in the late 2000s, and in December 2015 – on the eve of the 20th anniversary of the big fire – announced the factory would close at the end of the year.
So, what is the take-away here? Well, for one thing, nothing lasts forever. Grandfather Henry founded Malden Mills in 1907, and father Samuel later took things over. Young Aaron joined the firm right after college, in 1947. The company made upholstery and other textiles before developing Polartec, and moved to the Lawrence plant in the 1950s.
By any measure Malden Mills had a good run. But apparently not even booming sales of a proprietary product were enough to overcome the debt load incurred by constructing that gleaming new $130 million plant Mr. Feuerstein opened in triumph, just twenty months after the devastating December 1995 fire.
Could he have reopened with less grandeur and expense, and would that have made a difference? Don’t know. The debt load notwithstanding, consumer tastes change, and industries that serve those tastes must either change or be forced out of business. Malden survived as long as it did because it developed Polartec, and no longer had to rely on upholstery to earn its living. Would Polartec have been enough to keep Mr. Feuerstein in the game, if he it hadn’t taken on so much debt? Would he have been able to find a new proprietary product late in his career, and pivot once again?
What does Malden Mills’ demise say about Aaron Feuerstein’s basic management principle? It certainly does nothing to undermine the efficacy of his approach. Looking out for his production line workers wasn’t just the right thing to do, it was good for business. It was a major reason his textile factory was so successful for so long. This is true of many a burgeoning commercial enterprise. Someone bright comes up with a winning formula. But once that formula is established, it’s the little people who are often the ones responsible for making things happen. Credit Feuerstein with being honest enough with himself to admit as much.
In the interests of promoting a just and equitable society, this same principle of empathy toward production line workers should be implemented by whatever new industries emerge to meet the demands of an ever-changing, ever-evolving marketplace.
Robert J. Cavanaugh, Jr
November 21, 2021