This Day in Jewish History

1995: Malden Mills Burns Down, Shows What an Employer With a Heart Looks Like

Happy birthday, Aaron Feuerstein, briefly hailed hero, whose Jewish ethics influenced him not to fire the whole staff right before Christmas.

Smoke and flames leap skyward from the leftover structure of The Malden Mills as a fire still burns in areas.
The Boston Globe via Getty Images

On December 11, 1995, the core buildings of the Malden Mills textile plant, in Lawrence, Massachusetts, burned to the ground, in what has been described as the worst fire in the 20th-century history of that state. At the time, Malden, which patented and produced the synthetic fleece Polartec, among other products, employed some 3,000 people. It was one of the largest employers in this town, once a center of the American textile industry, some 25 miles (40 kms) north of Boston.

Malden Mills owner Aaron Feuerstein, who, as it happened, turned 70 on the day of the fire, was fully covered for the loss by insurance. Conventional business logic would have supported him had he decided to shutter the plant. But, as a colleague in the plant’s management recalled, "He said, I'm not throwing 3,000 people out of work two weeks before Christmas."

Feuerstein, an Orthodox Jew whose grandfather had started Malden Mills in 1906, not only to decided to rebuild. He also resolved to continue paying the 1,400 workers left idle during the construction works their salaries for the next three months, and to cover their health insurance for 180 days.

Asked to explain his decision, he attributed it to the ethics he had learned from studying the Talmud.

“I have a responsibility to the worker, both blue-collar and white-collar,” he told Parade magazine. “It would have been unconscionable to put 3,000 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.”

Feuerstein’s altruism made him a national hero – at least, at the time. Although he was by nature publicity-shy, he quickly adapted to being in the spotlight, even accepting an invitation from President Bill Clinton to attend his State of the Union Address in Washington the following month.

Aaron Feuerstein (screen grab from YouTube, 2014)
YouTube

Fleeting adulation

After Malden Mills fully reopened, in late 1996, Feuerstein and his wife, the former Louise Woodhead, who oversaw many of the aesthetic details of the $450-million reconstruction received a prize from the National Trust for Historic Preservation for the effort.

That first year, too, productivity rose by 40 percent among the staff, all but 400 of whom had a job waiting for them when the plant resumed full operation. Aaron Feuerstein, it seemed, had done the right thing – not only on the human level, but on the economic one too. Until, that is, Malden was forced into bankruptcy, first in 2001, and then again in 2007.

The first time, Feuerstein had to relinquish the role of CEO; the second time, he saw company sold to the Boston-based Gordon Brothers Group – for $44 million -- and had its name changed to Polartec. Its staff was reduced to under 800, many of them overseas. Now, Feuerstein, the object of so much admiration just a few years earlier, was portrayed as someone whose nave sentimentality in 1995 led to his losing control of the family firm a decade later, and to the inevitable layoffs that he had tried to forestall.

A 2011 essay at the website ethix.org, published by Seattle Pacific University’s Center for Integrity in Business, suggests not blaming Feuerstein’s mensch-like behavior for Malden’s subsequent problems.

Yes, his decision to rebuild at a cost $150 million higher than the payout from his fire insurance definitely started Malden on the path to bankruptcy, but more significant were three unseasonably warm winters in the years following the reconstruction. And what American textile company hasn’t faced difficult challenges in recent decades, starting with the relocation of much production offshore? The bottom line, concludes David Gill, author of the Ethix article, is that, “[The] market situation, not his kind heart, is what ended Feuerstein’s run as a textile industry leader.”

Today, Aaron Feuerstein turns 90. His wife, who converted from Mormonism when they married in 1988, died two years ago, and today he lives with two of his grandchildren, and prays at Young Israel of Brookline, MA. He told the Boston Globe last week, “I go on living with gratitude and humility. I’m happy with my life. I do the best I can.”