We often hear of “golden parachutes,” “stuffed wallets,” and “high priced public relations” when we hear of corporate leaders. It is difficult to find strong models of moral behavior, ethics and employee consideration in modern CEOs. Aaron Feuerstein modeled great ethics and community awareness throughout his career, especially noticeable when he handled the aftermath of a tragic fire that left his community on the verge of despair.
Aaron Feuerstein was born in 1925 as the son of a businessman. His father and grandfather had owned and operated a company named Malden Mills since 1906. Malden Mills was one of the largest employers in the town of Lawrence Massachusetts and would continue to grow, eventually employing over 3,000 workers.
In the 1960’s Aaron Feuerstein would eventually take control of the company, which had become famous for its wool “workman’s” sweaters and uniforms as well as its fair business practices and employee treatment. Tough economic times forced the company into bankruptcy in 1981 and hundreds of employees would be laid off. Even then Feuerstein was regretful of this situation and made great efforts to reduce human suffering and provide generous severance packages.
“We insist the business must be profitable . . . But we also insist a business must have responsibility for its workers, for the community and the environment. It has a social obligation to figure out a strategy, which will be able to permit workers to make a living wage. There’s a responsibility to the workforce, to this community.”
Malden Mills’ prior research investments paid off and would soon rebound with the release of its newest textile, “Polarfleece.” Trademarked as “Polartec Climate Control Fabrics,” Polarfleece soon became the most in-demand textile in the U.S. and around the world, purchased en masse by the U.S. military and companies such as North Face, Eddie Bauer, Ralph Lauren and L.L.Bean.
The tragedy of this story began in December 1995, shortly after Malden Mills invested millions of dollars into new equipment and research into creating Polarfleece out of recycled materials. A fire destroyed the factory complex and left all of the employees out of work. At the age of 70, Aaron Feuerstein could have easily pocketing insurance money, closed up shop and retire. He also could have followed the trend of other large corporations and relocated overseas. Instead Feuerstein decided to rebuild the factory right where it had stood and keep the jobless employees paid at full salary during the down-time (at a cost of $1.5 million per week). He also pledged to keep their family’s benefits for at least 3 months.
This choice to rebuild in Lawrence and support his employees was not painless for Feuerstein, as it would cost him his $300 million insurance settlement and an additional loan of $100 million. His decision he credits to his belief in Jewish Law, which prohibits oppressing the working man who is “poor and needy” and because he is considered a brother.
“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 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 (Parade Magazine, 1996)
Malden Mills was rebuilt and the employees were able to return to work without facing the devastating effects of a community without employment. Aaron Feuerstein became affectionately known as “the Mensch of Malden Mills”, because he had kept his promises to the community. The new plant was rebuilt as a employee and eco-friendly factory. Though it has been a union factory for generations, Malden Mills has never had a strike because of the leadership of the Feuersteins and their efforts to balance employee and business needs. Rather than downsize each time they developed new technology that would replace workers, they instead would look for new ways to use their employees. If they had to downsize, they did so in a socially responsible way, providing time and resources for the employee to find new employment.
The company continues to this day to produce Polartec fleece, but was restructured after it was forced to file bankruptcy a decade later due to competing forms of the un-patented fabric and declining sales of textiles in the U.S. Though no longer the chief executive of Malden Mills, Aaron Feuerstein left an amazing legacy. Despite running a company making millions each year, Aaron never spent company funds (or even personal funds) on lavish expenses such as private jets and chauffeurs. His commitment to his employees and their community despite the cost and his dedication to ingenuity and honest business practices makes him a moral hero, a model for future business owners and CEOs.
“I think it was a wise business decision, but that isn’t why I did it. I did it because it was the right thing to do,” – Feuerstein.