Malden Mills Ethical Question

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William M. Grissett
Business ethics
WK 4 Research paper
Malden Mills Ethical question
June 25, 2009

Aaron Feuerstein greeted the brisk New England morning of December 11th, 1995 with unusual optimism, especially for a man almost seventy years old. After all Malden Mills was the last of the New England garment factories, and a century old family business besides! Known as the leading innovator, producer, and marketer of branded, high quality performance textiles for the outdoor products industry may require a much younger man he mused. Little did he know that before the day ended he would be faced with the biggest decision in Malden Mills’ history. Samuel Slater, a former apprentice in a British mechanized textile factory introduced the Industrial Revolution into the United States in 1790, when he established a similar mill in Pawtucket, Rhode Island. Mechanized textile factories quickly sprang up throughout New England. In 1814, at a cotton mill established by the American industrialist, Francis Cabot Lowell in Waltham, Massachusetts, all the steps of an industrial process were, for the first time, combined under one roof: cotton entered the factory as raw fiber and emerged as finished goods ready for sale. It was in this center of the textile industry that Henry Feuerstein, an immigrant from Hungary, incorporated Malden Knitting Mills in the city of Malden (five miles north of Boston) in 1906. The company began as a knitted product manufacturer producing woolen bathing suits and sweaters. In 1923 the company integrated backward into the supply chain by establishing the Malden Spinning and Dyeing Company. Looking for expansion space away from the cities, which had developed as a result of the mills, many large New England fabric operations began to construct new facilities closer to the source of their cotton raw materials in the south. Coupled with a lower cost workforce, this search for new manufacturing space began the migration of the volume producers to the Carolinas after World War II.

Aaron Feuerstein, grandson of the founder, and current Chairman, President, and CEO, of Malden Mills decided against relocating his mill outside of New England. In 1956, he took advantage of low-cost mill space, which had become available in Lawrence, Massachusetts due to the industry migration to the South. Beginning with the move to Lawrence, Malden adopted a business model, which called for the conversion of yarns to the fabric stage in small outlying plants in Maine, New Hampshire and Vermont and transporting these fabrics to the central dyeing, printing and finishing facility in Lawrence.

Feuerstein asserts that a great many of the companies that moved to the South failed anyway, despite the lower wages because they gave too much attention to costs and not enough to quality. “Why would I go to Thailand to bring the cost lower when I might run the risk of losing the advantage I’ve got, which is superior quality. In any case, lower wages are a temporary advantage. Quality lasts. At least it can last if you focus hard on expertise and the freedom to innovate. But to do that, you have to focus hard on employees.”

Commitment to those who work at Malden Mills is at the heart of Feuerstein’s management philosophy. Feuerstein treats his employees with human respect, partly because he is a religious man, but also because of his firm belief that “happy employees” make “productive employees.” During his years as CEO, Feuerstein has arranged for heart-bypass operations for several workers and offers of free soft drinks to workers during the days of summer heat on the manufacturing lines. He feels the relationship between management and employees is a vital one -- one that mistrust need not ruin but one that should be fostered and which in turn will foster the growth of the company. And finally, he believes the quality of the product is paramount and it is the employee who makes the quality; if the quality slips, the employee can...
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