Aaron Feuerstein-a Socially Responsible Owner

Topics: Social responsibility, Corporate social responsibility, Malden Mills Pages: 5 (1662 words) Published: August 26, 2010
Aaron Feuerstein-A Socially Responsible Owner

The evening of December 11, 1995, was a special time for Aaron Feuerstein, CEO of Malden Mills. A small surprise 70th birthday party quietly was held in his honor at a local Boston restaurant. But Feuerstein’s life took a dramatic turn that evening for a different reason: A boiler at his company’s plant exploded, setting off a fire that injured 33employees and destroyed three of the factory’s century-old buildings. Malden Mills was a privately owned firm, with Feuerstein owning a majority share. The firm was located in a small Massachusetts town, Methuen, and employed nearly 3,000 people in the economically depressed area. The fire was a devastating blow for the community. According to Paul Coorey, local union president, “I was standing there seeing the mill burn with my son, who also works there, and he looked at me and said ‘Dad, we just lost our jobs’. Years of our lives seemed gone”. Unexpected tragedies happen all too often, and the aftermath is frequently devastating to the owners, employees, suppliers, local community, and customers of the firm. But the December 1995 tragedy at Malden Mills had a different outcome than most, primarily due to the owner of the factory-Aaron Feuerstein-and the deep sense of corporate social responsibility he showed through his actions following the tragedy at Malden Mills. Aaron Feuerstein typically awoke at 5.30 A.M. and began each day by memorizing passages from the scriptures and shakespare. He firmly believed in loyalty and farness to his workers. He often said that the average American wanted businesses and their owners to treat workers as human beings, with consideration and thoughtfulness. Feuerstein tried to meet these expectations. “I have to be worthy”, he told his wife over and over again. “Too many people depend on me.” He simply could not let anyone down-even the unexpected and devastating tragedy of the December 1995 fire at his plant. Aaron Feuerstein knew he had many options after the fire. He could close the factory and walk away with tens of millions of dollars in fire insurance. He could turn over to his industry rivals his profitable, flagship product, Polartec. This synthetic fiber was in great demand by the sport outerwear industry. Its production required a highly skilled, experienced workforce, and Malden Mills basically held a market monopoly. Many of the company’s competitors would have paid a high price for the rights to produce Polartec. Yet Feuerstein’s commitment to his employees led him to a different strategy. As he later recalled, “I was telling myself I have to be creative. May be there’s some way out of this.” In an announcement to his employees at a local high school gymnasium four days after the tragic fire, Feuerstein explained that he would keep all the nearly 3000 employees on the payroll for a month while he started to rebuild the family business. One month later, as the rebuilding process continued at a slow pace, Feuerstein extended it for yet a third month. “What I did was merely the decent thing to do,” he insisted. “The worker is not just a cuttable expense, a pair of hands. I consider the employees the most valuable asset Malden Mills has.” With the first announcement of guaranteed salaries just days before Christmas, the reactions from employees were understandably positive. “When he did it the first time, I was surprised,” said Bill Cottor, a 49-year-old Malden Mills employee. “The second time was a shock. The third…well, it was unrealistic to think he would do it again.” Nancy Cottor finished her husband’s thought: “It was the third time that brought tears to everyone’s eyes.” By March 1996, most of the company’s employees were back to work. Those who were not were offered assistance in making other arrangements or finding other employment in the area. Malden Mills’ customers and other local organizations responded to Feuerstein’s actions with an...
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