Business Ethics Case of Malden Mills
MGMT – 368 Business Ethics
The Case of Malden Mills
Introduction
On December 11, 1995 a fire burned most of Malden Mills to the ground and put 3,000 people out of work. Most of the 3,000 thought they were out of work permanently. A few employees were with the CEO in the parking lot during the fire and heard him say “This is not the end.” With these words began a saga that has made Aaron Feuerstein a legend among American leaders and a hero to his employees, (Boulay, Art).
Central Facts about the case In the 1980’s Malden Mills had gone bankrupt when the market for the fake fur, (which they produced), dried up. Conversely, Mill’s continued its production of upholstery fabric and developed a new fleece product, Poalartec, and made a very successful recovery, (DeGeorge, Richard). Aaron Feuerstein was the third generation owner and CEO of Malden Mills in Lawrence, Mass. Even though the massive fire in 1995 nearly destroyed the whole place, Feuerstein continued to pay all of his workers their full wages, refusing to lay any of them off, and was determined to rebuild. He felt he owed it to his employees since they had always done their greatest for him and for the mill and for this, he became a case study in how to treat employees, (DeGeorge, Richard T). In 2001, the tables turned and Polartec’s popularity declined, Malden Mills was forced into Chapter 11 bankruptcy-court protection. By 2003, the company had emerged from the bankruptcy with the company lenders in control and a debt of $180 million dollars. By 2004, Feuerstein was still trying to raise enough credit to buy back control of the company, (DeGeorge, Richard T.). The filing was necessitated by the cost of servicing bank debt. A number of factors contributed, including a sluggish retail market, the high costs associated with rebuilding and the closure of the company’s upholstery division after a significant market share loss as a result of the fire. Malden Mills, a privately-held company, worked
The Case of Malden Mills
Introduction
On December 11, 1995 a fire burned most of Malden Mills to the ground and put 3,000 people out of work. Most of the 3,000 thought they were out of work permanently. A few employees were with the CEO in the parking lot during the fire and heard him say “This is not the end.” With these words began a saga that has made Aaron Feuerstein a legend among American leaders and a hero to his employees, (Boulay, Art).
Central Facts about the case In the 1980’s Malden Mills had gone bankrupt when the market for the fake fur, (which they produced), dried up. Conversely, Mill’s continued its production of upholstery fabric and developed a new fleece product, Poalartec, and made a very successful recovery, (DeGeorge, Richard). Aaron Feuerstein was the third generation owner and CEO of Malden Mills in Lawrence, Mass. Even though the massive fire in 1995 nearly destroyed the whole place, Feuerstein continued to pay all of his workers their full wages, refusing to lay any of them off, and was determined to rebuild. He felt he owed it to his employees since they had always done their greatest for him and for the mill and for this, he became a case study in how to treat employees, (DeGeorge, Richard T). In 2001, the tables turned and Polartec’s popularity declined, Malden Mills was forced into Chapter 11 bankruptcy-court protection. By 2003, the company had emerged from the bankruptcy with the company lenders in control and a debt of $180 million dollars. By 2004, Feuerstein was still trying to raise enough credit to buy back control of the company, (DeGeorge, Richard T.). The filing was necessitated by the cost of servicing bank debt. A number of factors contributed, including a sluggish retail market, the high costs associated with rebuilding and the closure of the company’s upholstery division after a significant market share loss as a result of the fire. Malden Mills, a privately-held company, worked
Cited: All business. Malden Mills Files Bankruptsy. Retrieved September 3, 2009, from http://www.allbusiness.com/retail-trade/miscellaneous-retail-miscellaneous/4457125- 1.html Boulay, Art. Malden Mills. A Study in Leadership. Retrieved September 3, 2009, from http://www.opi- inc.com/malden.htm Cline, Auston. About.com. Deontology and Ethics. Retrieved September 3, 2009, from http://atheism.about.com/od/ethicalsystems/a/Deontological.htm DeGeorge, Richard T. Business Ethics, 6th Ed 2006 Heroes of Professional Ehtics Retrieved September 3, 2009, from http://www.heroesofethics.com/speakers.html Kuro5hin. There’s Trouble at The Mill. Retrieved September 2, 2009, from http://www.kuro5hin.org/story/2001/12/19/114231/18 Narva, Richard L. The Real Story of Malden Mills. Retrieved September 2, 2009, from http://www.familybusiness.unh.edu/usefulinfo/MaldenMills.html Xavier University. News and Events. Retrieved September 3, 2009, from http://www.xavier.edu/news/news/6528/1/no