Interview with Aaron Feuerstein
Interviewed by Pamela Gerloff
What do you think
your responsibility is, as company president, to workers
and to your community?
Both our company
and I have established a mission statement that expresses
a strong responsibility, not only to the shareholders—and
that’s a very important responsibility— but
also to the employees who make our products. Whatever success
we have is because of the quality of the products we make.
So we have a responsibility to the workers, to the community
where we are located, and to the environment.
We believe that when you make a business
decision, it should not be based exclusively on how to make
the bottom line look better so that shareholders can have
an immediate benefit. It should be balanced. It should take
into consideration what’s right and wrong, as well
as profit. We don’t say that when you’re in
business it’s dog-eat-dog and you can do whatever
you want and get rid of all the values that you have—and
all you have to do is go to church or the synagogue once
a year and give some charity. Every decision in business
has to be both a good business decision and a good ethical
decision. We don’t accept that there’s a dichotomy.
We think that over the long run, if you do what’s
right in business you’ll have the most profitable
long-term situation. If you treat the worker right, the
company will be a better company. The same goes for the
environment and the community.
How did you come
to that belief?
I grew up with
it. Perhaps it was incubated when I was just a little kid.
I remember that at home the family used to eat dinner together.
We discussed everything: business, religion, school, politics.
It was just a free-for-all and it was wonderful. I recall
how my father reported that when he was 14 years old, he
went to work for his father, who had founded our company
at the turn of the century. My father noticed that, at the
end of each workday, my grandfather was going around with
envelopes of money and paying each of his workers for the
day’s wages. My father told my grandfather, “That’s
a cumbersome way to do things; it’s not the way to
do it. You should keep the records of the taxes, benefits,
hours, and wages, and at the end of the week, pay the worker
My grandfather said, “Oh no, that’s
against the Torah.” I was seven years old when I heard
this, and every day after public school, I had Hebrew religious
instruction, where I was taught by my maternal grandfather.
The next day I said to him, “Is it possible that the
Torah says you can’t pay at the end of the week? You’ve
got to pay during the week?” He said, “Oh yes,
your paternal grandfather is correct.” Then he opened
the book of Leviticus and showed me where it said, “You
are not permitted to oppress the working man. He’s
poor and needy, and you have to pay him his wages each day.
And you cannot let the sun set on those wages, because he’s
a poor man and those wages, psychologically, mean everything
to him. And you don’t want this poor man to cry out
unto God and you will have sinned.” Later on, when
I was older, I committed that to memory. I thought it was
Do you pay workers
Oh no, we got over
that! But the spirit is there—we try and treat the
worker fairly and as an equal, not as a pair of hands.
Before, a lot
of people lauded you for the decisions you made after the
fire, but now that your company is having financial difficulties,
some are questioning the wisdom of your approach.
right. I’m not questioning it, though. If I had to
do it tomorrow, I’d do it again. I’m sure that
in the long run, it’s going to pay off for this company.
The problems we’re in today are not a direct result
of having acted fairly with workers and having treated them
with respect. It’s because we did not have adequate
insurance to rebuild with the state-of-the-art equipment
that would enable us to produce the best quality in the
marketplace—which is what we’re famous for.
So we spent more money than we had and got into heavy debt.
With the debt, the minute you hiccup and something doesn’t
go right for one year, you’re in trouble. We had a
tough year in 2001 and were in default on some of the interest,
so our creditors put us under.
Choice Makes a Legendary Leader
“On December 11, 1995, a fire burned most of
[Polartec maker] 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....’
“Aaron Feuerstein spent millions
keeping all 3,000 employees on the payroll with
full benefits for three months. Why? What did he
get for his money? Is he a fool? Did he have some
dark motive? Here is Aaron Feuerstein’s answer:
‘The fundamental difference [between me and
other CEOs] is that I consider our workers an asset,
not an expense.’ Indeed, he believes his job
goes beyond just making money for shareholders,
even though the only shareholders of Malden Mills
are Feuerstein and his family. ‘I have a responsibility
to the worker, both blue-collar and white-collar,’
Feuerstein added, his voice taking an edge of steely
conviction. ‘I have an equal responsibility
to the community. It would have been unconscionable
to put 3,000 people on the streets and deliver a
death blow to the cities of Lawrence and Methuen
[where the factories are located]. Maybe on paper
our company is worth less [now] to Wall Street,
but I can tell you it’s worth more. We’re
—Excerpted from Parade
magazine, September 8, 1996, pp. 4-5
the fire, that plant [at Malden Mills] produced 130,000
yards a week. A few weeks after the fire, it was up
to 230,000 yards. Our people became very creative.
They were willing to work 25 hours a day.”
president of Malden Mills, as quoted in Parade magazine,
September 8, 1996
What will happen now?
Our plan for reorganization, which we have presented to
the court, states that we would like to pay back our creditors
100 cents on the dollar. The family equity holders will
get paid only after the creditors. We’ve shown in
our business plans that there’s enough enterprise
value in Malden Mills to handle the debt and to pay off
what we owe over time. We’re very optimistic that
the court will find in our favor and we’ll be emerging
successfully from the bankruptcy before the end of the year.
If you were a publicly-owned company, which typically has
a lot of pressure on it to—
to look terrific!
yes—would you do everything the same way you’re
Yes, but probably they would get rid of me. They wouldn’t
tolerate it. Maybe that will change in America, but at the
moment, that’s the thinking. Recently, the country
was shocked to learn that there are CEOs who are ready to
sacrifice their ethical values to benefit themselves, as
well as to make the next quarter look better for the shareholders.
I think that was a natural evolution that arose from accepting
the idea that ethical values should not be considered in
What’s the remedy for that?
I think there have to be tough laws, so the parameters within
which the CEO can operate do not allow such unethical behavior.
You have high ethical standards in your work life. How do
your ethics around money and wealth manifest in your own
I try to live a simple life, take interest in the community,
and be charitable. I’m always being offered all kinds
of money to just give up and let some of the creditors take
this company and move it to Asia. But what is all that money
going to do for me? The money itself isn’t going to
give me any happiness. I’m very disciplined about
how much I eat every day—if I have all the money in
the world, I’m not going to eat more or sleep better.
So I’m not going to sell my soul for a pittance. I’m
going to stick by the mission of this company and trust
that we will succeed by doing it.
Aaron Feuerstein is president and owner of the Massachusettsbased
company, Malden Mills (www.maldenmills.com), internationally
renowned for its Polartec fabrics. When a fire devasted
Malden Mills in 1995, Mr. Feuerstein’s leadership
became legendary as he continued to pay his 3,000 idled
employees during the rebuilding process. He is also known
for having resisted strong financial pressures to move the
company out of the country, choosing instead to keep it
in its present location to benefit the economy of the local
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