More Than Money
Issue #31

The Everyday Ethics of Wealth

Table of Contents

“After the Fire”

An Interview with Aaron Feuerstein
Interviewed by Pamela Gerloff

MTM: What do you think your responsibility is, as company president, to workers and to your community?

AF: 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.

MTM: How did you come to that belief?

AF: 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 in arrears.”

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 really fabulous.

MTM: Do you pay workers every day?

AF: 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.

MTM: 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.

AF: Yes, that’s 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.

Ethical 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 doing fine.’”

—Excerpted from Parade magazine, September 8, 1996, pp. 4-5

“Before 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.”

—Aaron Feuerstein, president of Malden Mills, as quoted in Parade magazine, September 8, 1996

MTM: What will happen now?

AF: 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.

MTM: If you were a publicly-owned company, which typically has a lot of pressure on it to—

AF: to look terrific!

MTM: yes—would you do everything the same way you’re doing now?

AF: 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 a business.

MTM: What’s the remedy for that?

AF: I think there have to be tough laws, so the parameters within which the CEO can operate do not allow such unethical behavior.

MTM: You have high ethical standards in your work life. How do your ethics around money and wealth manifest in your own personal life?

AF: 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 (, 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 community.

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