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Malden Mills Case Study

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York University
Administrative Studies
ADMS 1000
Eytan Lasry

THE MALDEN MILLS COMPANY Aaron Feuerstein’s grandfather Henry founded the Malden Mills company in 1906, at a time when Massachusetts was at the centre of the American textile industry. After World War II, most New England textile manufacturers moved their facilities to the South of the USA in order to be closer to the source of their cotton raw materials and to benefit from a lower cost workforce. In the 1980s, Malden Mills introduced the first generation of what has become an entirely new product category, 100% polyester performance fleece known worldwide under a variety of registered trademarks including Polartec and Polarfleece. These innovative fabrics revolutionized the way people dress through the concept of layering and helped create a $3 billion market in the process. By the mid-1990s, Malden Mills was the last of the New England garment factories and the leading innovator, producer, and marketer of branded, high quality performance textiles for the outdoor products industry. It was selling $400 million a year of fabrics throughout America, Europe and Asia and had brand name clients like North Face, Eddie Bauer, Patagonia and L.L. Bean. Despite increased competition from lower cost producers, Aaron Feuerstein decided against relocating his business away from the town of Lawrence, where Malden Mills is the largest employer in one of Massachusetts’ poorest towns. 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 elsewhere 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 3,000 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 destroy the company’s profit. DISASTER STRIKES On December 11, 1995 a boiler used in the manufacturing process exploded in the Malden Mills complex in Lawrence. There were approximately 50 workers in the building who, even though they were badly burned, helped others escape from the fire as the building collapsed around them. Others, more
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