In 1995 a fire broke out in the Malden Mills textile manufacturing plant in Lawrence Massachusetts.

As a result 3,000 people were immediately unemployed. As one of a few large employers in a town that was already struggling, the CEO Aaron Feuerstein did the unthinkable. Feuerstein kept all employees on the payroll with full benefits for 3 months; in total Feuerstein spent $25 million (Leung, 2009). When Malden Mills reopened, product sales and employee productivity grew by over 40 percent (Gill, 2011). But due to increased debt from rebuilding the factory, decrease in demand for Malden Mills products and volatility in the textile industry caused Malden Mills to file for bankruptcy in 2001. After a restructuring of the company left Feuerstein out as CEO the company again filed for bankruptcy in 2007 and the company was sold. The question of whether Aaron Feuerstein is an ethical hero or a failed business man is both easy and complicated. There is no doubt that he is an ethical hero, and ultimately he was a failed business man. Yet, does the result of his business failing fall completely on the shoulders of his ethical decision? In a period where manufacturing companies were moving operations overseas due to cheaper labor rates, Feuerstein decided to rebuild a state of the art facility in the same small town that had been their home for 100 years. Feuerstein stated about his decision, I was proud of the family business and I wanted to keep that alive, and I wanted that to survive. But I also felt the responsibility for all my employees, to take care of them, to give them jobs (Leung, 2009). The fact that Feuerstein wasnt bound by corporate governance, in that it he only had to answer for his decisions to himself and not a board of directors, allowed Feuerstein to follow what he believed in as a CEO and as a human being. That his workers were more than an expense, they were an asset to be taken care of (Boulay, 1996). The troubles that Malden Mills felt in the following years were not directly related to the choices Feuerstein made in his decision to immediately rebuild the plant after the fire. Malden Mills had invented and produced the fabric Polartec and Polarfleece popular lightweight winter fabrics. Three unusually warm winters greatly reduced the demand for the fabric and hurt the sales of Malden Mills (Gill, 2011). Feuerstein had decided not to patent this fabric technology. As a result Malden Mills lost customers while the new mill was being rebuilt. Feuerstein also wanted to immediately rebuild the plant after the fire. This caused him to have to take out a $100 million loan while waiting for the insurance company to investigate. These decisions are at the heart of why Malden Mills ultimately failed. Even though in the immediate aftermath Malden Mills was on the road to financial stability the downturn in the textile manufacturing market and the loss of revenue due to demand of Malden Mills products are what ultimately caused the company to end up in bankruptcy and out of Aaron Feuersteins hands.

Did Aaron Feuerstein face a difficult decision the night he stood in the parking lot of his mill and watched the fire destroy his family business? I would like to think that the decision he made to rebuild and continue to pay his workers was an easy one. That when an managers and CEOs talk about their employees as their most important asset that those words hold truth instead of holding the stockholders interest at the forefront of their decision making. I would like to think that I would have made the same decision that Aaron Feuerstein made. Here was a company that had been largely located in the same small town for almost 100 years. It was a private owned family business. The workers who were currently employed had had family members work there before them. The idea of a business has to be more than just about making money. It has to be about creating and sustaining jobs, to develop technology and to generate revenue. Even though Malden Mills went bankrupt the plant is still in production under the name Polartec LLC. Even though Feuerstein lost the company the employees, the community and the product continued on. I believe that in similar circumstances as Feuerstein I would take similar action. The plant was based in a small town where Malden Mills was a major employer. If the workers lose income for a substantial amount of time the town itself will suffer. So I would feel a greater sense of responsibility to the town. If the plant was based in a larger town such as Houston it would be easier to not pay the workers because of the larger opportunities for employment. Further, well treated employees are better employees. They look forward to coming to work, to contributing to the success of the company. This can be seen in Malden Mills case as the production of yards of fabric increased from 130,000 yards a week to 230,000 yards a week (Boulay, 1996). This contributes to the bottom line. I think it was a wise business decision, but that isnt why I did it. I did it because it was the right thing to do, says Feuerstein (Leung, 2009). This is the totality of being a leader in my opinion. Feuerstein made not only what he thought was a wise business decision but more importantly he did it because he thought it was the right thing to do. At the end of the day we are left with having to live with our decisions. In situations like this making the right decision is often the toughest one. To go above and beyond the call of being a leader takes having the fortitude to stand apart of everyone, to ignore those telling you to take the easy rode or that your decision is wrong. This is what Feuerstein did. He ignored the critics saying to take the insurance money of $300 million and close the plant, or to reopen in cheaper labor markets. His moral convictions allowed him to stand tall and do the right thing when all others said it was wrong. Reference List

Leung, Rebecca (Feb. 11, 2009) The Mensch of Malden Mills. Retrieved from http://www.cbsnews.com/2100-18560_162-561656.html Gill, David W. (June 25, 2011) Was Aaron Feuerstein Wrong? Retrieved from http://ethix.org/2011/06/25/was-aaron-feuerstein-wrong Boulay, Art (October 1996) Malden Mills: A Study in Leadership. Retrieved from http://www.opi-inc.com/malden.htm DeGeorge, Richard (2010) Business Ethics (7th ed.), Prentice Hall - Pearson