Loyalty Pays Off for Owner of Burned Mill

Few here would have believed, 20 months, after a fire nearly destroyed Malden Mills in Lawrence, Mass., the textile plant would be poised for a comeback.

Yet Sunday's dedication of a new $130 million state-of-the art textile plant facility, built on the remains of the old plant, is more than a story of what some call one of the greatest textile revivals in New England history.

Rather, the mill's new plant has become a symbol of what loyalty to employees and a community can build. And what that loyalty can bring in return.

Indeed, ever since owner Aaron Feuerstein vowed the night of the fire to rebuild the mill his grandfather founded more than 90 years ago and to keep on the payroll those workers left jobless from the disaster, it struck a chord with the American psyche.

When fire destroyed the mill in December 1995, Mr. Feuerstein had several attractive choices. He could have used the insurance money to rebuild in a state, or country, with lower wages. Or he could have retired.

Instead, he rebuilt and rehired in Massachusetts, a decision that has the press, politicians, even President Clinton rushing to praise. He has been variously dubbed the "new patron saint of working Americans" and the "mensch of Malden Mills." (Mensch is a Yiddish word, meaning a man with a heart.)

Yet to the no-nonsense chief executive, who has guided the family business for four decades, loyalty to his workers and the community are two of the most basic principles of business.

"The thing I'm most proud of is that the building is built right here in Lawrence ... right where the pocket of unemployment is ... and we didn't run away like many people might have to greener pastures," he told the Monitor. "We stayed here, and we think that's our duty."

Indeed, most other textile mills long ago abandoned high-wage Massachusetts, seeking cheaper labor in Asia and the South.

Feuerstein says his philosophy has been to compete on quality.

"Those people moved out because they thought they needed cheap labor to win," he says. "What this symbolizes is that it's not cheap labor but quality labor that you need, and you can win right here if you are creative and innovative and make a better quality product."

Despite some crushing setbacks and financial difficulties, the new plant seems to have emerged from the fire stronger.

Publicity has driven demand for Malden Mill's cardinal product, Polartec - a synthetic fleece used to make outerwear.

Projected sales are $380 million for this year and $500 million next year. That compares with $400 million in sales in 1995 (before the fire), which also included sales from the mill's upholstery division, a money loser before the fire and not back up and running.

Feuerstein has hired back all but 70 of the mill's 2,700 workers. He vows to put the rest on the payroll by year's end and says he expects to increase hiring at the factory next year.

That some 15,000 employees and their families attended the dedication says a lot about their commitment to the mill.

"Most people would get up and leave and move out of the US," says Steven McLaughlin, touring the facility with his family. He's been a materials handler at Malden Mills for three years, and his mother has worked there for 23 years.

The biggest obstacle, Feuerstein says, was the 18-month settlement negotiation with the insurance company.

He credits a dedicated group of bankers for backing his efforts to rebuild.

"Their loyalty and their identification with us really was what permitted me to survive financially during the slow settlement process," he says.

Still, what troubled many here is that Feuerstein's actions seem uncommon.

"Loyalty is a very rare commodity in the American economy right now," says former US Labor Secretary Robert Reich. "Yet here is a major employer who decided to forgo the fast buck and rebuild. And the community, and the employees, and a major bank helped."

"The only sadness," he told the crowd, "is that the deeds of this man are so newsworthy."