Har36867_ch01

Har36867_ch01 - First Pages Chapter 1 Ethics and Business...

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First Pages C h a p t e r 1 1 Ethics and Business Opening Decision Point Loyalty after a Crisis: Should Aaron Feuerstein Rebuild in Malden and Pay His Employees in the Meantime? During the early evening hours of December 11, 1995, a fi re broke out in a textile mill in Lawrence, Massachusetts. By morning, the fi re had destroyed most of Malden Mills, the manufacturer of Polartec fabric. The fi re seemed a disaster to the company, its employees, its customers, and the surrounding communities. Malden Mills was a family-owned business, founded in 1906 and run by the founder’s grandson Aaron Feuerstein. Polartec is a high-quality fabric well known for its use in the outdoor apparel featured by such popular companies as L.L. Bean, Land’s End, REI, J. Crew, and Eddie Bauer. The disaster promised many headaches for Malden Mills and for the numerous businesses that depend on its products. But the fi re also was a disaster for an entire community. The towns surrounding the Malden Mills plant have long been home to textile manufacturing. But the industry effectively died during the middle decades of the twentieth century when outdated factories and increasing labor costs led many companies to abandon the area and relocate, fi rst to the nonunionized south, and later to foreign countries such as Mexico and Taiwan. As happened in many northern manufacturing towns, the loss of major industries, along with their jobs and tax base, began a long period of economic decline from which many have never recovered. Malden Mills was the last major textile manufacturer in town, and with 2,400 employees it supplied the economic lifeblood for the surrounding communities. Considering both its payroll and taxes, Malden Mills contributed approximately $100 million a year into the local economy. As CEO and president, Aaron Feuerstein faced some major decisions. He could have used the fi re as an opportunity to follow his local competitors and relocate to a more economically attractive area. He certainly could have found a location with lower taxes and cheaper labor and thus have Har36867_ch01.indd 1 Har36867_ch01.indd 1 11/3/06 8:50:49 PM 11/3/06 8:50:49 PM
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First Pages 2 Chapter 1 Ethics and Business maximized his earning potential. He could have simply taken the insurance money and decided not to reopen at all. Instead, as the fi re was still smoldering, Feuerstein pledged to rebuild his plant at the same location and keep the jobs in the local community. But even more surprising, he promised to continue paying his employees and extend their medical coverage until they could come back to work. What do you think of Feuerstein’s decision? What would you have done had you been in his position? What facts would be helpful as you make your judgments about Feuerstein?
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This note was uploaded on 12/14/2009 for the course BUS 410 taught by Professor Smith during the Spring '09 term at AIU Online.

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Har36867_ch01 - First Pages Chapter 1 Ethics and Business...

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