Reference no: EM132257999

Case study:

Malden Mills had been founded in 1906 by Henry Feuerstein, the grandfather of the present owner, Aaron Feuerstein. In 1956, the business had been moved from Malden to Lawrence, Massachusetts. By 1995, most of the other fabric companies in Lawrence had closed or moved South or abroad to take advantage of cheaper labor costs. On Dec. 11, 1995, a fire destroyed the main manufacturing buildings.Rather than relocate the plant, Feuerstein kept it in Lawrence and paid his employees during the rebuilding process at great personal expense.Even when he had to lay off workers, he continued to pay for their health insurance.Almost decade later, with the downturn in the economy, Malden Mills went under. In the end, he lost his company.But although it was taken over, many of his former employees have work they would not have had had he closed his plant or relocated it elsewhere. The city of Lawrence, where Malden Mills was located, did not suffer the devastation of so many other New England towns whose plants were closed. The downturn in the popularity of Polartec was not related to the fire, and the fact that Feuerstein lost control of his company is not clearly or necessarily related to the fire. Was what Feuerstein did the right thing to do, as he claims, not only from a business point of view but also from an ethical point of view? Was it ethically mandatory or was it beyond what ethics demands? Would a publicly owned company have been able to make the same grand gesture and would the shareholders of the company and the Wall Street analysts have seen the move as enlightened business practice?

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