Malden Mills

Session 5

Case Outline

• The Situation• Background of Malden Mills• Internal Context• The Fire • First Bankruptcy• Second Bankruptcy• Board Options

The Situation

• 2004-The Malden Mills Board meets to decide whether to accept Feurestein’s proposal and return the company to its original CEO

Background• Founded in 1906, led by three generations of

Feursteins• Located in New England with plants in Vermont,

Maine, and New Hampshire initially• Maker of knitted produts• Declared first bankruptcy in 1982• Restructured the company and innovated with

the introduction of Polartec and Polarfleece• Significant sells to L.L. Bean, Patagonia, Lands’

End, Pentagon and others

Background (Continued)

• Polartec was not patented• Competitors later captured much of the

market with cheaper versions of the fabric• Had to adjust product mix when items went

out of favor in the marketplace• Faced stiff revenue and margin pressures due

to international competition and production capability overseas

Internal Context

• Feurstein: possessed passion, drive, courage and a strong belief in his abilities to succeed

• Deep affection for the company and the community and enjoyed the strong support of key employees

• Heralded in the press as a folk hero, “businessman with a heart”

• Determined to rebuild: state of the art facility

The FireDecember 1995

• Destroyed key buildings at the company’s headquarters-750,000 square feet in total

• Pledge to rebuild in Lawrence attracted national/international media coverage

• For sixty days, all employees were paid full salaries

• 2/3 of workers return to work in 60 days• Insurance coverage limited to~ $300M

First Bankruptcy

• Why?

• What was Feurstein’s mindset?

Second Bankruptcy

• Why?

• What was Feurstein’s mindset?

Key Decisions

• Did Feuerstein’s have the leadership attributes needed to face the brutal reality of the situation? Why?

• Is the demise of manufacturing firms like Malden Mills in the U.S. inevitable? What material from this case supports your argument?

• If you were the Malden Mills board in 2003, how would you advise the company on its CEO search?

Board Options

• Next Step