Malden Mills Industries, Inc. History

Address:

46 Stafford Street
Lawrence, Massachusetts 01841
U.S.A.

Telephone: (508) 685-6341
Fax: (508) 975-2595

Private Company
Incorporated:1906
Employees:3,200
Sales: $425 million (1995 est.)
SIC(s): 2221, Broadwoven Fabric Mills (Manmade Fiber & Silk); 2257, Weft Knit Fabric Mills; 2258, Lace & Wrap Knit Fabric Mills; 2262, Finishing Plants (Manmade Fiber & Silk Fabrics); 2297, Nonwoven Fabrics; 3086, Plastics Foam Products

Company Perspectives:

Malden Mills has spent the past quarter-century building one of the top textile research and development teams in the world. On the premise that customer interests are best served by continual innovation in both manufacturing and product design, the firm's skilled chemists, engineers, and textile designers constantly explore new ways to improve fabrics--making them warmer, stretchier, more comfortable, more moisture-resistant, easier to clean, and more durable.

Company History:

Although Polartec lightweight fabrics are recognized worldwide for their moisture resistance and thermal qualities, few know this extraordinary product is the creation of Malden Mills Industries, Inc. of Massachusetts. Family-run and -operated, Malden Mills quietly grew by 200% in the 1980s and 1990s as Polartec and a line of high-performance jacquard velvets for home furnishings generated a $3 billion market. Yet what put Malden Mills firmly in the international spotlight was a devastating fire in December 1995 that destroyed much of the factory and injured 33 employees. Rebuilding immediately, Malden not only assured workers of their jobs but paid full salaries to those unable to work during reconstruction. In an era of massive layoffs and closings, Malden Mills's dedication to the industry, its employees, and the community was a welcome anomaly in the fractured business world of the mid-1990s.

Wool and Woolies, 1906 to the 1960s

Henry Feuerstein came to America in the 1890s from Hungary and found work in New York City sewing blouses. After losing his job twice, Feuerstein turned to selling dry goods across the state. From small push cart to factory to wholesale outlets, young Henry prospered and soon lived among the well-heeled in Manhattan's Upper East Side. When his real estate investments went awry, Henry answered a classified ad and spent the remainder of his fortune, $50,000, on a small mill in Malden, Massachusetts in 1906.

Malden Knitting produced wool "workman's" sweaters and bathing suits. Under Feuerstein's leadership, the company flourished and created Malden Spinning and Dyeing in 1923 to keep up with demand, much of which was producing uniforms for the U.S. Army during World Wars I and II. By the end of World War II, Malden Knitting was experimenting with various fabrics and applications to broaden its production capacity and to anticipate the ever-changing needs of American families. By this time, Henry Feuerstein's son Samuel had taken charge of Malden Knitting and his teenaged grandson, Aaron, also worked in the family business. Beginning with school vacations and then becoming full-time after graduation from Yeshiva University in 1947, Aaron was appointed factory supervisor and began a long and distinguished career at Malden.

By 1956 Malden Mills achieved what the industry called "vertical" continuous production with dyeing, printing, and finishing all completed within one facility. This year also marked the company's relocation to Lawrence, Massachusetts, 35 miles north of Boston, and into the historic Arlington Mill complex built before the turn of the century. One former employee of the mill wrote a poem about it, entitled "A Lone Striker"; the poet's name was Robert Frost.

In 1962 Malden opened a new knitting mill in Bridgton, Maine, and four years later again branched out, this time by dabbling in synthetic fabrics for the upholstery market. With Samuel Feuerstein nearing retirement, Aaron's role was increasingly important at Malden. Under his tutelage, Malden became more automated and, unlike other textile manufacturers, stayed in Massachusetts rather than relocating to the South or the West Coast where land and labor were cheaper. Instead, Malden relied on the company's proximity to Boston for the area's skilled work force and high-tech breakthroughs.

The Fake Fur Faux Pas:the 1970s, and the Early 1980s

As the 1960s came to a close, Aaron Feuerstein took full control of Malden and bet big on fake fur products by pouring $20 million into specialized equipment and opening mills in Hudson, New Hampshire, and Barre, Vermont. "I thought there would be unbelievable growth because of the fur activists," Feuerstein later told Forbes magazine, yet despite capturing 25 percent of the U.S. market, fake fur demand never blossomed and began declining. Opening still another factory in North Berwick, Maine, in 1976, Malden tried to make ends meet by selling both upholstery fabrics and fake fur products, while continuing to pour funds into researching a synthetic, lightweight, thermal fabric. Though Malden's fake fur market share grew to 50 percent, Feuerstein realized this was not the huge opportunity he had originally believed it would be.

To head off falling sales Malden started producing velvet upholstery for home furnishings, but not in time. Forced into Chapter 11 bankruptcy in 1981, the company laid off hundreds of employees, and Feuerstein vowed to make it up to them some day. Salvation came soon in the form of Polarfleece, which revolutionized the fabric industry. Debuting in 1979, Polarfleece was 100 percent polyester, capable of drawing moisture away from the body while providing warmth; it became the fabric of choice for high-performance athletic and aerobic apparel. Among Malden's first major customers was Patagonia, which produced outerwear for mountain climbers and hikers. Thoroughly impressed with the unique shearling knit, Patagonia used Polarfleece for a variety of garments, buying "every yard we could make as fast as we could make it," Vice-President Henry Ackerman told the Wall Street Journal. Polarfleece was not only a huge success for Patagonia, which expanded into several related apparel lines, but put Malden on the map for a variety of other outdoor clothing manufacturers. By 1982, Polarfleece pushed sales to $5 million and helped pull the company out of bankruptcy in 1983.

Polartec--"The Ultimate Answer"--Mid-1980s to Early 1990s

Capitalizing on the incredible popularity of Polarfleece, Malden produced several new lines of high-performance, technically advanced fabrics to service the outdoorsy set. Yet Malden stayed ahead of its many imitators with constant innovation and by producing customized lots of varied colors, thicknesses, and textures so each of its customers could market their own blend. By 1986 overall sales had grown to about $150 million, and Malden began investing $10 million per year in state-of-the-art research, design, and production equipment to keep up with the ever-growing demand for its products. As Polarfleece continued to gain prominence, Malden's upholstery fabric sales had increased substantially and by 1988 accounted for more than $105 million in revenue. Polarfleece raked in a respectable $69 million. The end of the 1980s also marked Malden's expansion into Europe, where its nylon velvet and warp-knit upholstery fabrics were especially popular, helping total sales climb to $200 million in 1989.

As the 1990s approached, Malden was a dinosaur in the New England area. The few textile manufacturers who remained either went out of business or were plagued by the state's harsh environmental laws and ever-increasing labor costs. Yet Malden demonstrated its commitment both to the area and to protecting and preserving the environment by building a water treatment plant to restore the Spicket River systems encompassing the company's mills. The treatment plant conserved energy and reduced waste, air emissions, and the amount of chemicals necessary to produce its many fabrics.

In 1991 Polarfleece products were trademarked as Polartec Climate Control Fabrics available in light-, medium-, and heavyweight thicknesses with more than 100 different styles (from underwear, bike shorts, and sweatshirts to jackets, wet suits, and gloves) available in 5,000 colors and 1,000 patterns. Polartec remained the industry leader because of its stretch, fast wicking, easy dyeing, and durable, nonpilling finish. Clients like Eddie Bauer, Land's End, L.L. Bean, Ralph Lauren, and others often based their entire outdoor or athletic lines on Polartec fabrics, which in turn supported 1991's strong sales of $250 million.

Polartec and Eco-Velvet: 1992 and Beyond

Malden established the Glenn Street Studio in 1992 to develop and produce natural jacquard velvets. This sturdy, stylish cotton adorned a wide array of products from elegant, vibrantly colored furniture to vehicle upholstery and infant carseats. By this time Malden's home furnishings were sold in Australia, Canada, the Middle East, New Zealand, and South Africa, with such customers as Al Janoub, Carina Polstermobel, Ian Walker, Rexmore, and the Steinhoff Group. In the United States, Malden was a regular supplier to Action, Klaussner, and La-Z-Boy, and was also selling to Century, Frederick Edwards, Hickory Chair, and Southwood Furniture. This year, 1992, also marked the initiation of the Polartec Performance Challenge to sponsor and support outdoor adventures like the Trango Towers Expedition in Southern Pakistan, a 7,000-mile yacht trip around Europe, and a 4,000-mile trek of China's centuries old Silk Road. Another first was Malden's sponsorship of the 1992 Winter Olympics by providing Polartec fabric for the official garments worn by U.S. athletes.

In another environmentally conscious move in 1993, Malden debuted a new line of upholstery (including cotton novelty prints in botanical, floral, and jungle motifs) and clothing fabrics made from recycled fibers. By the end of the year Polartec fabrics contained up to 15 percent recycled fibers, a figure Malden hoped to raise when availability increased and costs of recycled products were less prohibitive. Overall sales for the year climbed to $340 million, with Polartec and upholstery each accounting for half of Malden's sales, but Polartec pulling in most of its $10 million in profits. New products included undergarments for NASA's astronauts, booties for sled dogs racing in Alaska's Iditarod, and hopes for new-fangled diapers.

In 1994 Malden hired a former leader of the state's Fish and Wildlife Commission to spearhead their continuing environmental efforts. The company reduced consumption and added further reuse and recycling programs and was recognized by the American Textile Manufacturers Institute (ATMI) for environmental "excellence" and leadership in the textile industry. Exports to 60 nations worldwide now accounted for 20 percent of Malden's revenues, with total weekly fabric production exceeding 1.6 million yards. Annual research and development investments had risen to $20 million, with another $20 million spent on new computer-directed textile machinery, including looms and weaving equipment to keep operations steady and competitors at bay.

Unforeseen by Feuerstein and the staff at Malden Mills, 1995 would be a year of banner success and shocking tragedy. In February, Dakotah, a popular apparel manufacturer, was given exclusive license to launch and produce a new home accessories line of pillows and throws made from Polartec. Next came the first of a series of blows when the U.S. Consumer Products Safety Commission televised segments in March of fleece fabrics catching fire. Though the products shown on the air were made by Coville Inc. (which later recalled more than 150,000 fleece products), consumers began returning Polartec garments for fear of their flammability. Malden immediately sought damage control by launching a $8.5 million advertising campaign, stressing the company's rigid standards and the repeated passing of inflammability tests conducted by the government.

By May the company introduced Eco-Velvet, a new upholstery fabric made from recycled soda bottles, and most of its Polartec products now contained from 80 percent to 100 percent recycled fiber. For environmentally conscious consumers, Malden Mills's fabrics were both a fashion statement and a political statement. In August, Malden announced several changes in the company: first, restructuring with newly appointed CEO Howard Ackerman (formerly vice-president) taking responsibility for running daily operations; second, integrating the home furnishings and apparel divisions to streamline production and share marketing and research and development staffing; third, funding additional promotion of Polartec fabrics (with projected sales hitting or surpassing $225 million for 1995); and fourth, building an $80 million European textile manufacturing plant in Gorlitz, Germany, as a companion to the company's distribution plant in Rotterdam by the end of the year.

The Gorlitz factory was expected to employ 150 and support extensive international sales to such companies as Berghaus, Jack Wolfskin, Lower Alpine, Schoffel, Silvy, and Japan's Asics, Goldwin, and mont-bell, while cutting down on slow turnaround and the expensive tariffs placed on goods imported from the United States. The implemented changes were designed to make Malden Mills, with total sales exceeding $400 million in 1995, a billion-dollar company within five years. "There's no reason why we shouldn't hit $1 billion by the end of the century," Ackerman told the Wall Street Journal in November 1995. Unfortunately, something could keep Malden Mills from reaching its goals--a catastrophe that rocked the company a few months later.

On the evening of December 11, 1995, while Aaron Feuerstein was celebrating his 70th birthday among family and friends at a Boston restaurant, there was an explosion at Malden Mills. The explosion sparked a fire that swept through three of the company's nine buildings, injuring 33 night shift employees and causing an estimated $500 million in damages. Feuerstein rushed to the scene, refused to lose his composure, and vowed to rebuild. Three nights later, Feuerstein announced that Malden Mills would reopen on January 2, that he would pay all employees their regular salaries (at a cost of $1.5 million per week) for the next 30 days, possibly more, and that he would continue health benefits for 90 days. Several companies and local organizations, hearing of Malden Mills's plight, immediately sent contributions to help rebuild and to support employees. Other responses ranged from U.S. President Clinton's invitation to attend the State of the Union Address, to comparisons with George Bailey from "It's a Wonderful Life," and the repeated use of words such as "hero" and "mensch" (a Yiddish term for a person of unquestionable honor and integrity).

Feuerstein hoped to have Malden Mills fully operational within 90 days and to have his diverse workforce (of British, Canadian, French, German, Irish, Israeli, Italian, and Portuguese men and women) back to their posts as soon as possible. Within days of his "full-pay" announcement, 80 percent of the Polartec division was on-line. By February, Feuerstein was still paying all employees and vowed to continue until at least the end of the month. With more than 70 percent of the workforce back on the premises, Feuerstein also announced that the construction outfit building the new Polartec facility was giving "first preference" to Malden's idle employees.

As the 1990s progressed, Malden Mills's comeback was assured and many wondered if there would be a changing of the guard. Although Aaron Feuerstein said he planned "to guide the company into the 21st century with success" and "work until the last minute of the last day," he had, characteristically, laid the groundwork for his two sons, Daniel and Raphael, to succeed him.

Malden Mills Industries, Inc. History

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