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A CEO Who Lives By
What's Right

Mary McGrory

Reprinted with permission from Washingtonpost.Newsweek Interactive Company and The Washington Post

In this anxious hour of pink-slip dread, it is restoring to think of Aaron Feuerstein, a Massachusetts manufacturer who prizes his employees and risks profits on their behalf.

The CEO of Malden Mills, located in Lawrence, the 23rd poorest community in the country, stepped clear of the greedy stereotype of his kind in 1995 when, just before Christmas, his factory burned down. Rather than taking the insurance money and retiring or moving the plant to some Third World country, he promptly announced that he would rebuild. He gave bonuses to the help and paid them while they waited for the factory reopening.

Last Monday, this paragon of corporate virtue held a rally at the plant he inherited from his father. The idea was to kick off a campaign for Malden Mills's special product, Polartec, a light, warm fabric that is keeping U.S. Marines cozy in the grinding cold of Afghanistan. Sen. John Kerry hailed Malden Mills as a mill with soul and a mill with heart. Rep. Marty Meehan, the local congressman, saluted Feuerstein for sticking it out with his workers, and sticking it out in Lawrence.

Feuerstein has not had all the good fortune he may deserve. Sales dipped, and he recently filed for bankruptcy under Chapter 11 and negotiated a $25 million bank loan. Feuerstein would have liked the money without the chapter -- "I hate to put any stain on our beautiful name" -- but he told cheering workers that together they would win.

Columnist Mark Shields was the first to make the striking contrast between Feuerstein and today's most celebrated bankruptcy case, that of Enron, the monstrous Texas energy outfit. Most of its 21,000 lost jobs. For 11,000, it was a lump of coal, the loss of life savings invested in Enron stock. Enron employees were urged to buy the stock with their retirement funds, their 401(k)s. When Enron started going south in October, however, the employees were forbidden to sell. Enron CEO Kenneth Lay and his fellow executives were exempt from the lockdown and sold, often at tremendous profits.

On Tuesday, stricken ex-Enron workers told the Senate Commerce Committee of being seduced, betrayed and abandoned by their bosses. Enron lied about earnings, cooked its books and left its employees in the lurch, while its top brass made out like bandits.

Janice Farmer, a Florida widow, had her daughter with her to help her through her testimony. A year ago, she retired with $700,000 in Enron stock. Today, it is worth $4,000. When she saw that Enron was ailing, she tried to sell. She was locked out.

If Lay is sorry about all this, he hasn't said so. Acting committee chairman Byron Dorgan (D-N.D.) said Lay had been invited to testify but declined and promised to come later. Lay is a good friend to the president and is his biggest contributor. White House strategist Karl Rove owned a big bloc of Enron stock, and when Vice President Cheney was devising his strange energy plan, Lay was consulted. There are other Texas ties: Wendy Gramm, wife of Sen. Phil Gramm, is a member of the Enron board and chairman of the auditing committee.

Where Feuerstein and Lay differed most sharply was on devotion to the bottom line. To Lay, we are almost forced to conclude, it was paramount; Feuerstein put the excellence of his product above the entries in his ledgers. To Lay, employees were as disposable as Kleenex; Feuerstein thinks they are partners.

Where did Feuerstein get his extraordinary ideas about worker-management relations? "At my father's table. We all had to be there. No pizza in the kitchen. I was seven years old when I heard my father tell a story I never forgot."

Aaron's father had watched his father, who founded the factory, go around at the end of the day and give money to every one of his workers.

Aaron's father explained to his father, a Hungarian immigrant, that this was not the American way. Aaron's grandfather screamed at Aaron's father that it was against the Torah to do it any other way.

Young Aaron consulted his rabbi, who happened to be his maternal grandfather. His other grandfather, he was told, was right. In Leviticus, it is written, "You are not permitted to oppress the working man because he is poor and needy." Aaron memorized the passage in Hebrew -- and lives by it.

Such a rabbi Kenneth Lay should have had.

Copyright 2001, Washingtonpost.Newsweek Interactive and The Washington Post.
All rights Reserved.
The Washington Post Company, Thursday, December 20, 2001; Page A03



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