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Malden Mills

Malden Mills. Session 5. Case Outline. The Situation Background of Malden Mills Internal Context The Fire First Bankruptcy Second Bankruptcy Board Options. The Situation.

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Malden Mills

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  1. Malden Mills Session 5

  2. Case Outline • The Situation • Background of Malden Mills • Internal Context • The Fire • First Bankruptcy • Second Bankruptcy • Board Options

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

  4. 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

  5. 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

  6. 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

  7. 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

  8. First Bankruptcy • Why? • What was Feurstein’s mindset?

  9. Second Bankruptcy • Why? • What was Feurstein’s mindset?

  10. 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?

  11. Board Options • Next Step

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