Mill town looks to Defense procurement for lifeline

On the scale of the mammoth $369 billion fiscal 2004 Defense spending bill that recently passed the Senate, a $3 million earmark to develop a lifesaving fabric for wounded soldiers is a pittance.

But this tiny item has come to symbolize not simply the potential for savings lives on the battlefield. It also has stirred the faintly pulsing hope of saving hundreds of textile jobs in the economically ravaged city of Lawrence, Mass.

And it might even spare an old man the agony of losing control of a factory-handed down to him by his family over a quarter century ago-that he ran as a benevolent patriarch who kept up his payroll through thick and thin, even when the place burned down in 1995 and during its reconstruction.

The story of Malden Mills Industries Inc. and its decades-old struggle to survive as the textile industry fled New England and even America's shores is a tangled one. Under the leadership of Aaron Feuerstein, now 77 and in the fight of his life, the big fabric firm endured one bankruptcy 20 years ago, only to be plunged anew into a second one in 2001 from which the company is now emerging.

In recent years, the onslaught of foreign competition, together with the ups and downs of the domestic market and the devastating fire, all contributed to a $180 million debt load at the mill and brought down the wrath of Malden's creditors. Under the watchful eye of the U.S. Bankruptcy Court, Malden's creditors gave Feuerstein until Aug. 26 to come up with $92 million to retain control of his company, or the creditors would take it over and consign him to a figurehead role.

The worry in Lawrence is that new owners then would decide either to liquidate the company or to scale it down at a heavy cost of jobs in the current 1,200-person workforce.

In the cold calculus of the MBAs who manage U.S. industries, Feuerstein's management style is a form of old-fashioned paternalism that is little more than a prescription for failure in today's globalized economy. Corporations, it is taught in the business schools, cannot afford a sentimental attachment to workers and hometowns, if they expect to profit and survive in world markets.

Feuerstein, who appears to view his workforce as part of a large extended family, said such teachings are an affront to "human dignity." The mill's workers apparently feel likewise; not once in Malden's long existence has the organized labor force there ever walked out on strike.

"I'm fighting for control of this company to ensure that it remains in Lawrence," Feuerstein told CongressDaily in a recent interview. "It's the mission of this corporation and of my life that we have a responsibility not just to our shareholders, but also to our workers and our community. If this company is successful simply by liquidating jobs in Massachusetts and outsourcing jobs to Asia, we would be relinquishing our responsibility to our workforce, our town, our state and America's manufacturing base."

Feuerstein's long struggle to hang on in New England, as other textile mills were shuttered and abandoned, along with his company's innovative fabric research and aggressive marketing, drew the notice of Massachusetts lawmakers who were equally concerned about the job losses and economic decline of the old mill communities. That's when Sen. Edward Kennedy and Rep. Martin Meehan, both Democrats, waded into the fight.

"With Aaron in control," Meehan said, "I think Malden Mills and Lawrence, the poorest community in Massachusetts, have a brighter future than if the mill went over to outside owners without the same commitment to the area. There's the nagging fear that a new owner would come in and mow down the workforce."

As Feuerstein scours the nation for investors to ante up in his bid to raise the $92 million, he is touting the potential of a Malden product known as "rugged textile electronic garments for combat casualty care," which could revolutionize the management of battlefield casualties, as one part of approximately $27 million in fiscal 2004 defense contracts that he hopes will grow in the years ahead.

Kennedy and Meehan inserted the money in the military appropriations bill in the hope of keeping the looms humming at the mill.

Still under development, the new fabric would be interwoven with electronic biosensors enabling medics nearby to determine the severity of a soldier's wounds in the midst of battle.

Kennedy said the system "would permit only wounded in urgent need of care to be extracted during the heat of battle, when the risk of additional casualties [among combat medics and medevac rescuers] is highest."

The fabric could also have civilian applications, according to Meehan, including the remote monitoring of sick or injured hospital patients, or used in the uniforms of first responders in disasters, or in monitoring the elderly or chronically ill people in rural areas.

For Feuerstein, however, the potential of the biosensor fabric extends beyond the possible military and civilian uses.

"If all the good manufacturing jobs are given away overseas, our unwritten commitment to the working people of our country is broken," Feuerstein said. "If we desert them, tell them to go find jobs making beds at the local hotel, that kind of solution is horrible. It will increase the spread now between the rich and poor, and it could ultimately undermine our democracy."

David Costello, a spokesman for Malden Mills, said the military contracts made possible by the defense bill could provide a "growing customer base whose requirements would provide a continuing source of income" as the mill recovers from bankruptcy.

"There really are no [textile] companies quite like ours left in the country," Costello said. "New investment could help create a whole new family of textiles with both military and consumer uses."

The export potential of any output from the new textile technology has led Feuerstein to the Export-Import Bank, among other places. Although he declined to speculate about the prospects for obtaining export loan guarantees, Capitol Hill sources said an Ex-Im loan could go a long way in bolstering Malden Mills' credit and perhaps even save most of those jobs in Lawrence.