Twenty years after a fire destroyed Polartec's factory and its CEO spent millions to keep paying employees during reconstruction, the company has announced it will close its Lawrence, Mass., facility and move operations elsewhere.
Over the next few years, Polartec plans to consolidate its U.S. manufacturing in its Hudson, N.H., and Cleveland, Tenn., factories, according to a statement from the company obtained Friday morning. Polartec does not have any other facilities.
The Lawrence facility is much too large, the statement said, and in its most productive year, only 25 percent of the facility has been used. Polartec has not created a timetable for moving its operations.
The company said it would work with local elected officials and employment development agencies to mitigate the impact closing the factory would have on Lawrence and surrounding towns. It will explore selling some or all of its assets there, providing training for its workers to help them get jobs elsewhere and looking for alternative uses of the Lawrence factory.
Articles published by local newspapers make it clear the town and the company's former CEO, Aaron Feuerstein, are confused and angered by the decision.
Then called Malden Mills, the factory burned on Dec. 11, 1995. Feuerstein ignored conventional business wisdom and continued to pay employees' paychecks and benefits, saying he would not put thousands of people out of work two weeks before Christmas. He later lost his position as CEO and the company filed for bankruptcy protection in 2007.
Versa Capital, the investment firm that owns Polartec, released a separate statement saying it had rescued the business in 2007 from "certain liquidation after multiple bankruptcies... precluding a catastropic event for the Lawrence and Methuen (Mass.) communities."
It further said that it supported the decision to close the factory as it had "sustained Polartec's manufacturing operations in Lawrence in these intervening years despite structural inefficiencies at the company's overscaled Lawrence facility. ... Polartec’s global supply chain has necessarily continued to evolve and markets have shifted, and the Company must respond to these competitive factors."
Chuck Dohrenwend, of public relations firm Abernathy MacGregor, would not comment on whether Polartec has long-term plans to move operations overseas or on why the company chose to consolidate in the way it did.
No comments would be made beyond what was released in statements, and CEO Gary Smith was not available for interviews, Dohrenwend said.
Feuerstein, 89, told the Boston Globe the decision was a "disgrace."
"All those jobs are lost, after we dedicated ourselves to keeping them," he said. "We considered our workers stakeholders, a part of the factory. They consider workers just a pair of hands. You can get a pair of hands in many places."
Malden Mills was started in 1906, and outfitted soldiers through two world wars, Polartec says on the "About us" page of its website. In 1956, it moved to Lawrence and the Merrimack Valley "for innovation."
The Massachusetts town of roughly 80,000 relies upon the wages earned at Polartec's factory, and hundreds of families will be affected by its closure, Lawrence Mayor Dan Rivera said in a statement his office provided Friday morning. Polartec is one of the largest private employers in the area, according to the Boston Globe. Rivera was particularly disappointed that the decision was announced Thursday, one day before the 20th anniversary of the fire that would have left hundreds, if not thousands, of workers unemployed if not for Feuerstein's generosity.
"I feel that the workers and I were deceived, because just one month ago, upon purchasing a similar business in Tennessee, Polartec reassured us (the Union and I) that they would not do exactly what they are doing today," Rivera said in the statement. "The federal, state and city governments made a long-term commitment to the manufacturing jobs at Polartec. That meant that whenever Polartec had a need or an issue, they would bring us all to the table together to figure out a way forward. That did not happen this time."
Rivera called for Smith to meet with him, Mayor Stephen Zanni, of nearby Meuthen, Mass., state and federal delegations and representatives of Massachusetts Gov. Charlie Baker's office to explain the decision. Lawrence will fight for the jobs, Rivera said.