MEDIA SPOTLIGHT: Forbes Features Golden of Star Stainless

John Wolz

Editor�s Note: Articles in Media Spotlight are excerpts from publications or broadcasts which show the industry what the public is reading or hearing about fasteners and fastener companies.
�Wayne Golden, president of Star Stainless Screw Co., violates some of the most basic principles of how to run a business � and thrives by doing so,� reporter Gary Shilling wrote in the May 1, 2000, issue of Forbes magazine.
Golden, who took over the $135 million Totowa, NJ-based master distributorship from his father 30 years ago, was featured in the �Entrepreneurs� section.
Golden took his sales force in-house 15 years ago and eliminated the traditional standard price list. Salespeople were given discretion to set prices as long as they maintained gross margins overall.
Customers could call different salespeople and get different prices. �Still, the system works profitably and results in high job satisfaction and low turnover,� Shilling found.
Golden violates a second rule by carrying a high inventory to give distributors prompt delivery.
�This means his inventories turn only 1.5 times a year,� Shilling pointed out. �That ties up lots of money � and exposes him to the vagaries of large price swings. Since 1970 he�s seen five of them, where prices have doubled only to be halved later on. But as a private company that doesn�t report quarterly to shareholders, Star can ride out the bumps.�
Golden buys in bulk with a long lead time from mostly foreign manufacturers.
�When prices fall, at the first sign of price weakness Star offers deep discounts to move inventories,� Shilling explained. �When prices rise, Golden sells his goods at the current replacement cost, plus a minimum markup of 10% to 15%. He also profits by accumulating inventories when he senses that prices are near a bottom.�
Golden also rejects the adage that 80% of sales come from 20% of the customers. He �loves to handle slow-moving items. He scores big points with customers by always stocking the odd-size stainless steel nuts and bolts and handling small orders, even though that means breaking open packages and weighing minuscule quantities.�