By Suzy Strutner, managing editor
For Star Metal Fluids, a distributor in Phoenix, one of the coronavirus’ biggest drawbacks has been a lack of customer facetime.
The company creatively cleared that and other hurdles and is now watching sales climb back up as it prepares to resume as much of usual operations as possible.
Taking a hard stance on payment terms — with empathy — has proved critical in dicey financial circumstances.
For Aaron Kurzawski, the coronavirus threw a curveball to business as usual. After making some savvy adjustments, he’s ready for his teams to operate more like they usually would in the coming weeks.
Kurzawski is general manager of Star Metal Fluids, a distributor of metalworking fluids based in Phoenix. The company, which his dad started, has 18 employees. It sells lubricants and machining fluids, which keep heavy machinery running smoothly, to manufacturers in Arizona, Utah and the Las Vegas area.
👉 Like many distributors and manufacturers, Star Metal Fluids kept operating over the past couple of months even as some businesses shut down temporarily due to COVID-19.
Its customer companies make airplane parts for big names like Boeing, Raytheon and Cessna, as well as components for the military. These customers were considered essential businesses, and therefore so was Star Metal Fluids.
But just because the company has stayed in operation doesn’t mean it’s been an easy stretch. Kurzawski and his team needed to think fast to ensure Star Metal Fluids’ wellbeing both during and after the coronavirus outbreak.
Making house calls
Most of Star Metal Fluids’ customers aren’t allowing outside vendors to visit their manufacturing facilities right now unless there’s an essential need, Kurzawski said.
This poses a challenge for the company, whose sales teams rely on being able to physically check on the machines that use their fluids in order to grow customer relationships and make more sales.
“A lot of other companies can ‘work from home,’ and we don’t have that ability because the company is very service-oriented,” Kurzawski said. “It’s now a lot tougher to get in to see our customer base.”
👉 To make getting in touch with customers easier, Star Metal Fluids started sending sales representatives to deliver orders in addition to the company’s usual delivery drivers.
When the representative shows up with a shipment of machining fluid, he’s able to chat with the customer face-to-face.
“Our sales guys will end up playing the delivery boy,” Kurzawski said. “That’s their way of getting in the door. Once you’re in the door, the customer sees you and you can check in.”
It’s “hard to determine” whether Star Metal Fluid has lost any customers due to COVID-19, he added, because there are many his teams still haven’t been able to visit as usual. Without these visits, it’s difficult to know whether a given customer is using Star Metal Fluids’ products in its machines.
Star Metal Fluids distributes machining fluids out of two warehouses. (credit: Facebook/MetalFluids)
Small businesses step up
There has, however, been a “slight uptick” in new customers over the past couple of months.
Since March, the Star Metal Fluids e-commerce site has seen a steady stream of orders for its fluids in small quantities. To Kurzawski, this suggests that smaller manufacturers are turning to Star Metal Fluids when COVID-19 shutdowns prevent them from getting fluids from the distributors they usually work with.
Overall, sales are rebounding from a slowdown over the first three weeks of April, Kurzawski said. He attributes this to the fact that many manufacturers changed their production lines to produce items like ventilators and test kits in response to COVID-19.
“One of the cool things that we’ve been able to watch and be a part of is these small businesses that have taken the initiative to say ‘Hey, I’m willing to convert these setups I have for airplane parts and now make parts to benefit our society,’” he said. “I personally think [Star Metal Fluids’ continued sales] have something to do with these ambitious small businesses.”
“One of the cool things that we’ve been able to watch and be a part of is these small businesses that have taken the initiative to say ‘Hey, I’m willing to convert these setups I have for airplane parts and now make parts to benefit our society.'"
The company recently used its regular ad space in a trade magazine to spotlight these businesses’ efforts. Kurzawski declined to name the businesses, saying they’re run by “humble guys that want to stay busy, not get recognition.”
Investing in inventory
Financially, the past couple of months have been more tedious than usual for Star Metal Fluids.
Most of the vendors who manufacture the fluid it sells had no problem getting the raw materials they needed despite COVID-19 closures, Kurzawski said. But in late March, one of the vendors advised him to stock up on its products, because it wasn’t clear whether it would have access to raw materials in the coming months.
Kurzawski placed an order from this manufacturer that filled both of Star Metal Fluids’ warehouses “to the brim.”
“I’ll be honest, that was pretty stressful for us,” he said. “... We typically have very good cash flow. But that’s not to say that when you see hundreds of thousands of dollars of additional inventory sitting on your floor, you’re not praying that they just move quick.”
In response to COVID-19, the company stocked up on certain inventory. (credit: MetalFluids.com)
Payment policies, in partnership
Kurzawski asked the vendor for an extension of payment terms, which would’ve allowed Star Metal Fluids more time to pay for the inventory beyond its usual 30 days. After a long talk, the vendor said no.
That discussion — and Star Metal’s current cash flow situation — caused Kurzawski to start declining his customer’s requests for payment extensions. Previously, he had granted a few of them.
“I thought of an analogy,” he said. “We’ve got thousands of customers. And if we poke holes in our dam — two, three, five holes is no difference. But if we poke 150 holes in our dam, it’s going to break. So I decided to put the kibosh on extending payment terms, because if we poke holes in our dam, we’re not going to survive as a small business.”
Plus, he said, some customers might pay late regardless of whether their terms are officially extended.
“We’re going to empathize with [customers who ask for extensions] because we’re feeling the same pain,” Kurzawski said. “Our cash flow’s down. We’ve had to invest in inventory and small expenses to keep stuff clean. We’ve incurred some of those same expenses [that they have], so we’re just not in a position to limit our cash flow right now, just like they aren’t.”
“We’re going to empathize with [customers who ask for extensions of payment terms] because we’re feeling the same pain. ... We’re just not in a position to limit our cash flow right now, just like they aren’t.”
Kurzawski emphasized that he views his customers, many of whom are longstanding, as partners. He typed up an explanation of the policy on company letterhead and sent it around to express his empathy.
Star Metal Fluids hasn’t applied for any government loans, as far as Kurzawski knows. It “hasn’t been a necessity quite yet.” The company finished April financially “stronger than anticipated” but still weaker than last year.
The company's warehouses haven't had to close due to the coronavirus. (credit: Star Metal Fluids)
Warehouse business as usual
Star Metal Fluids’ warehouses and offices have operated much as normal throughout the coronavirus outbreak, Kurzawski said.
While his colleagues in California cite fears of facility shutdowns, Kurzawski said his warehouse operations haven’t been hindered by any city or state mandates.
“Honestly, I think it’s been so much more chill here [in Arizona],” he said.
👉 Star Metal Fluids employees aren’t required to wear masks, though they are available in its office and warehouses.
There are never more than seven employees onsite at a time anyway, Kurzawski said. The company produced disinfectant and hand sanitizer for its own use, which is readily available at the Phoenix facility and its other warehouse in Utah.
The next chapter
Over the next few weeks, Kurzawski aims to move on completely from the coronavirus. It’s important to get his sales teams back on the road.
“I see, within a month, us being back to business as usual,” he said. “I see our guys traveling like they were before. That’s my goal: within a month, to get my sales manager traveling like he was, my account managers being able to go and visit their accounts like they once were.”
In the meantime, positivity takes precedence over panic.
“We’re optimistic and very grateful that we still have jobs and that nobody’s taken a hit yet,” he added. “And we’re very grateful for our customer base and what they’ve done to pivot and start trying to be part of the solution.”