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Little Blue Vol. 1.

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Group: Little Blue Vol. 1.
Mo, Mick, Karissa, and Rachel
ENG 211 Herndon
Essay:What is Fastenal?
2 February 2016

Fastenal: Just the Nuts and Bolts You Need

“Every child is born blessed with a vivid imagination.” (Walt Disney). Robert A. Kierlin

was just an average eleven-year-old boy when he imagined the idea for Fastenal. While working

for his dad’s auto supply shop, he would often think about if it were at all possible to make a

store that contained all the parts people needed instead of driving from place to place. Unlike

many other children’s dreams, Kierlin’s became a reality in 1967. Fastenal is a homegrown

company that has succeeded as a business using a unique corporate model, despite facing some

discriminatory issues with their labor force.

Fastenal started out as an idea and has grown into an international company. The business

began with help from Kierlin’s high school friends, Steve Slaggie, Michael Gostomski, and Dan

McConnon, and an IBM coworker Jack Remick. They were able to scrape up $30,000 for a

small storefront in Winona, Minnesota. According to the article “Fastenal Company,” Dave Mote

states that, “The founders’ goal with Fastenal was to devise a means of making all kinds of nuts

and bolts readily available to the general consumer” (Fastenal Company” 135). As years passed,

Kierlin continued to enhance the company’s game plan as well as slowly continued to open new

stores in smaller towns. Now, Fastenal is a fifteen-billion-dollar company that has thirteen

distribution centers and over 2,700 stores all over the United States, as well as stores located in

Canada and Mexico.
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Fastenal is a successful company due to specifically to how they do business. The

company has several methods of selling their products. Fastenal has a direct order system to

companies and worksites. Their distribution system allows Fastenal to be accessible and

complete orders in a shorter time period. Fastenal’s latest catalog is called Big Blue Volume 11

and boasts, “Big Blue features only a fraction of the products that Fastenal can supply” (Big Blue

Volume 11 1). Big Blue Volume 11 has 2,380 pages worth of products. Like all other large

retailers, Fastenal has an online store as well, where you are able to search through all 400,000

products and have them shipped to your home, business, or to the nearest Fastenal store. Like all

other large retailers, Fastenal has a potential online store as well. Fastenal’s online store

generated an average of 1.15 million visitors per month in 2011 (“Fastenal Company SWOT

Analysis” 2014). Here customers are able to search through all 400,000 products and have them

shipped to your home, business or to the nearest Fastenal store.

In addition to order system and online sales, Fastenal concentrates on providing industrial

and construction supplies through both retail stores and wholesale distribution. According to a

2014 SWOT analysis of Fastenal, it offers its products through 2,652 stores whereas its closest

competitor W.W. Grainger offers its products through only 711 stores. An advanced store

network and distribution model give Fastenal much more power to compete with its peers. A

strong market base and distribution center provide a steadying stream of income. Another sale

technique that Fastenal uses, is to allow their store managers to choose products and set the

prices locally to provide customers with the best value. This means Fastenal tries to figure out

the best way to sell products and get support from local people.

Fastenal has found another way to successfully sell their products using old technology.

The FAST 5000 system, simply put, is a vending machine. However, instead of snacks it is
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stocked with business supplies such as gloves, pens etc... The FAST 5000 allows business

owners to keep track of the inventory that employees are using on the job. Many items are not

for sale to the employee specifically, but it gives the administrations the opportunity to track

consumption. An online article entitled “Get Smart”, which is about industrial maintenance and

operations, refers to the FAST 5000 system “according to the company, these drive a 25 to 30

percent reduction in consumption” (“Get Smart”). This reduction in energy consumption also

helps Fastenal to cut down sales cost.

In addition to innovative selling techniques, Fastenal reaches out to the federal, state, and

local governments for contract work. Many of these contracts supply government fleet vehicles,

maintenance operations, and even hazardous materials protection equipment. Fastenal even has a

contract with the US Military. In an article found in the Winona Daily News, Patrick Anderson

writes, “Fastenal recently signed an $850,000 contract with the federal government to supply 23

parts for Mine Resistant Ambush Protected vehicles” (Anderson). Fastenal states that it prides

itself in customer service not just to the government, but also to all of their clientele and

suppliers.

Not only does the company believe in great customer service, but also Fastenal prides

itself on being an inclusive company when it comes to their employees. In 1999, an article was

published in Saint Paul Pioneer Press saying that Fastenal employees would now be given the

option to buy stock in the company directly from its CEO Bob Kierlin (McCartney). The article

goes on to mention that, Kierlin will be taking on all of the risks if the stock drops and will

assume none of the benefits if the stock rises, he will however be compensated for the optioned

shares (McCartney). Allowing employees to buy stock directly from Kierlin creates a sense of

community and family, the article continues, “shareholders benefit from the plan because it
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aligns employee interests with theirs, and their company doesn't have to pay for it” (McCartney).

Kierlin has taken a great risk in order to create a greater sense of community within his company.

Despite indicating that Fastenal considers itself to be inclusive, within the past couple of

years Fastenal has faced a series of lawsuits claiming that racial and gender discrimination exists

within the company. According to an article entitled “Fastenal Settles Federal Hiring

Discrimination Case" and published in Star Tribune, one of the most recent lawsuits Fastenal

faced took place in October of 2015. The article states, “[Fastenal] used screening and testing

practices in its Atlanta and Indianapolis warehouses that discriminated against 154 black people

and 17 women who applied for jobs” (DePass). The article continues, the U.S. Department of

Labor is requiring that Fastenal pay $1.25 million in back pay and must offer over 170 jobs to

applicants where the hiring discrimination took place.

Hiring discrimination has not been Fastenal’s only issue, more recently the increase of

minimum wage has been an ongoing problem for the company. According to a 2015 SWOT

(strength, weakness, opportunity, threat) analysis of Fastenal, found on Business Source

Premiere Database, one of Fastenal’s biggest threats is rising labor wages in the U.S. and

Canada. “The company's cost structure will be negatively impacted by the rising labor wages. It

could impact the margin expansion adversely and affect the company's profitability” (“Fastenal

Company” 6). According to the 2013 and 2014 SWOT analyses, increasing minimum wages has

been a consistent threat to Fastenal for the past three years ("Fastenal Company SWOT Analysis"

2013,2014 6). If work wages continue to rise, the company will be taking on more of a financial

loss, meaning the business will have to make up that money elsewhere.
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Regardless of employment lawsuits and rising minimum wage threats, Fastenal strives to

expand their business even more than they already have. According to article “Fastenal Plans

Local Manufacturing Site, 97 New Jobs” states, “As of January 4, 2015, Fastenal plans to spend

$4.2 million to redevelop an abandoned northwest-side industrial site into a manufacturing

facility, retaining 55 local employees and creating 97 jobs by 2020” (“Fastenal Plans Local

Manufacturing Site, 97 New Jobs”). They have in mind to use this money and this building to

assemble custom made, replacement parts of fasteners. They do not want to stop there.

According to the article “Fastenal: Great Company Expensive Stock” states, “In the future,

Fastenal hopes to eventually operate about 3,500 stores in the United States” (“Fastenal: Great

Compnay Expensive Stock” 1). Fastenal plans to change their store count annual rate from 10%-

15% to about 3%. They hope with the decrease in their annual rate is that it will free-up

budgeting resources to hopefully broaden their outside sales to achieve more efficient and greater

sales growth and to help boost their profits.

Fastenal started out as a small Midwestern business and has grown into an international

corporation using innovative ideas and a unique business model. In the face of employment

discrimination lawsuits and the continual threat of rising labor wages, the company has

flourished. Fastenal has succeeded over the past fifty years and Kierlin’s little dream has become

a huge reality and will only continue to grow.
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Works Cited

"About Us." Fastenal. Fastenal Company, 2016. Web. 24 Jan. 2016.

Anderson, Patrick B. "Fastenal Lands Government Contract For Military Parts." Winona Daily

News. 19 Aug. 2010. Web. 22 Jan. 2016.

"Big Blue: Volume 11." Fastenal. Web. 26 Jan. 2016.

DePass, Dee. "Fastenal Settles Federal Hiring Discrimination Case." Star Tribune (Minneapolis,

MN). 9 Oct. 2015. 1D. LexisNexis Academic. Web. 25 Jan. 2016.

"Fastenal Company." Fastenal Company SWOT Analysis 2015. 1-7. Business Source Premier.

Web. 25 Jan. 2016.

"Fastenal Company." International Directory of Company Histories. Ed. Jay P. Pederson. Vol.

42. Detroit: St. James Press, 2002. 135-138. Gale Virtual Reference Library. Web. 22

Jan. 2016.

“Fastenal Company SWOT Analysis." Fastenal Company SWOT Analysis 2013. 1-7. Business

Source Premier. Web. 25 Jan. 2016.

"Fastenal Company SWOT Analysis." Fastenal Company SWOT Analysis 2014 1-7. Business

Source Premier. Web. 25 Jan. 2016.

"Fastenal: Great Company Expensive Stock." Seeking Alpha. N.p., 17 Apr. 2013. Web. 22 Jan.

2016.

"Fastenal Plans Local Manufacturing Site, 97 New Jobs." Fastenal Plans Local Manufacturing

Site, 97 New Jobs. Design, CMS, Hosting & Web Development, 4 Feb. 2015. Web. 22

Jan. 2016.

"Get Smart." Industrial Maintenance & Plant Operation 70.11 2009. 29. Business

Source Premier. Web. 22 Jan. 2016.
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McCartney, Jim. "Fastenal’s Stock Option has Twist; Employees Will Buy Their Shares Directly

from Founder Bob Kerlin." Saint Paul Pioneer Press (MN). 18 Nov. 1999. IC.

LexisNexis Academic. Web. 25 Jan. 2016.

"Top 10 Best Walt Disney Quotes." Top 10 Best Walt Disney Quotes. Top10-best, 2010. Web.

02 Feb. 2016.