You are a manufacturer of 2.5 inch notebook computer disk drives with a surplus of 40,000 of the things, you can’t get rid of them in the notebook market without compromising the rest of your sales, so where on earth can you go? UK trading company PST (Trading) Ltd would be a good start. The Maidenhead, UK company recently bought 40,000 2.5 notebook drives from an unnamed manufacturer, built them into 3.5 cases and sold them as anonymous IDE drives for desktop computers. PST, a privately held company with revenues of around 18m pounds a year, has hundreds of these sorts of stories to tell. The company prides itself on paying cash up front for manufacturers’ redundant stock, be that not quite state-of-the-art personal computers, printers, peripherals, components such as disk drives, or quite often anything from refrigerators to wrist watches, and usually finding a buyer for it, somewhere in the world. It pays particular care not to sell back into the manufacturer’s own market, or to in any way compromise its channel sales. The only possible threat to this cosy little arrangement may be just-in-time manufacturing, where in theory a company manufactures only what has been pre- ordered. PST founder and chairman Howard Strowman admits that his company doesn’t get many computers from Dell Computer Corp for example, but says even with this build to order model, manufacturers can still find themselves with an excess of components, and also get left with faulty machines returned by retailers. PST has recently sold a 50% stake to investment bank Baltic Investments, which is quoted on the Luxembourg stock exchange, not, it seems, because it was desperate for cash, but because it is looking to broaden into other industries, and because Baltic Investments made us an attractive offer. Strowman certainly knows an attractive offer when he sees it, having first sold PST to Canon Investments Plc in 1987 and bought it back for ‘a lot less’ in 1992 (CI No 2,778). The other industries it wants to target include cameras, where Strowman started life and still has contacts, he says, and where digital imaging is forcing cameras into the personal computer-type lifecycle. The company has recently moved some Olympus Optical Co cameras, and is talking to Eastman Kodak Inc. Although it has no desire to become a hardware distributor, PST has recently become a distributor for IBM Corp’s Lotus SmartSuite, selling only to the smaller system builders that bundle the software, who by dint of their size are not viable for Lotus to deal with direct. PST does also occasionally buy end of line software, in the same way as it does hardware. Not everyone has to pay cash either. The company has introduced US barter company CSI International Inc to the UK and Europe, and the two have set up CSI Europe Ltd, which will pay manufacturers the full wholesale value of their goods in exchange for a mix of cash and trade credits, redeemable for advertising, travel and the like. The company’s venture into the computer memory market was not successful, however (CI No 2,778), due to the downturn in the market, and the company no longer trades in generic memory. While he admits that PST is the last port of call for many companies and seen as an admission of defeat, Strowman would still like to be in a situation where companies outsource their inventory management to PST, which he believes would save them a great deal of money. Many call the company in at year end, when the crisis has struck, or take so long to decide to offload their stock that PST’s original offer price is decimated by the time they finally decide, he says. There are very few well known manufacturers that PST hasn’t dealt with in its time, and the company sees nothing on the horizon that will change this. Everyone has a stock problem says Strowman. Even PST sometimes!
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