Indiana's Entrepreneurs of the Year.

• Author: Murphy, N. Scott

MANUFACTURING Kelly Rose Starcraft Automotive

It's the Indiana Entrepreneurs of the Year awards dinner at the Indiana Roof Ballroom. The CEO of the best-known van-conversion company in the world is gesturing as well as he can with one arm in a sling.

"One advantage of having rotatorcuff surgery is that sometimes you get away with not wearing a tie," he says. "But when I was getting dressed, my wife said, 'You're not going like that.'"

Kelly Rose may not like dressing up, but you'd never know it by looking at his vans. Starcraft Automotive, based in Goshen, is known worldwide for transforming GMC, Chevy and Dodge vans, minivans and sport-utility vehicles into traveling comfort coves. Three million Starcraft products have reached the market, and more are on the way: the company's net sales in 1993 increased to $85.3 million from $51.1 million in 1991.

It's quite a turnaround story. On Nov. 14, 1990, Starcraft filed for Chapter 11 bankruptcy protection. About the same time, Rose was itching for something to do after selling his company, an electronic distributor to the van-conversion industry. "I was bored to death," he says. "I had looked at about 11 different companies to buy. Nothing really appealed, nothing fit. When Starcraft filed Chapter 11, it seemed too far out of my reach. But I put together a team and found that it wasn't beyond my financial capability. I wanted to buy Starcraft badly. There's no other company that enjoys as much of an elite reputation. In Europe a custom van is referred to generically as a Starcraft, like tissue is called Kleenex."

Two months later, Kelly owned Starcraft. He implemented major changes in its upper leadership. "I retained the middle management," Rose says. "My philosophy is that any company is nothing but people."

Rose's preoccupation with teamwork reaches all the way to the assembly line. Rose spent nearly $1 million revamping the company's manufacturing plant, converting its winding assembly maze into three straight, 660-foot long, team-centered production lines. He also took the company public, and landed Starcraft on Business Week's list of the nation's best small growth companies. Starcraft was the only Indiana company to make the list.

Each step along an assembly line is handled by a team. Each team is responsible for inspecting the quality of the product received by the prior team and delivering a quality product to its "customer," the next team down the line. "We strived to build the quality in, not inspect the quality out," Rose says. "Our intent is to let people on the assembly line know that as the vans come down the line, each team 'buys' the van from the previous team and has to 'sell' a quality product to the next team." Each team's bonus and compensation is based on quality of performance.

Starcraft recently acquired Imperial, an entry-level van converter. The acquisition complements Starcraft's middle- to upper-end market share and should increase Starcraft's employment to more than 1,000.

RETAIL/WHOLESALE Charles Stentfenagel Stens Corp.

Charles Stentfenagel spends a lot of time explaining what his company does.

"I don't even think the people who made our video at the awards dinner really understood," says Stentfenagel, CEO of Stens Corp., a Jasper-based distributor of aftermarket parts for mowers, lawn tractors and other outdoor power equipment.

"Think of us like NAPA," Stentfenagel says, "but with outdoor-equipment parts instead. We're like a generic brand."

Stentfenagel's patience has paid off. He's made enough Stens believers to turn the company into one of the largest such distributors in the world. "Being a non-original supplier we only get one chance," Stentfenagel says. "Original dealers can make 10 mistakes to our one and still get by with it. If someone gets a bad sale from us, that confirms all the stuff the dealers are told about us. Twenty-five years ago the aftermarket sold junk. Stens has played a major role in bringing the industry up to standard."

Stens was founded in 1957 by Stentfenagel's father, Jim, as Sten's Sales and Service. After 12 years Jim realized that no one in the replacement-parts industry was effectively servicing Midwestern dealers. He turned over the retail store to his son and opened a small parts distributorship.

Charles Stentfenagel acquired his parents' interest in 1991 and changed the corporate name to Stens Corp. Annual sales have increased nearly 75 percent since then.

Today, Stens imports many parts directly from overseas, reducing costs considerably. Distribution centers in Jasper as well as Mississippi, Pennsylvania and North Carolina provide next-day direct service to dealers in 20 states, while full-line distributors serve customers nationwide. The company exports to Europe and to more than 20 other countries.

Several innovations make Stens an industry standout. Its entire distribution system has been computer-linked since 1990. A full-time data-processing department manages 24 phone lines, 60 IBM terminals and printers throughout Stens' central warehouse facility. In an average 1-to-2-minute order call, a customer order is compared with inventory, delivery is promised, inventory is updated and the request is sent through a computer link with the appropriate distribution center and then processed.

Most orders are taken, picked, packed and ready for UPS in less than 30 minutes. Stens guarantees that orders taken before 1 p.m. will be shipped the same day.

"Traditionally with original-equipment manufacturers and in our aftermarket, turnaround has been three to 10 days," Stentfenagel says. "That's what dealers expect. My father got it down to one or two days. Now it's in and out in a day. As time went on, we realized that we could make a great impact and get a lot of respect for our industry by achieving same-day service. Once we went 'live' and had our inventory right there on the screen, we could give immediate feedback to dealers."

Stentfenagel says his delegation ability has improved since his bowling alley/restaurant manager days. "In today's business arrangement, I learned very quickly that you can't do it all," he says. "You've got to delegate and get your people involved. I concentrate on being a leader of managers instead of a manager of a company. My senior managers are learning to delegate and give managers under them ownership of the company. They've been successful."

MASTER ENTREPRENEUR (co-winner) Andre Lacy LDI Ltd.

Take something, don't add much value to it and sell it to zillions of people.

According to Andre Lacy, that's distribution.

He devised the principle not while in the distributing business, but in manufacturing, as a director for the U.S. Corrugated Fibre Box Co. of Indianapolis. Unhappy with the company's direction, Lacy led his managers in a drastic restructuring. Unprofitable facilities were dumped and retained property was upgraded. Before long the company was the second-largest independent box manufacturer in the nation.

Then Lacy sold it.

"With the corrugated-box industry, it's not real friendly," Lacy says. "We weren't adding much value to the cardboard, and we were selling it to contain every conceivable product. We thought about this. You take something, you don't add a lot of value to it and then you sell it to zillions of customers. That sounds a lot like distribution. It was a new industry and we were excited about it. Most distribution businesses were started after World War II, and a lot are owned as family businesses. Now as they've grown older, they've slowed down their investments. So there was great potential there."

Lacy's fierce hatred of micro-management and indecisiveness became apparent when several of his fellow board members seemed hesitant to let go of U.S. Corrugated. "In 1980, I wasn't comfortable where the company was headed. I thought we were coming up against a ceiling for what our company could be so we decided to make our move, make the improvements and do an orderly divestment. That was when I got impatient. If you're going to get out, let's get out 100 percent."

Lacy Diversified Industries became LDI Ltd., and Lacy embarked on a career of reinventing small-niche distributors. It began with the purchase of Major Video Concepts, a recorded-videotape distributor. Eleven other distributors followed. Since 1983, LDI sales have increased from $70 million to more than $560 million. A share of LDI stock was worth $2.27 in 1983. In July...