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Archive for July, 2012

Why Niche Markets Are A Small Business’ Best Friend

Tuesday, July 31st, 2012

Niche Markets and Industry ConsolidationOver the past few weeks, there has been a great discussion in Welding & Gases Today’s On The Edge section about the impact of industry consolidation on GAWDA members’ businesses. If you haven’t had an opportunity to check it out yet, I recommend starting with small distributors’ reactions (here), then moving on to large distributors (here) and finally suppliers (here).

I was somewhat surprised to discover just how many distributors say they like the current trend of acquisitions. Although it is somewhat telling that while 73% of distributors say it will help their sales, only 42% of distributors say they like consolidation (only 35% dislike it). There is a tenor of apprehension when one distributor says, “Although it is a bit disconcerting to watch all of the independent distributors get eaten up by the giants, it also gives us hope and opportunity in our marketplace.”

Hope and opportunity are something also reflected in the view of Brandon Jones, president at Jones Welding & Industrial Supply (Albany, GA), who says he loves the effect consolidation has had on his business. “At one time we had five different distributors in our market. Now it’s us and one competitor,” he says, adding that as his competitor grows, it loses the ability to provide the same level of personal service.

“It’s still about relationships and service,” says Jones. “I know most of my customers. I sit across the table from them when I take them to lunch, or we play golf, that type of thing. If there’s a problem, they don’t have to filter up to the bureaucracy to get anything done.”

Jones says his business is more profitable than ever, and it’s largely due to finding new ways to compete and continuing to develop customer relationships. “You have to know your market, and you have to know your customers. What works for me in my market might not work for somebody up North or out West.” For his market, Jones has found success by carving out a niche selling steel.

“Steel is a different animal than welding supplies. For the most part, price determines where customers buy their steel, whereas there’s a lot more service that has to be factored in with gases. So I can go to a competitive account and say, ‘I know you don’t buy your welding supplies from me, but we sell steel. Can we quote you on your steel?’ That way, we’re able to develop a relationship through that venue, versus just trying to cold call them from time to time on their welding supply needs.”

As consolidation makes the big distributors bigger, niche markets can be a great way for smaller distributors to sweeten the pot and open doors for new accounts. But as Jones says, it’s important to make sure there is a need for those products and services. He says, “You have to know the weaknesses of your competitor, and you’ve got to know their strengths, so you don’t waste energy and money.”

What are your thoughts about industry consolidation? How are you taking advantage of the opportunities created by acquisitions?

Welding & Gases At The 2012 London Olympics

Friday, July 27th, 2012

As the opening ceremony for the 2012 Olympics gets underway this evening, the world of gases and welding will be front and center in two of the games’ most anticipated and iconic elements—the Olympic torch and the Olympic Stadium. Hydrogen vehicles also play an interesting role in the 2012 London Olympics.

London's Olympic Stadium

London's Olympic Stadium is 75% lighter than previous Olympic venues, thanks to the use of lightweight steel.

The Olympic Stadium
In years past, Olympic venues have been designed as monuments, something to remember for years to come. Take the Beijing National Stadium built for the 2008 Olympic games (the Bird’s Nest, as it has come to be known). The stadium with its whimsical steel frame—and 45,000 tons of steel in all—will no doubt be remembered. But the dig on Olympic venues is that they often serve little function after the games.

With this in mind, London’s Olympic Stadium looks to make a very different kind of statement than those of years past. During the 2012 games, the Olympic Stadium will seat 80,000 people. 55,000 of those seats are temporary. After the games, the stadium will be partly disassembled to create a smaller 25,000 seat venue. In fact, the builders didn’t even bother to cover the bolts used to hold the steel together, knowing that they will eventually be removed.

One of the keys to creating a stadium that could be transformed was the use of lightweight steel. In total, the Olympic Stadium contains just over 11,000 tons of steel (a far cry from Beijing’s 45,000), making it the lightest stadium in the world at this size. Also of note is the fact that the top ring of the stadium was built using 2,500 tons of reclaimed surplus gas pipes from the North Sea Gas Pipeline project.

The Olympic Orbit

The ArcellorMittal Orbit includes steel from five contintents.

As with any stadium construction, the Olympic Stadium relied on skilled welders to join the lightweight steel. One welder left his mark—and a good-luck charm for his home country—by welding a series of horseshoes that resemble the Olympic rings into the stadium’s roof. You can read more about how Construction Manager Steve Burley welded his creation 120 feet up on a pillar here.

Elsewhere in the Olympic Park, the Aquatics Centre (where swimming events will be held) stands out with its 525-foot-long wave-shaped steel roof, which rests on just three supports.

One of the most distinctive buildings at the 2012 London Olympics is the Orbit (officially the ArcellorMittal Orbit), an observation deck that doubles as a piece of public art. ArcellorMittal donated all of the steel for the project, sourcing the supplies from five different continents (including North America) in the global spirit of the Olympics. Just over 2,400 tons of steel were used in its construction, including 60% recycled steel.

The Olympic Torch
Arguably the most iconic symbol of the Olympics, this year’s Olympic torch is made from a special aluminum alloy originally developed for the aerospace and automotive industries. The alloy’s characteristics make it heat resistant, lightweight and strong.

The torch has a unique triangular design incorporating a complex pattern of 8,000 holes (representing the 8,000 people who carried the torch on its journey from Olympia, Greece, to London). Along with their symbolic representation, the holes are functional. One of the torch’s designers, Jay Osgerby , says, “The wind moves through the torch, the perforations allow the metal to cool, and so the torch never gets hot.”

The Olympic Torch

The Olympic torch relies on laser welding and cutting processes.

In creating the torch, the holes are cut from the alloy using a numerically controlled 2D laser cutting machine. After this, the manufacturer uses 3D laser technology to weld the parts of the torch together in a smooth, seamless joint and cut additional holes in the welded areas.

As for the actual flame, the 2012 torch uses a gas mix including two-thirds propane and one-third butane. Each of the 8,000 torches used this year (yes, they use a separate torch for every runner) has enough gas to burn for 13-14 minutes, although it only takes 3-6 minutes for each carrier to travel the 300 meters (328 yards) of each leg.

Scroll down to view a video of the torch’s construction.

Hydrogen Vehicles at the Olympics
Recently it was announced that five hydrogen taxis will be used to transport VIPs in London throughout the Olympics. The fleet will refuel at London’s Heathrow airport at a new Air Products fueling station.

Meanwhile, London’s fuel cell buses, which have been running since 2009 (and recently hit the milestone of 100,000 miles driven), are being decommissioned during the Olympic due to security concerns. The Air Products hydrogen fueling station in East London used to operate the buses was originally approved in 2009 on the condition that hydrogen fuel not be stored on-site between July and mid-September of 2012.

Notably, a fleet of 20 hydrogen buses was used successfully and without incident at the 2010 winter games in Vancouver, Canada.

With or without hydrogen buses, the gases and welding industry will be well represented at the 2012 games. As promised, here is a video showing the manufacture of the Olympic Torch.

Photos: London 2012, ArcelorMittal

Helium Shortage Puts GAWDA Members In The Spotlight

Tuesday, July 24th, 2012

Still-Leben Mülheim 10 iesWhen it comes to questions about gases and welding equipment, it’s no secret that GAWDA members have a great deal of expertise. In my experience, they’re also very willing and eager to share this expertise with others. I couldn’t even begin to measure just how much I’ve learned about the industry from GAWDA members.

With the helium shortage all over the news, local newspapers and TV stations have turned to GAWDA distributors to tap into this expertise and learn about the helium supply situation. While a product shortage may not be a boon to business, it has no doubt provided some exposure for these distributors.

Here are some of the distributors who have appeared in recent news stories:

Norco (Boise, ID) has been interviewed by several news sources. President Ned Pontious told KTVB, “Obviously the price on helium has been increasing quite dramatically, but what’s really frustrating is when price is not an issue and you still can’t get the product. We’re willing to pay whatever we can pay to get it, but we can’t get it.” Pontious was also interviewed by another area TV station, and the company made an appearance on news station KREM2.

Mike Storie, vice president of sales at Haun Welding Supply (Syracuse, NY), told The Post-Standard that the company has 1,000 empty cylinders that should be full of helium. “We see no signs of it going backward.” Store Manager Brian McDonald was also interviewed by a local TV station, and Sales Manager Grant Hanlon spoke with an area newspaper.

In Wichita, KS, Lampton Welding Supply President Guy Marlin was quoted in the Wichita Business Journal: “It’s probably not going to change for a while. We’re fortunate that we’ve been able to hang in there.”

nexAir (Memphis, TN) Senior VP Steve Atkins told The Commerical Appeal, “Everything we read and see leads us to expect to see more cost increases in the future.”

“Helium in the earth is depleting, not as much as there use to be, demand has gone up somewhat, and it’s a worldwide product now,” said Melo’s Gas & Gear (Bakersfield, CA) President Dave Melo in an interview with a local TV station.

Noble Gas Solutions (Albany, NY) President and CEO Dave Mahoney told with the Times Union, “The last thing I want to do is see a welding operation lay people off … so I can watch a bunch of balloons at a parade.”

“We are trying to spread it out so everybody gets something,” Michael Sutley, OXARC (Spokane, WA) vice president and general manager, told the Tri-City Herald.

An update on Weldstar’s (Aurora, IL) website was quoted by the Pharos-Tribune as saying, “Along with many other distributors, Weldstar is feeling the effects of a global helium shortage, which is expected to last up to three years.”

In Bend, OR, Airgas Branch Manager Phil Price told The Bend Bulletin, “As far as we know, we could see the end of helium-filled balloons.”

In these interviews, GAWDA members offered some great insights into the helium supply situation. Reading through these articles, I realized that having access to this incredible network of industry members is something that I take for granted at times…after all, I get to speak with members about a variety of business and industry related topics on a daily basis (whereas it takes an event like the helium shortage for mainstream media outlets to pick up the phone) . All I can say is it’s about time that the general public got to see how knowledgeable and well-spoken GAWDA members are.

If I left your company out of the list of news appearances about the helium supply, feel free to add a link in the comments area.

What’s So Green About Gases And Welding [Video]

Friday, July 20th, 2012

Recently in LinkedIn Answers, I came across an interesting question: Is it always best to buy, sell and promote environmentally friendly products? During a conversation last week, I asked a distributor what he thought about this question. He expressed that being “green” was important to him in his company (recycling, etc), but that it was not something customers had ever expressed as a real priority.

As a business, it makes the most sense to sell what the customer wants, so the answer to the original question is that it’s not appropriate for everyone. But while some often think of the gases and welding industry as very “industrial,” in reality it’s a very green industry, and it’s become so without really trying. Take hydrogen fuel for example. Or wind turbines, which take a massive amount of welding. Even a core group of suppliers is focused on improving air quality through fume removal systems.

But long before the push for environmentally friendly energy sources, distributors were helping their customers recycle. Cutting equipment—be it oxyfuel cutting, plasma cutting, propylene, chemtane, you name it—is another important group of product supplied by GAWDA distributors. These powerful tools help fabricators, artists and other metalworkers break down scrap metal and recycle it for new purposes.

Here’s a video of an artist cleaning up scrap metal sitting at the bottom of a body of water and turning it into a great piece of art. It doesn’t get much greener than this:

How To Double The Effectiveness Of Company Events

Tuesday, July 17th, 2012
The ROI of a Welding Rodeo

You're not seeing double, just maximizing the ROI on your sponsorship of the local welding contest or event.

When it comes to local welding contests and other events, goodwill and giving back to the community are great reasons to support these events. Even looking out for the good of the industry is a worthwhile reason to get involved. But just because generosity may be your motivation, it doesn’t mean gases and welding distributors can’t take full advantage of the event to maximize their returns.

Take Bellingham Technical College’s Welding Rodeo for example. Central Welding Supply (North Lakewood, WA) has been an avid supporter of the welding rodeo for the entire 11 years it’s been running. In fact, Central Welding Sales Manager Marshall Judy was one of the original people who helped see the Welding Rodeo to fruition. “The Welding Rodeo is a great event for Bellingham Technical College and for the local community. The school and its welding program benefit in many ways,” he says.

When I spoke with Judy recently, he talked about how the event is a way to contribute, but it also provides opportunities for Central Welding Supply to gain exposure and future customers. Based on my conversation with him and conversations with other distributors about their support of local events, I’ve come up with a list of 5 ways to get greatest ROI on an event or sponsorship.

  1. Involve industry partners. You don’t have to go it alone. Central Welding Supply recruits vendors to donate prizes for competitors. Many vendors are willing to contribute, and it only helps to strengthen the distributor-supplier relationship.
  2. Exhibit at the event. A trade show is a nice pairing for a welding competition or other event. Setting up a booth allows you to reach participants and event attendees, and it’s another great opportunity for visibility.
  3. Find teachable moments. Central Welding donated oxygen and chemtane fuel gas for each of the booths this year. Safety training is conducted with the competitors before the event to make sure students know how to use the fuel. This helps keep everyone safe and establishes your reputation as an expert.
  4. Product placement is kosher. If you’re donating product, nobody’s going to complain if it provides value to you as well. As for the aforementioned donation of chemtane fuel, Judy says that it’s a great way to expose students to an alternative fuel. On the altruistic front, it broadens the students’ experiences.
  5. Stay in touch. Students are your future customers, so it’s important to make a good first impression. But don’t stop there. Stay in touch as their career grows. Says Judy, “We like to have exposure early on, so that when the students go on to management positions in 10 or 20 years, they remember us.” With the Welding Rodeo in its 11th year, Judy reports that a number of students have now gone on to decision making positions.

What other tips do you have to get the most out of company events? Share by leaving a comment.

5 Issues Affecting Businesses In The Election

Tuesday, July 10th, 2012

Presidential Election 2012Although I try not to talk politics, there are times when it can’t be ignored. GAWDA members, like all business owners, are paying close attention to the upcoming Presidential election. One distributor told me last week that he was looking forward to November. And of course, the Supreme Court’s recent decision on the health care law has only heightened the discussion of how the elections will impact businesses.

Paychex recently published its list of the issues that are of greatest importance to small business owners as we hurdle toward Election Day. “As campaigns for elected office intensify between now and November, it is important that the issues small business owners care about are included as part of the national debate,” said Martin Mucci, Paychex president and CEO. Here are their top five issues in order:

1. Taxes: Provisions that could impact small businesses include: the continued viability of business structures (such as S-corps) largely intended to provide insulation from certain types of tax; the possible scaling back (or conversely, creation) of certain tax breaks targeted specifically to businesses; the ongoing potential for increased unemployment tax burdens on businesses; and the general question of whether the basic federal business tax rate should be adjusted.

2. Overall Regulatory Burden: In addition to taxes, the existence of a “business-friendly” environment, also referred to as freedom from undue regulatory burden, is usually seen as a primary factor in a small business owner’s appetite for expanding and/or investing in his or her business.

3. Employment Regulations: Worker-focused regulations include an increase to the federal minimum wage, the creation of additional “protected” categories during the hiring process, steps to ease the formation of labor unions, and other items which might not garner broad support from the business community.

4. Immigration: A key focus of the immigration debate will likely be the extent businesses should play a role in managing and enforcing immigration policy through hiring practices.

5. Retirement Security: There is growing concern over the inadequacy of retirement savings for many Americans and the possible role that some think employers could play in a mandated solution such as an Auto IRA program or other similar option.

While taxes are always an issue, the one item that really stood out to me was the overall regulatory burden. This is something about which I’ve held many conversations with GAWDA members. In the gases and welding environment, there are many regulatory bodies that distributors must pay attention to, including DOT (and its FMCSA and PHMSA administrations), FDA, OSHA, EPA and so forth. Thank goodness for GAWDA’s consultants to help make sense of it all!

What is the top issue in the upcoming elections as far as your business is concerned?

What The Future Holds For Welding And Gases

Friday, July 6th, 2012
Automated Welding Robot

Robotics is a growing market for welding suppliers.

What does the future of the gases and welding industry hold? In the world of business, understanding what your customers will want tomorrow (maybe even before they know themselves) can be a significant advantage. Robotics, LNG, and shale are a few of the markets distributors are investing in for the future, and the reality is that it’s closer than many people think.

There are a variety of forces at play in shaping the future of welding equipment and gases. Technology has always been a major driver, and the emergence of technology is changing the pace of business and tools with which business is conducted. The movement toward energy efficiency and the price of oil are driving burgeoning markets where opportunities abound.

So where will the money be in the future? Or better yet, where is the money now? The Summer 2012 issue of Welding & Gases Today delves into growing markets in the aptly named cover story “Where Is The Money?

Technology, as I mentioned, is a major theme. Social Media is changing the way customers communicate. Computer systems are changing the way distributors handle Accounts Receivable. And robotics is changing the way manufacturers create their products.

In Robotics 101, Fanuc Robotics Staff Engineer Michael Sharpe talks about the past, present and future of robotics. Notably, Sharpe says manufacturing is coming back to the U.S. “I’ve talked to many suppliers who comment that production in China has not saved them money because of high shipping costs, scrap rates and others.” This is great news for distributors and for the economy in general.

When it comes to energy, shale and LNG are hot topics. Somewhat surprisingly, the conversation on hydrogen as an alternative fuel is relatively quiet. For years hydrogen had been talked about as the future of energy, particularly with hydrogen fuel cell forklifts and cars. While automakers continue to push forward, the fueling infrastructure remains a major question mark.

What markets do you feel hold the strongest promise for the gases and welding industry? On the flipside, which markets are not likely to last?

Dealing With Gas Supply On The Fourth Of July

Tuesday, July 3rd, 2012

A lot of propane will be used this Fourth of July, but it’s also a day when many independent distributors may be closed for business. So where do customers go for their gas needs? This was one of the issues raised in a recent On The Edge article called “Putting The Honor System To The Test.” A propane dealer expressed his frustration at losing customers to Big Box stores on the weekends and on holidays. Especially when holidays are some of the biggest grilling times, you can see why this would be an issue for some distributors.

The propane dealer’s response was to find a way to serve his customers by leaving out partial tanks. I raised the issue with several GAWDA members, and most agreed that there was a better solution than leaving tanks by the back door.

Multiple GAWDA members have found a solution in setting up their own consignment cages for propane at convenience stores, even at some of the Big Box type stores themselves. This not only keeps customers honest, it keeps the tanks under lock and key for safety. So if you’re looking for propane this 4th of July, you may still be able to buy it from your favorite GAWDA member.

Welding & Gases Today will have the full story next week, including GAWDA members’ opinions of and alternatives to the honor system.

The Intrepid - Helium Filled Military BalloonAs we celebrate the Fourth of July, this is also a great time to look at an amazing story involving helium. When the Genesee Country Village & Museum set out to recreate a Civil War military balloon, it never imagined that a helium shortage would deflate its plans. With the global helium shortage, the museum had trouble securing a supply of the gas and put out a call for help. Macy’s responded by donating 50,000 cubic feet of helium to get the Intrepid off the ground.

The fourth of July will be the inaugural launch of this helium-filled piece of history at the Rochester, NY, museum. Visitors will be able to ride up 300 feet in the air in the tethered balloon to recreate the experience of Union soldiers observing enemy troops (with helium in place of the more volatile hydrogen used by the soldiers). It just goes to show that gas played an important role in the military even in the 19th century.

Here’s wishing everyone a safe and happy Fourth of July!