Are We Having Fun Yet?

Distributors roll up their sleeves to meet the challenges of 2009.

As 2008 was coming to a close, the economy was in an uproar. Industry was at a standstill, the housing market had crumbled, financial powerhouses were no more, auto manufacturing had crashed, and the D word, though not yet uttered, was within close earshot. Like all new beginnings, the new year brings hope, but this one—so filled with uncertainty—also comes with strategic plans, hard work, new ideas, and a commitment to making business decisions that will work.

Across the board, customers are watching their bottom line and looking for ways to buy product at low cost, do more with less and make their processes more efficient and less costly. They are relying on distributors to do more for them, whether that be watching their inventory, training their staff, or showing them how to do things better. Customers' expectations of their suppliers are higher than ever.

Despite the doom and gloom, the word “fun” was used more than once by distributors while describing the business challenges of 2009. Those who know what it takes to succeed are not surprised by that. Distributors are keeping a positive attitude, rethinking their priorities and even looking forward to the challenge. As one said, “We've had it easy for the last several years. Let's dig in and find out what we, our companies and employees are made of. It will be fun.”

Happy new year!

“We raised our delivery fee 15% while fuel costs rose 40%. We've tried to ease the burden, but I don't want to make it the customers' burden.” Eric Wunschel Independent Welding Supply Corp.   “The price increases vendors are constantly hitting us with have to be managed.” Bryan Keen Keen Compressed Gas Co.   “Customers are de-manding lower prices, and the competition's become very stiff.” Peter Ficarrotto Ace Welding Supply   “We've been through this before, it's nothing to get excited over.” John Colgan, Williams Metals and Welding Alloys   “The buzzwords for 2009 are cash and costs.” Bo Martin Middlesex Gases and Technologies   “Keep costs controlled when things are down, you stay in business. Don't, and you're out of business.” Robert Goodliffe, J.W. Goodliffe and Son   “Full service, technical support and service are critical for success in this environment.” Pete Matarese Liberty Supply   “Business is out there. Develop the attitude that you're going to work harder and smarter for it.” Jim Earlbeck, Earlbeck Gases and Technologies

Hard-Won Growth in the Northeast Zone
Predictions for 2009 are varied for distributors in the Northeast. While more than half expect little or no sales growth, those who do are stepping up their sales efforts, improving their operations, updating their showrooms and leaving no stone unturned as they search for sales. The projected overall increase is 1.1%, the lowest across the country.

“Customers are looking for the same thing we are—a way to keep their costs in line,” says Bruce Leasure, president, Middlesex Welding Sales (North Brunswick, NJ), who works hard to show his customers ways to turn their inventory more rapidly and keep it lower. His suppliers are investing in modern technology and bringing more efficient welding equipment to the table. “Our job is to get that equipment in the customers' hands and help them be as efficient as possible,” Leasure says. He expects sales to remain level. During the 1st Quarter, he will upgrade the showroom at a second location and will invest $100,000 in his truck fleet.

Eric Wunschel, president, Independent Welding Supply Corp. (Bronx, NY), hopes his company's sales will not be down any more than 5%, a decrease he attributes to lack of consumer confidence. He will improve the company's Web site, try to reach new markets and introduce e-mail advertising. Two delivery trucks will be replaced in the 2^nd Quarter, a $120,000 investment Wunschel says will help with prompt deliveries and create a better image out on the road. “These are rolling billboards that catch the eye,” he says. Wunschel has a plan to overcome the challenge of accounts receivables. “Customers who were good payers are falling behind a bit and we have to keep on top of this.” Office staff will concentrate on collections, and two separate days will be set aside to go through the list of overdue accounts.

Sales will be down by 5% at Earlbeck Gases and Technologies (Baltimore, MD), says Jim Earlbeck, president. “We've been passing along some hefty price increases in this industry, and while top-line revenue remains the same, the number of units sold is diminishing.” Earlbeck will be remodeling his showroom to capture a more upscale look. “If you go from one showroom to the next, they all blend together. There are a handful of exceptions, and we want to be one of those exceptions.” Another investment will be employee training. Using Toyota and General Motors as examples, Earlbeck explains: “When times are tough in the automotive business, GM shuts down its plants and sends workers home with partial pay. Toyota, on the other hand, doesn't send workers home. They come in for additional classes and training, and management uses the time to increase their productivity level. That is what we will do.” Earlbeck expects that his $50,000 investment in employee training will come with a payoff in additional sales. “When customers make a cutback, the person cut back is usually the one making the biggest paycheck, typically the most highly skilled staff laborer or engineer. Customers need to become more reliant on educated distributors like ourselves. Increased training, getting our people more educated on the products they sell and being able to field customer questions in a quicker, more intelligent manner will hopefully result in more sales.”

Russell Strate Jr., president, Strate Welding Supply (Buffalo, NY), expects a modest improvement of 2-3% due to new customers and growth within current customer accounts. “Our salespeople will look outside their comfort zones to find other options,” says Strate. “We will look at each and every thing we do and make sure the dollars we spend are done appropriately, including making sure our truck routes are efficient and purchasing four or five new trucks that get better gas mileage.” Strate will talk with customers about increasing the number of cylinders they keep on hand in order to lessen the number he must have.

Sales will remain level at Ace Welding Supply (Freeport, NY), and Peter Ficarrotto, president, will do all he can to maintain market share. In early 2009, he will invest $100,000 in new trucks, hoping to cut back on maintenance issues. He purchases welding wire and consumables at buying shows “to get better deals” and makes sure that service to customers is at the top of every employee's list. “We will quickly get whatever customers need and provide same-day service.”

Bryan Keen, president, Keen Compressed Gas Company (Wilmington, DE), expects things to pick up a bit by the 3^rd or 4^th Quarters, and he forecasts growth of 5-10%. Bulk and microbulk gas sales are increasing, and the company is spending time developing this segment. Keen has been planning to build a modern fill plant for a couple of years but is not sure if it will happen in 09. “We will invest over $1 million to build a new fill plant, and if things work out, it will really set us up for growth for the next generation. We don't, however, want to get too far ahead of ourselves with the way the economy is.” He will add an inside salesperson and operations staff and plans to be more aggressive getting in front of the customer.

“Customers needing to cut costs are coming back to their vendors and saying, 'you've got to help us out here,'” says Robert Goodliffe, president, J.W. Goodliffe and Son (Linden, NJ), and adds, “One of the no-no's in business is to reduce prices in the face of falling sales. We'll try to stand our ground as much as possible.” With projects being delayed or canceled, Goodliffe expects sales to be down by 8%. He plans to add a salesperson and will expand the company's Web site, already a large part of Goodliffe's sales. “I look forward to the weeding out of some of the online competition. I think that some of the distributorships that have jumped in and dabbled in Internet sales are going to be disappointed by 2008, maybe a bit discouraged, and I think they are going to get out of the Web business.”

John Colgan, general manager, welding division, Williams Metals and Welding Alloys (Wayne, PA), expects a 5-10% sales increase. His product line is 100% consumables. Automotive is a big market for the company, one that is down quite a bit. Other sectors, however, have been up, including energy and shipbuilding. Colgan says his edge is responding quickly, being price conscious and providing good service. For welding products, orders taken up to 3:00 p.m. are shipped same day. His biggest investment in 2009 will be inventory. “You can't ship it the same day if you don't have it.” The company has several million dollars' worth of inventory, about 3,000 SKUs, and Colgan points out that because of tight credit, customers are not putting stock on their shelves like they used to. “They rely on us to have it, which is good. They want it. We have it. They'll come to us for it, and they'll get it quickly.” Fluctuating prices are the big challenge. “We buy inventory at one price and then find that when we sell it, we have to work a different price.” Colgan talks to suppliers about holding prices and making a long-term commitment.

Bo Martin, chairman and CEO, Middlesex Gases and Technologies (Everett, MA), is hoping for a slight increase of 3-5%, and he will make sure his outside sales force continues to be aggressive. “Everybody has to work a little bit harder to make sure we really do our best to keep our customers satisfied. It comes down to good service, good people and giving the customer a reason to come back.” Martin will keep receivables in line, eliminate unnecessary costs and promote different ways of operating so end-users can reduce their cost through operating more efficiently, not necessarily through price cutting.

“2008 was the best year we ever had,” says Pete Matarese, president, Liberty Supply (Leominster, MA), who optimistically forecasts another 10% increase. New industrial construction is taking place, including two new manufacturing plants. Starting in January, Liberty will refill its own gases and will add an employee. Matarese recently purchased 2,000 liquid and high-pressure cylinders to service a large construction project. “To get that business, pricing wasn't the issue; it was the supply. So I had to invest money, almost $100,000, into containers.” Getting the filling on line will help him capture some of the business lost through pricing.

Howard MacKay, president, West Penn Laco (Pittsburgh, PA), is pushing to maintain last year's sales numbers. His company is very involved with the manufacturing of nuclear power equipment, and MacKay is hoping that activity will be stimulated should the federal government go with nuclear power. “The effect on our marketing area is going to be substantial, not only with direct manufacturers, but with companies subcontracting for them.” He will make some internal modifications, replace old equipment and invest in trucks and tanks.

“Customers are demanding and expecting more technical service and support, so we need knowledgeable salespeople.” Glenn Bliss, General Distributing Co.   “We make sure there are no unused cylinders sitting empty on a truck. We get them filled and back in the customers' hands.” Brent Laing Industrial Source   “We're working hard to put cylinders back into service, keeping customer backlogs low.” Jim Moore, Fire King of Seattle   “For the last several years, we've had it easy. I'm looking forward to a challenging year.” Darren Bradley, Spectrum Gas Products   “If people don't have the need or the money, you can do everything you want to grow the business, but people still aren't buying.” James Rasmussen Modesto Welding Products   “Everybody's looking for a better price, only I don't think they really know what a better price is, but they keep asking for it.” David Melo Melo's Gas and Gear   “Growth will come from entry into non-welding markets.” Steve Craig, Craig Welding Supply Co.

Western Zone Feels the Heat
While manufacturing, construction and agriculture are all down, healthcare, university research and some energy markets are on the rise, leading to an overall average increase of 2.3% across the western region. Sixty-two percent of the companies in this region are forecasting a flat year. Distributors are focusing on collections and accounts receivables, staying competitive with price pressure and improving sales skills.

Activity in the energy, construction and medical segments will propel a sales increase of 6% at General Distributing Co. (Great Galls, MT). President Glenn Bliss is looking to add new product lines for both the energy and medical sectors. He plans to hire two additional salespeople and will continue an aggressive training program with both sales and operations staff, training them on how to bring value-added services and products to customers. “We have a lot of great opportunities to get some exciting things going on.”

Steve Craig, president, Craig Welding Supply Co. (Los Angeles, CA), is expanding into new markets, but will not divulge which ones. He does say, though, that the markets are in the non-welding field, and that's where the company's growth will be. Craig is always looking for new products to offer customers and wants to help them learn new processes to become more efficient and save money. Sales for 2009 are expected to remain flat.

Brent Laing, vice president, Industrial Source (Eugene, OR), will break ground on a new facility with a fill plant in Portland, Oregon, at the end of the 1^st Quarter. “We're putting a lot of hope in that market,” says Laing. “We're relatively new there, and we hope to make up for any slippage in our other branch locations.” Wood products and the manufacturing of motor homes and boats are down in the region. However, a large number of retirees will spur medical gas sales. Overall, Laing expects sales to remain level. He is adding new products that will help customers increase weld speeds and improve efficiencies. He's also looking at different gases to replace some of the higher-priced helium mixes. “Depending on the application, if we can get them into a wire they can use, a CO2 argon mix over a helium mix will save the customer money. They pay more for the wire but less for the gas, so it comes out to be a cost savings for them.” To save on his own costs, Laing is now e-mailing and faxing invoices.

Given the slowdown in home construction, Stacey Shelton, administrative liaison for Vern Lewis Welding Supply (Phoenix, AZ), hopes sales will remain similar to last year's numbers, which she describes as “pretty good.” To help grow sales, the company is cultivating used equipment, particularly the large custom RV market. Shelton explains, “A lot of customers purchased equipment to use in their own shops. We want to get that equipment they're now not using and resell it into other markets.” The company will add two route trucks in the 4^th Quarter and is working on a new location set to open in 2010 that will contain its headquarters and a central warehouse. Salespeople are taking information sheets out to clients and leaving them, rather than doing everything by word of mouth, so that when a competitor knocks on the door, the clients have information readily available to make a comparison.

“I'd venture to say at this point that things are going to be lucrative,” says Rob Stoody, vice president, Stoody Industrial and Welding Supply (San Diego, CA), and he expects 15-20% growth. The company does a lot of work with the Department of Defense, taking advantage of government contracts for small business owners. Says Stoody, “We're counting on our relationships and allowing our customers to lead us to where we need to go, allowing them to drive our bus as opposed to us telling them what to buy.” The company is strengthening refrigerant lines, adding some specialty gases and may open another facility in another state, possibly in the next year. “We've gone through some internal changes as far as our direction and our focus, and I'm really looking forward to putting some road behind us with our new ERP system and utilizing it to its full functionality,” Stoody says. “We are looking forward to growing our relationships with our customers.”

Gary Armstrong, president, General Air Service (Denver, CO), expects sales to remain level. Healthcare and university research will be up, while construction and infrastructure development will be down. He will make sure his employees do not get distracted by what they hear. He explains, “A leader needs to be confident and share both the good and the bad information. We have to share what our thinking is. We have to ask for input, and we have to challenge people to be more involved. Each sale will be a little harder. When someone comes through our door, we have to be ready for them, ready to answer their questions, meet their needs and show them the value we provide with the equipment we have available. We have to be better.”

Darren Bradley, president, Spectrum Gas Products (Costa Mesa, CA), is looking forward to a challenging year after a few of what he calls “easy ones.” Almost 80% of Spectrum's sales are gases, and a large portion of those are medical, which is slow right now. He forecasts sales to be flat and will do more marketing with new fliers and brochures. By 3rd Quarter, he will clear off his rental cylinders and purchase about 400 new ones, and may combine all of his operations into one large building from the three the company is currently in. Three back-up drivers are available so on-time deliveries can be made throughout the day.

Rich Hargett Jr., general manager, Kent Oxygen Co. (Kent, WA), expects sales to be up 5-7%. “Although we expect to see a drop in manufacturing and fabrication, we also expect an increase in the repair and maintenance of equipment as companies look to minimize capital expenditures.” The largest investment will be the expansion of Kent Oxygen's existing fill plant, expected to take place in the 3^rd and 4^th Quarters, a move that will allow the company to improve cylinder management and cost control, as well as venture into new markets. Hargett also wants to expand the company's construction and welding equipment repair facility and will be training and certifying technicians.

Modesto Welding Products (Modesto, CA) is located directly in the middle of three contiguous counties that led the nation in foreclosures. James Rasmussen, manager, indicates that one out of five houses in the area has been foreclosed, leaving no extra money in this mostly agricultural community. Rasmussen expects sales to be down by 10%. A positive sign is that sales of high purity gases for the medical and lab industries are going strong. He is investing about $75,000 in new cryogenic equipment and will be working collections and receivables, carefully screening customers and putting in stopgap measures.

Boeing recently put off its Air Force refueling tanker project, which put a lot of people out of work in the Seattle area. Jim Moore, president, Fire King of Seattle (Seattle, WA), hopes sales will be a little better than last year, or at least remain level. He'll put in additional test equipment in the 1st Quarter, which will keep the company at the forefront of the maintenance and testing business.

A refinery expansion and some energy projects will be offset by a declining agriculture market and a flat construction market, so David Melo, president, Melo's Gas and Gear (Bakersfield, CA), expects sales to remain level. He will be purchasing 3,000 cylinders to replace his rentals. He points out that as competitors raised prices—significantly—taking advantage of rising costs in steel and fuel, continuing to increase surcharges and prices at every whim, they drove customers away. “We worked on controlling our costs. Our pricing is apparent across the board, and customers came to us because they could see the pricing structure.”

At U.S. Airweld (Phoenix, AZ), gas sales are up, capital equipment is down, and welding supplies are staying the same. According to President/CEO Marc Boccaccio, this will add up to a level 2009. He'll invest in anywhere from 2,000 to 5,000 cylinders and will add a cryogenic tanker and three outside salespeople. Says Boccaccio, “We review our customers' processes and operations and introduce them to products that will increase their work output and cylinder handling.” Suppliers are helping with ongoing training and end-user calls.

Richard Deveau, president, BayArc (Albany, CA), points to the San Francisco Bay Bridge project, along with refinery work, as driving a growth of 10%. Maintaining adequate inventory levels while prices are being increased is his biggest challenge. “We have to come up with more cash to pay for the inventory we need, so we make sure we're not stocking dead items.”

“Green energy is the wave of the future and will open new markets for us.” Tommy Hagan Jr., Logan Hagan Welding Supply   “We look at each account and make sure we're taking good care of them, supplying all they need.” Mack Meharg Montgomery Industrial Gases   “Delivering process improve-ments to customers is more important than ever.” Bill Visintainer, Atlas Welding Supply

Making It Count in the Southeastern Zone
Overall growth in the Southeast should be at 3%, which distributors will realize through introducing new product lines, upgrading facilities and operations, working to control costs and making sure that everything they do counts.

Vance James Jr., president, James Oxygen and Supply Co. (Hickory, NC), is seeing a decrease across the board, from large manufacturing companies to small one-man shops, causing him to forecast a slowdown of 10%. “Customers are requesting more frequent and smaller deliveries, which is not good for us because of high fuel prices.” In 2008, James purchased three propane fuel vehicles for his fleet and will do the same this year.

Business in the region is stable after losing some industry three years ago, and F.R. Blankenstein Jr., president, F.R. Blankenstein Co. (Natchez, MS), expects his sales to remain level. He will go through a major computer upgrade this year, saying this of the investment: “They don't save you any money, they don't save you any time, they just help you run your business better with more control.” His advice for getting through this rough economy: “Just try to run your business the best you can and don't panic.”

On the heels of his biggest year ever, Jim Gillespie, president, General Welding Products (Louisville, KY), knows 2008 will be hard to beat. With mechanical contractors not able to get bonds and mid-sized metal fabricators slowing down, Gillespie predicts a sales slowdown of 5%. He will be making more sales calls and being more aggressive on the street. He is looking at buying three propane fuel vehicles for his sales staff in the 1^st Quarter. “As a propane distributor, it will cost closer to $1.50 a gallon to run them, rather than $3.” He's also increasing inventory to provide faster delivery of product. General Welding Products celebrates 50 years in 2009.

Walk-in cash sales and impulse buying have slowed, causing Michael McCourt, president, Gas Products and Services (Orlando, FL), to forecast a flat sales year, and he's bolting down the hatches, looking for places to curtail expenses and utilizing employees' efforts more efficiently. “Customers' expectations of their suppliers are higher than ever,” says McCourt. “They expect us to be competitive in our pricing and efficient in our delivery. We have professional customer service people behind the counter with years of experience, and they're efficient at what they do. Because of this, our mistakes are limited. Customers know this and are drawn to it. We are going to market with a positive attitude about the things we do and do well. We know where we are as a company, and if we work as a team and go into the market with a positive attitude, bring new things to customers and find new areas, it will be a positive result. It's all about attitude.”

Tommy Hagan Jr., president, Logan Hagan Welding Supply (Statesboro, GA), is looking at alternative energy sources as a new niche market. “The manufacture of green energy material, whether it be windmills or solar farms, would be a nice market for us. Green energy is the wave of the future, and I want to tap into it.” Right now, he is hoping for sales to remain level.

Carol Hill, treasurer, Willard C. Starcher (Spencer, WV), is anxiously waiting to see if banks will lend money to gas companies to build a pipeline. Hill is unable to provide a forecast, as it wasn't clear in the fall as to whether the pipeline work would continue. In the meantime, she will consolidate orders to save on freight and direct-ship to the customer's location. “We'll listen to our customers and try not to flub up any orders. We'll assess customers to be certain they're financially sound prior to giving them credit. If they want to order $25,000 of equipment, I have to make sure we'll be paid within 30 days.”

Ricky Dennis, vice president, Dennis Welding Supply Co. (Montgomery, AL), is looking to create 8-10% sales growth from the medical side of his business. “Everything in America's outsourced other than medical, and it continues to grow.” He's introducing new products for the home healthcare and small hospital market. He also will see growth from a new Kia automotive manufacturing plant set to open in 2009. Says Dennis, “We're trying to run as lean as we can, making everything we do count. We've cut back on personnel, and now we phone customers where we used to stop by and see them. These steps are helping us operate with a profit.”

John Sheehan, president, Tri-Tech (Tampa, FL), expects sales to increase by 4%. While customers have not invested much in capital equipment, he believes he will see an uptick in purchasing during the 2^nd Quarter. “We're not looking for low-end welding wire business. We're more interested in customers willing to pay the price for good service.” Sheehan opened several branch locations in 2008: Charleston, SC, and Cocoa Beach, FL, and purchased a four-branch business with locations in Georgia and South Carolina. “As we grow, we need new cylinder assets, which will help grow our rental revenue as well as increase gas sales and margins.” The company is recruiting new hires, and is training them during this downturn so they are ready to go when things begin to move again.

“We're going to get back to blocking and tackling,” says Zane Lee, president, Sidney Lee Welding Supply (Hampton, GA), acknowledging three years after expanding into a new market, there is now time to work on doing all the little things right to get the best ROI. He expects sales to grow by 8-12% and sees markets connected to electrical power generation growing. He may upgrade his fill plant and put in a larger oxygen tank in the 1^st Quarter, and may sell more specialty gases to broaden his customer base.

“We're concentrating on calling on more of our competitors' accounts than we have been,” says Mack Meharg, CEO, Montgomery Industrial Gases (Montgomery, AL). He foresees a downward pitch of 15% but will counteract it by doing fewer deliveries to cut down on delivery costs, introducing new products like saws and specialty drills, and investing around $150,000 to purchase 9,000 cylinders. “We want to eliminate the rental costs.”

Bill Visintainer, president, Atlas Welding Supply (Tuscaloosa, AL), purchased the 66-year-old company last March and is making changes. He's working hard to grow the industrial side of the business, but is increasing spec and medical gases for a market that includes university research and small-end medical consumers. Visintainer is confident that his sales will increase 30%. He describes the company when he bought it as “debt-free, comfortable and complacent, with no desire or need to make any changes.” Since then, he's added products, invested in different delivery modes and tried to bring value rather than take orders. “More than anything, it's a culture shift,” he explains. In March, 50% of the tickets generated on a daily basis came from walk-in customers, and while the number of tickets written has not gone down, the average sale has. Visintainer added third-party bulk accounts, large compressed tube trailer accounts and dry ice, and is looking at an acquisition that may happen in the 1^st Quarter.

Shane Miles, president, O2 Plus (Carrollton, GA), is looking for a 10% growth. “While people are not buying new equipment, they are repairing what they have.” O2's largest customer is using the current downtime to prepare all the machinery for when the economy goes back up. For his part, Miles is a firm believer in the power of a name. “When people need something, if they see your name out there, they remember it if there are plenty of places for them to have seen it.” O2's name will be in plenty of places in 2009, as Miles plans to spend around $25,000 on advertising.

“Government work is the one thing that does not shrink.” Jim Wright Argyle Welding Supply   “I hire people with the ability to help our company expand and grow.” Guy Marlin, Lampton Welding Supply Co.   “We strengthen our employees because they are the one thing that makes us successful.” Angela Harrison-King Welsco   “As we move forward, we will recognize that leverage is OK, but we better know how to manage it.” Craig Duncan, Winfield Iron & Metal   “The biggest challenge is holding costs down and sustaining growth.” Edward Bowling Metalweld   “We have to compete with those purchasing online and looking for a better deal.” Ricky Byron, Louisiana Industrial and Safety Supply

Southwestern Zone Distributors Seize Opportunities
Distributors in the Southwest expect the biggest gains this year—with 75% of distributors expecting an increase, and 9.8% overall regional growth—due mainly to military contracts and booming energy and oil markets. Distributors are focused on taking advantage of the opportunities before them in order to keep their businesses strong, regardless of what Wall Street says.

“Selling has become the art of listening carefully to the customer and then matching their needs and keeping their costs low,” says Craig Duncan, president, Winfield Iron & Metal (Winfield, KS). He is training salespeople to listen hard and recognize key things a customer says that might trigger a product to fulfill that need. With manufacturing down and fabricators and machine shops hitting a brick wall, Duncan predicts a downturn of at least 10%. He's always watched his costs, so it really becomes a challenge to find the nickels that are leaking out the door. Communication with employees is crucial, and Duncan makes sure to explain the issues to employees. “I don't expect them to come up with the answers. I don't expect them to have that same gut feeling I have, but if they can give me any input, any light on anything, I'm willing to listen. I encourage them to look at their processes and whatever it is they're doing, if they know a way to do it better, we share it.”

With so much pipeline work in the area, Frank Boudar, general manager, H-Town Oxygen (Houston, TX), is optimistic and looking for a sales increase of 10-15%. The company is building a new warehouse that will contain office space. Boudar is looking for a way to keep adequate inventory to satisfy customers' needs. “We don't know what the customer needs until they call and ask for it.” He's working to develop a way to help the customer anticipate what will be needed, so the product can already be in stock, eliminating the high cost of overnight shipping. “Part of this,” says Boudar, “is education, because some don't think beyond tomorrow.” He will add at least one more truck driver and two inside salespeople.

With a large number of manufacturing customers in the lumber industry, AWI/Arkansas Welding Supply (Hot Springs, AR) will feel the trickle-down effect from the slow housing market as these companies scale back or shut down. President Tom Butler expects business to be down 5-7%. He is expanding medical gas coverage to take advantage of a growing healthcare market in the area, and will add small, entry-level machine tools to his product line. “Everybody in the company will become a salesperson, from the truck driver to the receiver,” says Butler, who is doing both internal and supplier-based training to help his entire staff learn how to sell. This training often takes place after hours. One change Butler notices with customers is that they want AWI to become their stockroom manager. This idea of consigned inventory management came to Butler from a previous career as a buyer, and it's working, particularly with commodity-type items. The customer sections off a specific area in their stockroom, and AWI fills it. The customer is charged when items are withdraws. While Butler says the arrangement creates an additional inventory management challenge, it does have an advantage. “It forces a more close-knit relationship with that customer. We become part of their system, rather than just their supplier.”

“The expansion of Fort Bliss will bring in a lot of extra business,” says Jim Wright, president, Argyle Welding Supply (Albuquerque, NM). Argyle has a location in El Paso, where the base is located. Wright also points to a lot of government work in New Mexico. As a result, he expects sales to be up this year and is investing in analytical equipment in order to do some of his own gas mixes and high-purity gases.

With several large power plant construction projects in the works and an uptick in the energy market, Gary Kennedy, CEO and chairman, Red Ball Oxygen (Shreveport, LA), believes business will be better this year, perhaps by as much as 15-20%. When asked what he attributes the growth to, in addition to construction projects, Kennedy answers without hesitating, “leadership,” and points to President Bob Ewing and VPs Jarrod Lipsey and Ralph Thomas. “They are a tremendous team,” says Kennedy, “and we've hired and trained good people who take care of our customers. We're in a position to take advantage of whatever happens or to ride things out.”

New construction in Dallas, including office buildings, apartment complexes, hospitals and a new stadium for the Cowboys set to open in 09 will jack up sales by 25% at GWS Welding Supply Co. (Dallas, TX). If all goes according to plan, CEO Karen Dean will add a driver and purchase additional cylinders.

Lewis Hairgrove, vice president, Wilbanks Welding Supply (Tulsa, OK), hopes sales will be a little better than last year. When local manufacturing left the area, companies tooled down. Now business is back (much of it oil-related), and they're buying equipment again. Two years ago, the company began selling high density plasma, a market Hairgrove says has done “exceptionally well.” He adds, though, “It takes a while to educate the customer that this equipment does a better job than the old plasma.”

Angela Harrison-King, CEO and chairman, WELSCO (North Little Rock, AR), expects a sales growth of 10%. WELSCO places a lot of emphasis on training new hires, who are required to read several books to help them understand the company philosophy, even before coming on board. “Employees are the one thing that make us successful,” says Harrison-King, “and it's a lot of fun watching people grow and enjoy what they do while continuing the growth of the company.” WELSCO may open a new store in mid to late 09.

Robert Lantrip, president, Ourco Welding & Industrial Supply (Houston, TX), noticed that every time salespeople went to their customers, the customers were buying the same things—welding wire, grinding wheels and things of that nature to suffice for the week—and they all were buying similar products. So he developed an idea modeled after Snap-On-Tools. “I put guys in big box trucks filled with product, and they drive from customer to customer once a week. The customer wants five rolls of wire, two boxes of grinding wheels and some anti-spatter, and it is pulled right off the truck.” There is a computer on the truck, a delivery ticket is printed out and signed for, an invoice is created and walked right into the accounting department, and the driver/sales rep leaves. “This platform allows us to sell a lot more industrial supplies not typically seen at a welding supply store, things like duct tape, spray paint, sand paper and a tremendous amount of drill bits and slugger bits.” The model has enabled Ourco not only to increase industrial sales, but to widen its footprint. Lantrip explains, “We're hitting another market that a typical welding supply company doesn't hit, which is the individual welder. These guys normally punch out at the end of the day and go to a store to buy what the company does not provide for them, i.e., a level or tape measure or different tools. We're doing cash sales right there on the truck.” Lantrip will add two trucks to his current fleet of four, and expects to see a sales increase of 15%.

Oil and wind-related industries are doing well in the region, leading Guy Marlin, president, Lampton Welding Supply Co. (Wichita, KS), to shoot for a sales growth of 10-12%. The company may have one or more expansions during the year. Marlin likes the challenges, and describes the industry as a bit failsafe in a slowdown. “When people are no longer buying welding machines, they come to the welding supply stores and buy more repair parts. So we work a little harder and handle more product to compensate for the lower dollar amounts on what we sell.”

“The fact that our competition keeps raising their prices will help our sales grow 10% this year,” says Edward Bowling, president, Metalweld (Dexter, MO). One-fourth of the company's sales are in gases, and that business will be up. Bowling has set up a hydro-test cylinder reclamation center and will begin pumping gases at one of his stores, a move that will cut shipping costs in half. Says Bowling, “We're working on being more self-sufficient, sending as little business out as possible.” He is selling more plasma cutters and will be adding another 500 cylinders.

The oilfield market and rebuilding after hurricanes swept through will propel a 20% sales growth at Louisiana Industrial & Safety Supply (Covington, LA). Owner Ricky Byron wants his six-year-old company to move into markets for larger equipment. He will be doing in-house gas apparatus repair and adding inventory to meet the needs of new customers. Outside and inside salespeople will be added.

“Customers want and need our technical expertise.” Mark Falconer Minneapolis Oxygen Co. “We're doing everything we can to keep our customers competitive in their marketplace.” Jeff Skumautz, Central McGowan   “The sale of consumables will increase as customers focus on doing their own equipment maintenance and repair.” Brad Peterson Mississippi Welders Supply Co.   “The ability to get through challenging periods while continuing to grow is our mission.” Stan Lefeld, Lefeld Welding and Steel Supplies   “Wind power is a hot ticket.” Joseph Campbell, Machinery and Welder Corp.   “Lasers and robotics are showing big growth.” Steve Christoph Superior Welding Supply Co.   “Opportunities lie within the challenges.” Barry Nanz, Trade and Industrial Supply   “It's our job to introduce customers to technologies that reduce their cost of doing business, like welding robots and gas manifolds.” Fred Semenik, Inweld Corp.   “Training programs are busy as companies use downtime to educate employees.” Pat Garten, Sutton-Garten Co.   “We're selling things today I never thought we'd sell 20 years ago, everything from balloons to beer taps.” John Small, PoochWelding Supply

Balloons, Beer Taps and Lobsters for the Central Zone
Tapping into non-welding markets will bring some growth for distributors in the Central Zone as they come to terms with a shrinking industrial market and a crashing automotive base. While this zone has the highest projected sales decrease of -12%, the overall projected increase is 8.6%. For many distributors in the region, managing costs is a primary challenge, and among the initiatives they're taking are adding branches, improving employee training and, above all, taking care of current customers.

Expecting sales to be flat for the first six months and ending with modest growth by year-end, Mike Ziegler, CEO, Valley National Gases (Independence, OH), says that his company will be very judicious with their investments. Ziegler says, “A big part of our plan for growth, going forward, is acquisitions.” Ziegler's plan for 2009 is to acquire companies totaling in the neighborhood of $100 million in sales per year.

“Being in the propane business right now feels like eating lobster in a restaurant,” says Lou Campbell, president of Blue Water Industrial Products (New Baltimore, MI). “The cost keeps going up and up.” Campbell is referring to the tracking of propane with both gasoline and oil prices, rather than just gasoline. When either goes up, the cost of propane increases. He is searching for a better method to easily change his pricing with the numerous fluctuations. A brand new fill plant in New Baltimore, Michigan, that went online in late fall will enable the company to fill oxygen, argon, carbon dioxide, nitrogen and nitrous oxide. Campbell is shooting for a 10% increase in sales.

Mark Falconer, president, Minneapolis Oxygen Company (Minneapolis, MN), expects sales in the laboratory, high-tech, rare specialty gases and food markets to drive an increase of 5%. In the 1^st Quarter, Falconer plans to upgrade the company's rare and specialty gas lab and is focusing on improving services to customers, including offering sales guides, upgrading the company's Web site and providing more guidance to customers on safety issues. He may relocate one of his satellite stores.

Tim Trame, president, Weldco Incorporated (Cincinnati, OH), is tripling the size of his repair department and moving it to a new location three blocks from headquarters, a site that will also house the company's rental fleet. He is researching the ability to connect with other family-owned businesses to secure the buying power to pre-buy fuel for his vehicles at a lower cost. “Saving 10 or 15 cents a gallon will be huge on the bottom line,” he says. Pointing to the many acquisitions throughout the industry, Trame is not worried. “The acquisitions open a door for us and other family-owned businesses. As far as service goes, I believe we are more in tune with customers. We can get it out there when the customer needs it, not when it's convenient for the distributor.” After adding five positions in sales, distribution and marketing, Trame is looking for a 17% increase for his 10-year-old company.

“Sales to agricultural manufacturers and exporters are going well,” says Jeff Skumautz, president, Central McGowan (Saint Cloud, MN). Automation sales are also up. “The efficiencies and quality achieved by automation are now recognized, especially in rural areas where workforce availability is limited.” Skumautz expects sales to increase by 7%. “Our well-trained automation division account managers are reviewing processes and efficiencies with customers and suggesting newer process equipment or filler material diameter changes, all in the name of efficiency and productivity.”

Ike Spriensma, president, Lake Welding Supply Company (Muskegon, MI), will be happy to maintain sales equal to 2008, given what's going on with the automotive industry in Michigan. He plans to remodel and update the showroom at his Manistee location during the first half of 09. “We want to add hands-on space and expect to see an increase in walk-in traffic.”

A mix of new customers, new markets and new applications will propel a 5% growth for Mississippi Welders Supply Company (Winona, MN). In November, the company opened a new store in Weston, Wisconsin. President Brad Peterson points to an emphasis on equipment repair and maintenance, and expects customers to purchase more consumables and equipment to make those repairs. Peterson acknowledges “the suppliers who show up and work with us, making calls to end-users, doing technical training sessions and developing a plan together. They're sowing the seeds and they'll reap the harvest.”

After expanding a showroom and adding sales staff in 2008, David Harrington, general manager at Weld-Mart USA (Wheeling, IL), forecasts a growth of 10-15%, much of it with lab gases, specifically plasma. The company is five years old and Harrington is working to automate some processes. “We want to integrate our cylinder rentals into one system. He will bar-code inventory and expects to achieve better control and easier cylinder management.

Stan Lefeld, president, Lefeld Welding and Steel Supplies (Coldwater, OH), has been diversifying his market for the last five years to make up for the loss of manufacturing in the region. All areas are experiencing bumps, including agricultural, medical and automotive. Lefeld guesses that sales will be down 10-15%. “We'll hone our skills and our marketing attack, look for a niche, pay close attention to our customers and make some improvements in order to offer more competitive pricing.”

Joseph Campbell, president, Machinery and Welder Corporation (West Allis, WI), believes a growth of 15-20% is possible due to strong equipment sales for the mining industry and military equipment manufacturers. He also sells to companies that make wind turbines, a hot ticket right now. “Adding value is a must, and customers want us to do more. They want their inventory maintained, controlled and audited. They want us to help them make sure they never have too much inventory and never have not enough.” Campbell will expand his welder training program.

A new branch store is going very well, and Steve Christoph, president, Superior Welding Supply Company (Waterloo, IA), expects an increase of 5-8% from the new accounts. He may open another store later this year or in 2010, and has plans ready for a spec gas facility. He points to lasers and robotics showing big growth, and he will add new product lines of robotic cells and laser equipment.

Barry Nanz, owner, Trade and Industrial Supply (Lawrenceburg, IN), expects sales to increase by 15-20%. “We're getting more salespeople out to see more customers and are successful obtaining their business.” The company will be picking up and hauling its own liquid nitrogen into some towns and will add more tools and abrasives to its offerings. Some large companies are moving away from integrated purchasing. Nanz explains, “It didn't turn out to be the great thing they were led to believe. “We're going to pick up the pieces and we see opportunities.”

Pat Garten, president, Sutton-Garten Co. (Indianapolis, IN), forecasts sales to be down by about 10% due to a slowdown in local home-appliance and auto-related manufacturing. “The beverage gas market is somewhat new for us, and we want to expand that quite a bit.” He expects the welder training and certification department to get very busy as companies use their downtime to educate employees. “We teach them how to use new products like flux core wires to offset their costs and be more productive.”

At Inweld Corp. (Indianapolis, IN), medical sales are strong, propane remains consistent, but industrial is down. Thus, Executive VP Fred Semenik expects sales to stay level. Salespeople are working harder and making more sales calls. To reduce expenses, Semenik is looking at a new VOIP phone system that will eliminate long-distance calls among the main store and its five branches, and is doing safety training to reduce employee injuries, thus stabilizing insurance rates. “We target individual companies and address specific areas where we know we can help them. We use our suppliers to help us formulate a game plan and go after the new business.”

Bob Lang, general manager, Weld Specialty Supply Corporation (Milwaukee, WI), wants to take on a solid base of new customers willing to contribute to the long-term growth of the business, rather than customers just shopping for a price. A trained, technical sales force looks for customers that need technical assistance and want help in being a low-cost producer. “We have an opportunity to show people how to save money in tough times,” Lang says, “and if we find those customers that can apply those techniques and assets, we have a good chance of getting another customer.” Lang forecasts 09 sales to be the same as those in 08.

Even though the automotive industry is in the tank, causing sales at Pooch Welding Supply (Benton Harbor, MI) to decline by 10-15%, John Small, president, sees two bright spots: propane for lift trucks and medical gases for an aging population. He says, “It's a tough business climate in this part of the world. We will do the best we can to deflect any large change in volume. We look forward to getting through 2009, and into a new decade in 2010.”

So the challenge is here. Whatever you do with it, look for the opportunities. They're out there ready to be had. And remember, have some fun!