Oxyco Inc.

The newest acetylene distributor in Texas is off to a promising start.

Problems don’t intimidate Charlie Atkerson. Good thing, because three years ago he ran into a big one. Industrial gas industry consolidation in Texas had pushed the wait to have his acetylene cylinders filled to as long as six weeks, and that was no good. Atkerson’s solution to this problem was elegantly simple: Figuring he had a business opportunity as well as a quandary, he founded Oxyco Inc. and built his own acetylene plant. “I said, ‘Well, if I’m having this problem, then every other little guy like me is having the same problem.’”

Atkerson was right. Oxyco opened in Big Spring, Texas, in July with a solid customer base and possibilities for expansion. That doesn’t mean the past three years have been easy. Atkerson essentially built the plant from the ground up—for less than $1 million and without taking on so much as a dime’s worth of debt. He performed much of the work with his own two hands, learning on the fly as he navigated a slow process that was sometimes frustrating and often challenging. Despite all that, the experience meant more than hard work and late nights. “It’s been a lot of fun,” Atkerson says.

COMPANY SNAPSHOT
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President: Mary Jo Atkerson
Vice President: Charles Atkerson
Year Founded:
2006
Year Joined GAWDA:
2008
Headquarters:
Big Spring, Texas
Employees: 12
2007 Sales:
$1 million

Up and Running
Atkerson owns several businesses (and manages two others), and Oxyco grew out of one of them, Big Spring Welding Supply, a welding and gases distributorship he opened in 1997. Even though Oxyco is new to the fold, it’s steaming right along. Atkerson estimates that Oxyco will bottle some 300,000 cubic feet of gas each month. At 8-10 cents per cubic foot, Oxyco stands to generate yearly revenues between $240,000 and $360,000. That’s not bad for a four-man operation, and Atkerson doesn’t have a crystal clear picture of the company’s financial performance yet because it’s been open such a short period of time. And remember that Atkerson built the plant debt-free. If worse ever came to worse, he could walk away with his finances intact. “It’s going to fly,” he predicts. “There’s no downside because we don’t have any debt on it.”

Customers apparently don’t see a downside, either. Seven independent distributors are firm customers, and in the weeks before Oxyco opened, Atkerson was lining up nine more in Dallas. In fact, the response is better than Atkerson initially expected. He had planned to open the plant with one compressor and three manifolds but upsized to three compressors and five manifolds. Two of the compressors are online, and Atkerson has the equipment on hand for seven manifolds. In other words, there’s plenty of room for expansion. As Atkerson puts it, “The sky’s the limit.” Even with its present setup, though, Oxyco has the capacity to process more than one million cubic feet a month.

With that much acetylene, safety is a paramount issue. It would be, considering acetylene’s explosive nature. Above 15 pounds of pressure acetylene will self-ignite—the friction from moving through the air is enough to set it off. That’s where water comes in before the fire department has to. Oxyco’s compressors are submerged in hundreds of gallons of water. That way, they stay cool and if a leak should spring, the acetylene will bubble through the water and stay below the 15-pound threshold. At the same time, the cylinders are sprayed with water to keep them cool during filling. Pop-off valves in the high-pressure piping ensure that the acetylene never gets trapped. Add explosion-proof electricals and flash arrestors that can shut off the flow of gas in an instant, and Atkerson sleeps soundly at night.

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Oxyco Founder and Vice President of Operations Charles Atkerson (right) and President Mary Jo Atkerson (front, fourth from right) mark the opening of their new acetylene plant with employees, including children Jeff, Nathan and Sheree.

Supply and Demand
What did it take to bring Oxyco into reality? Atkerson has a list: vision, patience, family support, a lot of good luck and even more hard work. But it was something as simple—though critically important—as customer service that planted the Oxyco seed in Atkerson’s mind.

Atkerson believes in doing business the old-fashion way, with a square look in the eye, a firm handshake and the ability to discuss issues honestly. “Business is always built on relationships,” he notes. In 2005, however, industry consolidation was sapping his ability to meet customers’ needs.

During the years before Atkerson opened Oxyco, the number of acetylene plants in Texas fell from seven to three, as major companies acquired independent distributorships that operated small plants and consolidated them (the state lost another one, in Dallas, when it blew up in 2007). Each closure tightened the squeeze on the remaining distributors, who faced rising prices and fees, longer drives in an era of record-setting fuel costs, and turnaround times that climbed from one or two weeks to three, four and more.

No distributors were immune, but bigger companies with deeper pockets and larger orders had an easier time. Small shops like Atkerson’s, especially those in remote locations, were the ones bearing the brunt of the pain. “The big guys were getting their service first, and the little guys were put at the back of the line,” Atkerson recalls. “As they continued to close the plants down, it got worse and worse.” Yet, small distributors found ways to tolerate the situation because they had nearly no place else left to go.

Atkerson resolved to give them one. Building an acetylene plant was an obvious solution, but could it be successful? Atkerson reasoned that it would. Big Spring is centrally located, roughly half-way between Dallas and Houston, and there are 17 independent distributors within a 100-mile radius, and more than 30 within 150 miles, including two major distributors. It’s also right in the middle of an area brimming with oilfields, refineries, electric utilities, hospitals, farms, machine shops—plenty of potential customers. Industry consolidation had a silver lining, after all. “It was great for me if I could get the plant open,” says Atkerson, “because all that volume had to go somewhere.”

Sweat Equity
Atkerson incorporated Oxyco with himself as vice president and his wife, Mary Jo, and his four children as the full owners. It’s a living “inheritance,” in that Atkerson’s family will have control of the company after his death, without paying taxes.

Fortune smiled on Atkerson’s generosity. He quickly found a nine-acre parcel of land that he was able to buy at low cost (he later sold four acres he didn’t need, raising money that helped finance the plant). The former site of a cotton gin, the land needed improvements, but the skeleton of a building still stood there; all Atkerson needed to do was skin the structure with sheet metal. Since the property was eight miles outside of town, zoning for the plant was no problem. Neither was getting insurance, although coverage is expensive. “The way we’re processing this acetylene,” Atkerson says, “is actually safer than processing propane. It’s not hard to insure.”

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Oxyco plans to bottle some 300,000 cubic feet of gas each month with these Fill Room manifolds.

Not everything went so smoothly. Water—so crucial to Oxyco’s operations—proved to be a challenge. Atkerson needed a well in an area that’s notoriously dry. The only well digger who would take the job struck abundant, clean water at a mere 56 feet—on his first try—and then his rig broke down. It took nearly five more months to get the job finished. Then came the flood. A nearly unprecedented rainfall washed away a fence and berm that Atkerson had built around the perimeter of the property. “It’s probably the only time in 100 years we’ve had five inches of rain in an hour,” he says.

Building the plant inexpensively was of paramount importance to Atkerson. Why? Debt: He didn’t want any of it, not after it took him seven years to pay what he owed for his welding supply store. “I just knew I didn’t want to do that again,” he says. So Atkerson funded Oxyco out of the welding store’s receivables, one dollar at a time, laboring by himself or with his son and the man he hired to manage the plant.

To his credit, Atkerson knows hard work and doesn’t mind it. The youngest in a family of 17, he’s been working “pretty much full-time” since he was 11. Nor does he have any intention of stopping. “I think I want to work as long as my hands will allow me to work.” To build Oxyco, Atkerson learned to do plumbing and wiring. Through industry connections and withering hours of Internet research, he tracked down as much used equipment as he could, including the three compressors, which he rebuilt himself. The total bill for Oxyco was in the range of $500,000.

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Each of the two compressors is submersed in a water jacket to help cool the acetylene gas as it is being compressed. The jackets also keep the gas from entering the atmosphere at high pressure in case of a leak in the compressor piping or gaskets.

Atkerson freely admits that he made some mistakes along the way, but he sees them simply as part of the process of growing and creating. Planning Oxyco down to the last detail was a critical key to success. “We’ve had to do some things over,” he says, “but for the most part, we’ve stuck with the plan, and it turned out great.”

What Tomorrow Will Bring
Despite its solid prospects, Oxyco was at the least a bit of a gamble. For instance, Atkerson didn’t even have an acetylene supplier when he started building the plant, a state of affairs he likens to assembling a 747 and not having any fuel to fly it. Today, the company is taking off. In fact, it’s largely selling itself.

Atkerson has met with some prospective customers to pitch Oxyco face-to-face. But word of mouth has taken care of most of the marketing for him. The grapevine carried word to one area distributor who turned up to see the plant while it was still under construction. Then there are those Dallas distributors Atkerson was courting. They’d been driving clear to the other side of Oklahoma City to get acetylene. Needless to say, Big Spring is a lot closer. Add in the fact that Atkerson offers a one-week turnaround on cylinders—72 hours if a customer is in a real bind—and business started to build.

It doesn’t hurt, either, that Atkerson began his welding career after he left the Air Force in 1981. “It’s not like I just opened up,” he says, adding of local distributors: “They’re familiar with me, and they know my integrity.” Atkerson isn’t done yet. His goal for the next three years is to offer a one-stop gas cylinder fill station for all of the common industrial gases. Longer term, he’d like to install a small trailer fill station. “You never know what’s going to happen,” Atkerson says.

True, but it will be interesting to find out.

Gases and Welding Distributors Association