Melo’s Gas & Gear

With its foundation in place, Bakersfield, California, company is ready for rapid growth.


Melo was the first to have a nitrogen tube trailer on site and ready to respond quickly to customers located in the area’s agricultural and oil markets. The company currently has a fleet of 15 trucks, including two nitrogen tube trailers.

The year was 1998 and almost 25 years after taking his first position in the gases and welding industry, David Melo was at a crossroads. Praxair, his employer for the previous 13 years, had consolidated the office where he served as marketing director, and was asking him to leave Bakersfield, California, to relocate to Chicago. It seemed that his only options were to uproot his family or find another line of work. He didn’t want to move, and the gases and welding industry was all he ever knew, so Melo decided to create a third option. “I got together with a couple of buddies who had worked in the industry, and made the decision to open up our own shop,” says Melo. In July 1999, Melo’s Gas & Gear (MGG) officially opened its doors.

While technically in its infancy, the start-up was loaded with veteran talent. Including Melo, there were five employees with the company when it was founded and all but one, Melo’s son Brady, had significant industry experience. Ron Wade was an independent repair contractor who did a great deal of business with Praxair. “When we started out, I asked him if he wanted to run his business out of our shop,” says Melo. “But he said no, he wanted to be a part of the company instead.” Doug Robinson spent about seven years in the industry, mostly doing field sales before joining MGG. Ron Burrow is the only founding employee who is no longer with the company, but in the beginning he provided another veteran presence.

Founding Principles
When he founded the company, Melo had enough industry experience to know what works and what doesn’t, and there were a few things that he knew had to be done if the company was going to survive. One area that was addressed immediately was cylinder tracking. “You can talk to anyone in the industry,” says Melo. “Reconciling cylinder balances can be an incredibly frustrating and potentially damaging process for a distributor.” Without a cylinder tracking system in place, it’s hard to truly know who should have what cylinder. This often leads to a back-and-forth with the customer that is the definition of a no-win situation. That’s why from day one MGG has invested a significant amount of time, energy, labor and money into its cylinder tracking program.


A hardgoods to gas mix of 35/65 keeps Melo’s Gas & Gear’s two locations diversified. A 5,000 sq. ft. acetylene plant, capable of producing 1.75 million cubic feet of gas each month, was added in January 2011.

The results of the program have been as expected. “Our cylinder billing hasn’t been flawless,” says Melo. “But it’s been pretty darn good.” MGG’s customers appreciate the system because it eliminates confusion. It has even helped the company recover a significant number of stolen cylinders. “The local police know us, and if there is a questionable cylinder somewhere, they give us a call,” Melo explains. “They’ve actually made a few arrests when our cylinders have been in the wrong hands, and it’s all because we are able to substantiate the fact that they were stolen.”

While squabbles over cylinder possession can be damaging to customer relationships, shady pricing practices can be absolutely destructive. That’s why pricing was the second major area that MGG was sure to lock down from the get-go. “In this industry, there are a few companies that have some questionable pricing structures,” says Melo. “They operate with this ‘I hope I don’t get caught’ strategy where they try to get someone to pay $100 for something that they typically sell for $50. We didn’t want to operate that way.” Instead, Melo developed a pricing structure based on a profit margin that he considered respectable for the customer base. It’s steady and it’s consistent from customer to customer. While it might not always be the most profitable structure, it is a fair one. Melo believes that the worst thing someone could ever say about a company is that it’s dishonest, and if it takes sacrificing a little bit of profit to make sure that never happens, it’s well worth it. “We’ve had no complaints about our pricing,” says Melo. “Now maybe that hurt our profits a little bit, but I founded this company with the philosophy of ‘traditional values and traditional service’ and our pricing policy reflects it.”

Dave and Brady Melo

Brady Melo (left) works alongside his father Dave Melo at the Bakersfield, California, headquarters.

Expanding the Reach
With a solid foundation in place, it didn’t take long for MGG to start to grow. In 2000, Air Liquide approached the company about purchasing its Fresno, California, retail store. They wanted to unload the branch, and thought Melo might be a fit. At first Melo resisted because Air Liquide wanted MGG to sign an exclusive supply contract. Eventually, Air Liquide relented on the demand and, in early 2001, the deal got done. “The Fresno branch has been a huge addition for the company,” Melo says. “It came with a good customer base. So not only did we enter a new market, we gained some good, solid employees.” In 2005, MGG purchased Air Liquide’s Bakersfield store (Kern County Gas and Welding), which was situated just a few miles from Melo’s headquarters. With this acquisition, MGG added solid employees and an expanded customer base. This acquisition led MGG and Air Liquide into a strong relationship.

Between the two locations, MGG employs 24 people. A team environment exists among employees, and when a competitor’s employee comes knocking, hoping for a new job and a raise in pay, Melo is hesitant to hire. “If somebody is willing to come to us for 25 cents on the dollar, then they’ll leave for 30,” he explains. It’s a practice that has worked for Melo. He’s lost a few employees to the oil fields, but aside from that, the company sees very little turnover. “We have a strong collaborative environment here,” he says. “Nobody is just doing their job in a vacuum; they’re part of a team.” Customers seem to be taking notice says Melo, who has received many compliments on the way his staff functions as a unit. 

Collaboration is also the word when it comes to MGG’s relationship with its suppliers. With a 35-65 hardgoods to gases sales split, the company’s main partners include Air Liquide, Miller Electric, Lincoln Electric, Tillman, Norton Abrasives and Sowesco. “We have great relationships with our suppliers,” says Melo. “And there’s a simple reason for it. The relationships are two-way streets. Our suppliers go out of their way to support us, and we do the same for them.” For MGG, it all comes down to integrity. Whether he is dealing with an end-user or one of his suppliers, Melo believes that building successful relationships is all about honesty. “If you cheat any one of those parties, then your reputation is shot,” he explains. “If you cheat your supplier, why should your customers believe that you won’t do the same to them?” There have been instances where an outside supplier has come to MGG, trying to take business from an existing supplier. “The financials of the deal sometimes make sense,” says Melo. But the company stays loyal to its partners. “In turn, they do the same for us.”


Sales Manager Doug Robinson (left) has been providing customer solutions and satisfaction since Melo first opened its doors.

Filling a Need
It was MGG’s relationship with its gas supplier, Air Liquide, that allowed the company to ring in 2011 with a reason to celebrate. MGG’s Bakersfield location has its own pumping facility where the company pumps oxygen, nitrogen, argon and carbon dioxide. However, the facility was rather cramped. Also, it doesn’t have acetylene production capabilities. MGG was looking to upgrade. In fact, the company was so serious about it that Melo placed a call in 2005 to Air Liquide to ask if its 2.3-acre Bakersfield fill plant was available for purchase. The answer was no. Then, in 2009, the two companies were renegotiating a contract when the subject was broached again—this time by Air Liquide. This time the deal would get done.

The 103,000 sq. ft. site is also home to a cylinder maintenance facility, a testing station and a pumping station for nitrogen, oxygen, argon and several other gases. “Initially, they just wanted to sell the acetylene plant,” Melo says. “But as the negotiations progressed, we both decided that it would make the most sense for me to purchase the whole thing.” That’s exactly what he did. In late December 2010, MGG finalized the purchase of the property and equipment. The company retained all eight of the plant’s existing employees.

The new facility is going to give the company a much higher capacity for production. The acetylene plant is capable of producing 1.75 million cubic feet of gas each month. The new pumping facility checks in at 5,000 sq. ft. That’s 1,000 sq. ft. larger than the entire store that the company currently operates. “Right now, we can fill about 20 oxygen cylinders at a time,” says Melo. “With the new plant, that number could approach 60.”

For MGG, a company that has always taken pride in its “independent” label, it is now able to operate with a greater level of autonomy than ever before. Having its own pumping facility will allow the company to control its price destiny. It will also allow MGG to be much more responsive to just-in-time requests. But to Melo, the most important thing that the acquisition will do for MGG is make it more self-reliant. “I don’t like having to rely on other people for things that we can do ourselves,” says Melo. “The more control, the more stable we are as an organization, and the better we can serve our customers.

Melo's Repair

A part of the company since its beginning in 1998, Ron Wade (left) directs Melo’s repair department. Tony Leon is a repair technician.

Independence won’t be the only by-product of the acquisition; it also provides an opportunity to open up some new markets. MGG is now the only local independent shop with an acetylene plant north of Los Angeles, and Melo believes that many of the local distributors will now look toward his company as a supplier. “They want an alternative to the majors,” says Melo. MGG also will be supplying some product to Air Liquide. “We have an agreement in place to provide them with acetylene and some cylinder filling. And if they need us to deliver to some of their existing customers, we’ll do that too.”

An Ambitious Agenda
While this acquisition is one of the biggest moves in company history, MGG isn’t done quite yet. “We’ve been researching some equipment that will allow us to start mixing basic specialty gases,” says Melo. “In years to come, I want to evolve that into a medical gas offering.” Melo also plans on adding more branch locations. He would like to open two in the next two years and a total of four new locations by 2015. “We’ve always been fairly conservative in what we do, and purchasing this plant was a bold step,” says Melo. “But it was a necessary move, and it’s going to provide us some much-needed stability as we pursue our targeted growth.”

Achieving such significant growth in a relatively short time is a daunting task. However, looking at how far the company has come in its 13 years of existence, it’s hard to doubt MGG’s ability to make it happen. Obstacles will likely present themselves along the path, but Melo’s Gas & Gear has a strong foundation of veteran leadership and a clear set of principles are ready to lead the way.

Gases and Welding Distributors Association